How to start a PR consultancy business

This is an article by Stephen Waddington.
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The recession coupled with the falling readership of traditional media, the rise of online and the emergence of digital networks are leading to dramatic changes in the PR industry. These elements combined are creating opportunities for PR entrepreneurs and business leaders to build a new breed of PR consultancy.

But there’s another more fundamental driver that the industry has dodged for more than a decade – measurement and the ability to tie a given input to a guaranteed outcome. Outside universities, PR has long been an ill-defined discipline lacking formal planning and rigorous measurement.

PR consultancies have typically been very good at creating content and energetic in their efforts to engage with the media. But the industry has lacked formal methods and as a consequence its ability to work with other elements of the marketing discipline has been limited.

Financial performance

In 2007 the top 150 agencies grew by 22 per cent to a fee income of £779m according to the annual rankings published by PR Week. The comparable figure for 2008 was 10 per cent and a fee income of £858m.

But the headline numbers only tell you part of the story. The number of people employed within the top 150 firms fell from 8,200 in 2007 to 7,990 in 2008. Industry growth has slowed and consultancies are doing more work with less people. The data for 2009 is likely to continue this trend.

“PR agencies have apparently employed various strategies in 2008. Some have gone for growth, through capacity or adding new skills, and some for efficiency and profitability. The question for 2009 will be whose strategy turns out to be the best for the challenging environment the industry now finds itself in?” says Adam Parker, chief executive of RealWire.

It’s a tough time for the industry. But it undoubtedly has a strong future. Now more than ever companies need guidance to manage the conversations around their brands and modern PR, with its roots in creating influence through the editorial process, has a lot to offer and much of it tangible.

Digital changeover

The question is whether the industry is quick enough to recognise and adapt to the changing dynamics. The real threat is not the contraction of the industry but its ability to modernise and adopt the formal planning and communication methods made possible by digital techniques. Here lies an opportunity for new businesses to be created offering new propositions.

The PR industry has the skills and the tools to lead clients into the new area of marketing called social media. Those that are making a bid to adopt the lexicon of marketing and the disciplines of the marketing team are already reaping the benefits. If PR fails to innovate and deliver the services and products that the market demands digital and media agencies will undoubtedly be quick to grab this contested territory.

PR agencies currently fall into three distinct camps: consultancies that are embracing and actively creating the digital PR future by retooling their businesses; consultancies that believe digital calls for traditional techniques to be transposed to bloggers and via networks such as Twitter; and those that are standing still.

History is repeating itself to an extent. The dot com boom and the resulting bubble kick-started a period of entrepreneurial activity in the PR industry with consultancies such as Rainier PR (my former business), Mantra PR, Hotwire PR and Brands2Life started.

The next wave of independent PR businesses that will call the industry to account within the next five years and top the league tables is being created now using digital as an opportunity to develop a disruptive proposition. Companies such as 3WPR, Diffusion, Escherman, Immediate Future, Liberate Media and Wolfstar are winning business off more traditional firms and developing a strong reputation.

“Innovation in any industry is always driven by risk-takers that can foresee the demise of the old ways of doing things and pinpoint where the new opportunities lie.  Our motivation for starting Diffusion was to build an agency from the ground up with digital at the very core of our business model and approach to tackling clients’ communication challenges. We also wanted to play a part in defending PR from digital, advertising and search marketing agencies,” says Daljit Bhurji, managing director of Diffusion.

Team work

Stephen WaddingtonSteve Earl and I started Rainier PR as a technology challenger in 1998 tooled up to handle the booming telecom, electronics and software sector. We built it to a turnover of £2.5m before selling it to Loewy in 2006.

During the past 12 months we’ve integrated the three PR businesses and five brands within Loewy and re-positioned the new business squarely around the emerging opportunity for digital communication and marketing. We firmly believe that we’ve created a robust digital offering and investment in formal methods has created a robust planning and measurement methodology.

I worked with Earl for four years before we started a business together. We’ve worked together for 15 years and have seen each other through the highs and lows of client wins and losses, an attempt to defraud the business, all nighters in the office, and HR nightmares. That’s important. Running a business can be a lonely task.

Guidance from mentors is crucial for the same reason. Grey hair brings experience. We have always surrounded ourselves by people that have experience in areas that we lack. It’s by far the best way to learn.

Business models

The agency or consultancy model is incredibly simple. At its most basic a consultancy business matches people with client work. In the PR industry, salaries typically account for 55 to 60 per cent of fee income. Overheads should account for 20 to 25 per cent, leaving a balance of 20 per cent or so profit.

Clients are attracted to talented people, a strong brand and a robust proposition. They are also typically risk adverse so you can expect to have a tough time persuading clients to come on board in your initial few years. Your first few clients are likely to be mates. But that’s okay. De-risk your own investment by starting small and keeping an iron grip on costs.

Many of the services around a PR business are now commodity products. Distribution is almost exclusively via networks.

“Use Realwire or Sourcewire for press release distribution. Use Getting Ink Requests to find out about editorial opportunities. Use Google Alerts via RSS to Google Reader and Google Blog Search for monitoring,” says Andrew Smith, Escherman managing director.

Smith showed recently in a blog post how it is possible to build a PR business on a credit card. His post was tongue-in-cheek but it proved how little it costs to start a business. But the fundamental point that he makes is sound. PR is a knowledge-based industry that doesn’t require significant outlay in capital assets.

Wealth creation

Creating a business is one of the few ways of developing an asset that will have a significant and tradable value in the event of an exit. It is a long term game but is a sure route to breaking the link between the hours you work and the income you generate.

I have immense admiration for anyone that starts up their own business and delight in the fact that Rainier PR and Loewy have spawned numerous start-ups. It’s healthy for the industry as it encourages new thinking, promotes innovation and drives up standards.

Business plan


Write a 12 month and a five year business plan to map out your objectives. And then measure yourself against it on a quarterly basis

Produce a cash flow projection to determine what level of investment you need to get your PR consultancy off the ground

Going it alone is tough. Consider pulling together a team of people with complementary skills to share your risk

PR consultancies are typically poor at marketing themselves. Create a strong brand and invest some energy behind it and you’ll well on your way to winning for first client

The PR industry is a crowded market. You need a proposition that will create cut through and engage prospects

Don’t expect people to seek you out. You’ll need a programme to drum up business

What investments do you need to make in capital assets to get your business off the ground?

Stephen Waddington is managing director of Speed Communications.


  1. Great article. The biggest challenge we’ve faced starting Wolfstar is your first one – cash. You’ve got to remember that cash is king. It’s fantastic to land a big new client in competition against global agencies100 times our size, but then you’ve got to finance even basic things like lots of flights, hotels, equipment hire etc, so even with a commerical overdraft the personal credit card is your flexible friend in growing the business!

  2. kevin makyotto says:

    it is good.

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  4. This article is really helpful with shedding light on the factors to consider when starting out. Thank you!

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