Insights from the Industry Blend PR Roundtable – May 30th

At last week’s Industry Blend Roundtable, key decision-makers in the PR and Media industries provided a comprehensive overview of the current state including insights into emerging trends, challenges, and opportunities reshaping the PR landscape. From the impact of procurement processes on agent relationships to the strategic considerations of mergers and acquisitions, the roundtable delved into various facets of the PR industry, offering invaluable perspectives for firms and professionals alike.

The roundtable featured discussions with Michael Belfer, Partner and Public Relations Practice Leader at Anchin, Anthony Bracco, Partner and Leader – Litigation, Forensic, and Valuation Services at Anchin, Brad Schwartzberg, Co-Chair of the Corporate + Transactions Practice at Davis+Gilbert LLP, Michael Lasky, Co-Chair and Founder of the Public Relations Law Practice at Davis+Gilbert LLP and Kim Sample, President at the PR Council.

This article distills the essential takeaways from the roundtable discussions, providing a roadmap for navigating the complexities and seizing the opportunities in the public relations, media and advertising industries.

Current Marketplace

• Voluntary Turnover Trends: Kim noted a significant decline in voluntary turnover, which is reducing salary pressures.
• Impact of Procurement: Procurement processes are influencing more and more agency relationships. While focused on increasing value and cutting costs, procurement executives note preference for fixed fee pricing and value billing over hourly rates. That’s good news for firms.
• Need for Industry Progress: There’s a growing desire for discussions on the industry’s evolution, including consistent measurement practices and operationalizing AI technologies.
• Agency Perceptions: Agencies often feel undervalued, viewed more as vendors than partners, but it’s possible to redefine these relationships by consistently demonstrating the value they bring to their clients.
• Talent Attraction and Retention: While PR firms excel at nurturing talent, challenges like over-servicing and margin pressures exist. Talent across the industry needs to upskill their capabilities for a new reality.

Growth Strategies

• Strategies for Growth: Brad emphasized the importance of nurturing and expanding the asset base of PR firms amidst challenges like over-servicing and margin squeezes.
• Compensation Considerations: Beyond annual salary and bonuses, successful firms have developed Long Term Incentive Compensation Plans (both cash and equity based) to attract and retain talent.
• Mergers and Acquisitions: Michael indicated that there have been 46 completed M&A deals for the first 5 months of 2024 – the exact same number completed in the comparable 5-month period last year. Davis+Gilbert’s data demonstrates that there are more opportunities than ever for smaller and mid-sized firms to enhance growth and diversify clientele through strategic acquisitions—and that these smaller “tuck in” acquisitions are getting completed.
• Valuation and Estate Planning: Understanding the factors that impact firm valuations is crucial for both estate planning and potential business sales, especially considering the evolving tax landscape.  It is critical to accelerate estate planning before the sunsetting of estate tax exemption amounts at the end of 2025, and prior to receiving an offer from a potential acquirer. An operational review with an eye towards improving efficiencies can enhance firm value.
• Long Term Incentive Plans (LTIP) and Equity Arrangements: LTIPs should be reserved for mid to senior-level employees and tied to pre-determined performance metrics. (See Davis+Gilbert’s “WORKS” attachment) Statutory equity and contract equity (also known as “phantom equity”) should be reserved for senior employees. Davis+Gilbert’s annual industry survey consistently demonstrates top performing firms that have LTIPs, contract equity, or both.

Additional Insights

• Remote Work Challenges: Maintaining collaboration and culture in a hybrid work environment poses challenges, emphasizing the importance of a supportive workplace and competitive pay.
• Service Offerings and Efficiency: Limiting service offerings can prevent over-servicing clients, while optimizing internal processes can enhance agency efficiency and client satisfaction.
• Non-Compete Considerations: A nationwide federal law banning non-competes has been proposed by the Federal Trade Commission, but it is being challenged in court. Michael emphasized that this is a good time for firms to evaluate if they have the most appropriate non-solicitation, non-servicing, non-hire and confidentiality agreements in place.

In conclusion, the PR Roundtable highlighted the need for continuous adaptation and strategic planning to navigate industry shifts and capitalize on emerging opportunities. By embracing innovative approaches to compensation, talent retention, and growth strategies, firms can position themselves for success in an evolving landscape. Adaptability, strategic planning, and a focus on long-term goals are essential for weathering challenges and seizing opportunities in the PR marketplace.

If you’re interested in continuing the roundtable conversation with any of the panelists from the event, please see their contact information below:

• Michael Belfer, Partner and Leader of the PR, Media and Advertising group at Anchin
• Anthony Bracco, Partner and Leader – Litigation, Forensic, and Valuation Services at Anchin
• Brad Schwartzberg, Co-Chair of the Corporate + Transactions Practice at Davis+Gilbert
• Michael Lasky, Co-Chair and Founder of the Public Relations Law Practice at Davis+Gilbert
• Kim Sample, President at The PR Council