Updated Jan 18, 2024 - Business

"Challenger" firms rising: Top PR talent defect from big agencies

Illustration of two megaphones facing off, shouting at each other with abstract vector shapes behind the megaphones indicating loud noises.

Illustration: Aïda Amer/Axios

Top communicators are increasingly going off on their own to launch independent advisory firms.

Why it matters: These challenger firms — or high-level, strategic communications advisories that are more agile than the agencies of lore — are changing the PR business model and its offerings.

Driving the news: Joele Frank alums launched Collected Strategies, Laurel Strategies and BCW alums are leading One Strategy Group and Edelman and Brunswick alums started Velocity Partners, all to provide specialized, executive-level counsel with lower overhead.

  • In-house talent is increasingly going off on its own too. Amazon and Boeing alums recently joined forces to launch Shallot Communications, and a collective of former Twitter executives opened the strategic communications advisory, Blue Owl Group.

State of play: Specialty communications firms with expertise in health care, public affairs, corporate affairs and finance were more resilient against last year's economic challenges, per a recent Davis+Gilbert report.

Yes, but: The PR industry as a whole is bracing for a volatile 2024, with only 53% of the firms reporting an optimistic business outlook — down from 66% last year.

Zoom in: Firms' biggest concerns include client budgets remaining flat or decreasing, the rising cost of talent and retaining existing talent, per the report.

  • Leaders of challenger firms argue they can solve these concerns by attracting talent who crave ambitious projects and remote work models, and clients with high demands but shrinking budgets.
  • Plus, the addition of artificial intelligence will empower smaller firms to work faster and smarter with fewer people.

The big picture: AI is expected to impact 60% of jobs in developed economies and 40% of jobs globally, according to the International Monetary Fund.

  • The adoption of AI will not only change the work of PR professionals but it'll disrupt the business model as a whole.

Between the lines: Gone are the days of billing several hours of work for a press release, briefing document or media list.

  • Instead, firms will need to serve as trusted, strategic advisors who can guide the new generation of C-suite leaders, says One Strategy Group president Brian Ellner.
  • "The C-suite is getting younger and more diverse, and companies are facing more pressure from more sides. Our team is embedded in the C-suite and all of our communications work is driven by strategy — we are not replicating the model of pushing work down to junior associates."

What to watch: PR firms are ripe training grounds for communicators who are new to the workforce. Elevating the work of these firms could alter the future talent model and leave some behind.

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