Shel Holtz wonders whether smaller agencies may have the edge. I agree, and have long held the view that the best consultancies continue to operate out of one room. (I’ve also been re-reading EF Schumacher’s Small is Beautiful, the celebrated – if unduly pessimistic – economic critique of growth from the 1970s.)
That said, you need to set up on your own to realise the power of working for a brand name. You know you’re as good as you ever were, and you’re now working for a fraction of your previous consultancy’s fees, but the larger clients and the bigger budgets elude you. Buyers of PR services can be risk averse and so prefer the bigger name.
Who wants to tell the chief executive that you’ve procured cheap PR services? You want to say you’ve hired the best. So everyone colludes for the time being in admiring the emperor’s new clothes. The moral of the story for independents is probably to raise your fees and to build your own networks.
PR Studies 
They certainly see to have the edge in AUstralia anyway http://trevorcook.typepad.com/weblog/2004/12/be_nimble_think.html
How true this is. I’ve lost count of the number of times I’ve pitched for an account and had feedback along the lines of “Well you had the best ideas/understanding/track record etc, but we didn’t think you were quite big enough to handle our account”.
I had recent experience of this when I had to work with a top 10 PR firm retained by one of the world’s largest PC manufacturers. My client needed me to approve/edit a news release produced by this top 10 company. It was hard to know where to start (my first instinct was the bin!) The news was either non-existent and/or hidden half-way through the release. The first line had grammatical errors! It took me a good half day to try and sort out their mess.
What really galled is that my client is on a one day a month retainer. I know that the top ten PR firm has a monthly fee that is more than my client’s annual budget. I had to waste half a day of my client’s budget sorting out their mistakes.
The two classes of agencies most likely to succeed in today’s economic climate are probably the big agencies (which have the benefit of name recognition) and very small outfits willing to take on lots of part time customers. Most vunerable are probably the boutiques who are large enough to have payroll issues and minimum spend requirements for clients, but small enough not to have the name-clout.