The New York Times points a firm finger that conglomerate agencies’ drive to fatten their profits causes a drop in their ethical standards. Citing the Armstrong Williams case, Edelman big wigs wade in:

‘Communications conglomerates, however, make much more money from
advertising than from public relations. As a result, critics say, firms
like Ketchum that operate inside conglomerates are pushing harder to
fatten the bottom line – which may lead them to cross ethical
boundaries.

Critics also say that the billions of dollars in debt
the conglomerates have incurred during their acquisition spree has made
them pursue fees more aggressively. "It’s our belief that the masters
of the universe, if you will – WPP and these other guys – are pressing
for higher profits," said Daniel J. Edelman, father of Richard and
founder of the company that bears his name. "They have standards for
what they want, usually 17 percent margins. We like to do well, but
we’re not trying to hit those kinds of numbers. It takes away from our
historic relationship with the media."’

I’d suggest that a good independent can hit that level of profitability, without selling its soul and without sacking its own staff to maintain that margin when times are tough. Conglomeration is happening in all industry sectors, not just PR, but a lot of the real innovation is happening at the independent level. The difference in PR is that at a purely national level, the economies of scale are such that independent boutiques can compete effectively against the conglomerates. That’s why they grow, and in an effort to capture that ‘magic formula’ (for which read delivering against client expectations and impacting their business), the conglomerates buy them up, normally losing the ‘x-factor’ in the process. A big part of that ‘x-factor’ is commitment. And anyone laid off by the conglomerates in the recent downturn knows that commitment is not a two-way street at Plastic Omnipublic Intercom. Until the conglomerate suits realize this, they’ll continue to reap the fruits of debacles like Armstrong Williams. It just goes to prove there are no short cuts to success in this field.