The epidemic will certainly have serious consequences for the PR industry. Maybe they will be not as grave as for the advertising industry, because our budgets are much more modest, but for many agencies this time can be very difficult. When several clients freeze their PR expenditures, it may even be a matter of survival for the smaller agencies. But even larger agencies will suffer losses, they will have to reduce costs and even cut jobs, because this is the largest cost in every agency.
I think that it will be relatively easier to survive for those agencies which focus on building the clients’ reputation, their relations with the external environment, communications and crisis consulting, and therefore those for whom remuneration for the time spent on such activities, or fee income, constitutes for 70-80% of their total revenues. Such agencies do not depend on client’s large budgets, which are now disappearing. On the other hand, consultancy or reputation-building activities, CSR, maintaining relationships with external stakeholders will still be needed and maybe even more needed than before. We already note increased interest in crisis consulting, training and anti-crisis activities, also in the social media. However, agencies for which these activities don’t constitute their core business, and which recently focused on marketing communications, content creation, organization of large campaigns and events, can experience a harsh time. Not because they do something wrong, but because the clients are going to freeze these budgets in the first instance. It can already be seen in the event or training industry. In a vertical division, it can be assumed that the agencies which specialize in providing services to the industries which have suffered the most as a result of the pandemic – such as retail trade, hospitality, tourism or transport – will also be in a more difficult situation. The same applies to the production of certain FMCG categories which now experience a lower demand.
How will the situation develop in the long run? Well, I don’t have a crystal ball, but I can see two possible scenarios. The pessimistic one assumes that the global economy, including the Polish economy, will suffer from this year’s crisis for a long period of time. We’re also facing such challenges as population aging, climate change, future migration crises and perhaps new viruses. Besides, most experts had prophesied a recession even before the outbreak of the pandemic. Considering all of this, the chances of maintaining an earlier, 4-5 percent annual growth rate of the PR industry in Poland and globally, are rather limited. On the other hand, these conditions will probably require major changes in the industry. The agencies will have to adapt to the new situation, change the way they work and how they approach the customers and their needs. If most agencies succeed in doing it, then I see some chances for a more optimistic scenario.