Agency profits hit by overservicing, says PRCA report

Profit margins are falling, and PR agencies are spending an average of pounds 500,000 every year overservicing clients, according to the PRCA’s annual benchmarking survey.

Profit margins are falling, and PR agencies are spending an average

of pounds 500,000 every year overservicing clients, according to the

PRCA’s annual benchmarking survey.



Although the agencies surveyed are still profitable, averaging a 14 per

cent profit margin, it is a notable decline from the 19 per cent average

two years ago.



Mark Mellor, a member of the PRCA’s best practice committee said: ’The

industry has grown at 14 per cent for two years running, yet

profitability is down, which means something is seriously wrong.’



The 2000 PRCA Benchmarking Survey includes information from 91 chief

executives and managing directors; 69 finance directors and 69 human

resource directors, and small, medium and large agencies.



The survey revealed that the top internal problems are all staff

related, with staff recruitment deemed the worst, followed by staff

retention.



Ironically, finance directors indicated that firms were not investing

great sums in training.



The survey also revealed that 60 per cent of companies have resigned

accounts in the last year because of overservicing, and 16 per cent

cited client aggression or abuse towards staff as the main reason.



Mellor said immediate action could be taken by agencies to set better

client expectations ’instead of running around doing whatever they

ask’.



Leader, p8.



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