Provokeglobal: Selling PR Firms To Ad Groups Was A 'Colossal Mistake'

(MENAFN- PRovoke) CHICAGO - The sale of leading public relations firms to advertising holding companies was an“understandable but colossal mistake” that left the industry poorly positioned to realise its strategic value, PRovoke Media founder Paul Holmes told the Global Summit in Chicago this week.

In a reversal of the usual interview format, Penta CEO Jim O'Leary questioned Holmes on the future of agencies, in-house communications and the media, in a conversation that challenged assumptions about the benefits of scale and the relationship between PR and advertising.

“Public relations is not a function that aligns with advertising. It's a function that aligns with management consultancy, in my opinion,” Holmes said.“Not true of every firm, but it should be aspirationally true for all of them. I'm not suggesting that McKinsey and PWC were lining up to buy PR firms. They weren't, and advertising agencies were.”

Nevertheless, he argued that advertising groups had historically treated PR as a supporting service, while their current emphasis on media buying and technology offered little reason to expect that position to improve. Recent consolidation had largely reflected a search for savings rather than investment in growth.

“Media buying is the one thing that benefits from scale. I see no evidence that public relations benefits from scale, but media buying truly does. The more media you buy, the better rate you can negotiate,” he said.“Public relations remains an afterthought for most of these groups.”

Different agency businesses

Holmes said it was increasingly difficult to have an intelligent conversation about“the agency business” because the term encompassed several distinct businesses with markedly different prospects. The challenges facing large global networks, particularly those owned by advertising groups, contrasted with investment in corporate advisory and the performance of many smaller and mid-sized firms.

“The lack of investment in PR from the big holding companies, the fact that they see it as a cost-saving opportunity rather than a growth opportunity, stands in pretty stark contrast to the number of people out there in the private equity business who clearly see what I call public relations as a growth opportunity,” he said.

He pointed to corporate affairs, public affairs, financial communications, crisis management and change and transformation as areas attracting investment, with firms including Brunswick, FTI Consulting, FGS Global and Penta able to command premium fees.

“There are clearly people out there who look specifically at corporate affairs, public affairs, financial communications, crisis management, change and transformation as a business where communications has a bright flourishing future and is worth investing in,” he said.

Meanwhile, many smaller and mid-sized agencies working in consumer brand building, healthcare and technology were performing well. Citing PRovoke Media's ranking of the world's largest firms, Holmes said around two-thirds had grown in the previous year, while their work demonstrated the industry's evolution beyond traditional publicity.

“I've seen public relations in the consumer space move from product publicity to genuine brand building, and often leading an organisation's brand building,” he said.“There is a flourishing long tail of mid-sized to small public relations firms that are actually doing pretty well, thank you very much.”

The prominence of the largest networks risked distorting perceptions of the whole market:“They are so big and their evident problems are so widely discussed that I think it creates the impression that the whole industry is suffering, when actually the whole industry is doing okay.”

Pressed by O'Leary on whether holding company agencies could return to growth, Holmes said he saw no reason they could not, citing strong leaders and talented people within the networks. He argued that Burson would be better off outside WPP, predicting that a sale to private equity or another buyer outside the advertising holding company sector could produce an initial contraction of around 10%, followed by substantial growth.

Large agencies could also improve their prospects by making clearer choices about where they could offer exceptional expertise, rather than seeking to provide every service to every client, he said.

“If large agencies figure out the things that they can be A+ at, and stop doing the things that they can only be B+ at, they will be in a much stronger position than they are right now,” Holmes said.“Great agencies are defined by what they won't do rather than by what they do. And the problem with being a big agency is the list of things that you don't do is incredibly short because you're trying to do everything for everybody.”

For clients treating PR as mission-critical, he argued, the benefits of choosing the strongest agency for a particular assignment and market could outweigh the additional complexity of managing multiple relationships.

“I believe that the benefits of having the best agency in Paris for consumer or the best agency in Hong Kong for a financial transaction far outweigh the complexity of making individual picks,” he said.“Just fine is not good enough.”

O'Leary noted that some well-resourced clients would continue to want global partners capable of operating across dozens of markets, ensuring demand for that model. He also identified opportunities for“modern corporate advisory” firms, sector specialists and agencies built around AI, where small teams could deliver capabilities previously associated with much larger organisations.

“What the agency landscape looks like three to five years from now will be dramatically different than what it looks like today,” he said.

Holmes added that the movement of senior practitioners would be important to watch:“At the end of the day, clients follow talent. And if I believed that the big agencies were trying to use their size to attract the best talent, that would change a lot. But what we've seen recently is more a case of talent fleeing or being ejected at the senior level from those agencies, and in a lot of cases going off and starting their own one- or two-man consulting firms.”

Credibility and the future of media

O'Leary framed the wider conversation around his prediction that the profession would experience more change in the next three to five years than it had over the previous three to five decades, driven by AI, shifts in media consumption and the convergence of business, culture and politics.

Holmes described the media environment as the most challenging he could remember, with publishers competing against abundant free information and misinformation that allowed audiences to reinforce their existing prejudices. However, he resisted treating journalism as a protected category, or assuming that the distinction between journalists and influencers remained useful.

“The people that you should be using as conduits for your information are people who have the power to either give your message credibility or change people's minds about an issue. And I don't particularly care what label those people put on themselves,” he said.

Audiences were making their own decisions about credibility, and communicators needed to understand those choices:“If they choose to trust a podcaster with an audience of 60 million over a sort of 100-year-old news institution with an audience of 10 million, it's not my job or your job to second-guess that. It's your job to use that.”

Asked what happened when audiences trusted an LLM above other sources, Holmes said practitioners needed a sophisticated understanding of those systems, while expressing concern about their susceptibility to manipulation. He acknowledged that journalists could also be vulnerable, particularly when excessive proximity to sources weakened their willingness to challenge them, but questioned whether LLMs offered comparable resistance to well-funded efforts to influence information.

Nevertheless, he remained confident that there would be demand for“objectivity, which is not the same as balance”, truth-telling and sophisticated analysis, regardless of the platform or professional identity of the person providing it.

“That will survive no matter what the changes in the technological environment are, or what we see in terms of corporate media being bought and paid for,” he said.“Those are the people who are going to deliver the currency that we all deal with, which is trust and credibility and authenticity. It worries me that it's becoming a niche market rather than the mainstream, but it's always going to be there.”

AI-mediated discovery presented a particular dilemma for publishers. Holmes said credible editorial coverage was increasingly valuable to organisations seeking visibility in search and AI-generated answers, strengthening the argument for earned media while potentially weakening the economics of producing it.

“For journalists, it's a double-edged sword. Obviously, it makes us more important and more valuable to you, but at the same time, it reduces the number of clicks that we have trained ourselves in recent years to view as the most critical metric of business success,” he said.“I think journalists need to wean themselves off the idea that clicks and page views are the most important metric of their success, and find other ways to monetise their credibility.”

Defining the CCO's contribution

For in-house leaders, the combination of geopolitical turmoil, political polarisation, social unrest and technological change had dramatically increased expectations of the function. Holmes argued that interpreting the external environment was becoming as important as the craft of communication.

“PR today stands for pattern recognition,” he said.“These are all the things that I'm seeing going on in the world, and this is what I'm seeing as a pattern in all of that noise. This is the signal that I think is interesting and important. And that ability to interpret the noise and extract the signal is crucially important.”

That responsibility operated in both directions: helping the company understand its stakeholders, then helping stakeholders understand its response. Yet the expansion of the role had not been matched by resources or a shared understanding of what communications leadership involved.

Holmes said a conversation with senior communicators around three years ago had introduced him to the idea that leading communications could be“the loneliest job in the company”. Subsequent discussions had repeatedly exposed the same sense of isolation.

“Most of them turn into something that feels more like a therapy session than a roundtable. Nobody understands my pain except the other people who do what I do in other organisations,” he said.“It's so nice for CCOs to sit down with other CCOs and understand that actually everybody else is going through the same completely unreasonable set of expectations, and the same budget constraints and the same failures to understand.”

Part of that problem was the assumption among other executives that communications was something anyone could do if they had the time. Holmes said he had heard from communications leaders whose CEOs questioned the need for substantial teams when AI could write press releases.

“First of all, writing press releases is not the job. And second of all, no, it can't. It sucks,” he said.“Your peers in the C-suite don't get what you do, don't necessarily always respect what you do until something really bad happens. And then they're like, 'Save us, CCO'.”

There could also be a disconnect between CCOs and their own teams, as their access to the wider business picture meant explaining why an apparently strong campaign did not align with corporate priorities. Those tensions reflected a deeper lack of agreement about the function's purpose, remit, reporting relationships and measurement.

“We don't know what it's called, we don't know who we report to, we don't know what it should include, and most critically for this discussion, we do not have a universal set of standards by which we can measure its impact,” Holmes said.

Companies routinely embedded financial, legal and operational perspectives in their leadership structures, he argued, but reputational and relationship considerations were less consistently represented when decisions were made.

“Communication sort of floats around outside that, and sometimes it's in the room and sometimes it isn't,” he said.“Sometimes it's part of the decision-making process, and sometimes it's like, hey, we just decided to lay off 50,000 people, can you go spin that please? And that's not how we should be adding value.”

For Holmes, the terminology itself could reinforce that marginalisation. While he recognised that the debate had largely moved on, he still preferred public relations because it described the purpose of the work.

“Communicating our company positions is important, but helping to shape our company's positions is much more important,” he said.“When we say we're communicators, people think you're the people who talk about it afterwards.”

Despite those frustrations, Holmes remained optimistic about the profession's ability to create business value through relationships, trust and credibility, from recruiting employees and increasing sales to securing community support or influencing legislation.

“If we can deliver trust and credibility, we will add to every dimension of the organisation's success,” he said.“If we build trust and credibility, there is a genuine dollar amount payoff at the end of that. And we're very good at that. We're underappreciated.”

O'Leary agreed that pressure on companies and CEOs was increasing the importance of some of the profession's most valuable work, particularly the judgement and counsel that sat above tasks increasingly handled by AI. Holmes pointed to empathy, presence, original thinking, creativity and hope as capabilities central to PR and reasons to remain confident about its future.

“While everybody else is freaking out about whether AI is going to take their job, there are huge parts of our job that cannot be done by a bot,” he said.

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