Staff costs a problem, claims study

The PR industry's success in 2000 could create major problems for

agencies going forward if incomes continue to fall sharply in the

downturn, according to research published this week.



Creative services accountancy firm Willott Kingston Smith has published

its annual survey of the industry, confirming a boom 2000 for the PR

sector with raised turnover, profit margins and productivity.



But the threat of a full-scale recession means increases in staffing

during that year are now difficult to justify. WKS partner Kit Pogson,

said: 'Income levels need to be maintained in the face of the threat of

slowdown. I do not think it will be as bad as in the early 1990s as the

sector is better prepared, but agencies need to match staff to

income.'



During the period covered, staff numbers rose by 21 per cent, taking

staff costs on average to 54 per cent of gross income. Pogson says this

is already higher than ideal, which he put at around 50 per cent, before

the additional factor of a downturn put jobs at risk.



The survey uses the latest publicly available figures from the top 30 PR

consultancies measured by gross income. It is part of WKS's annual

report on the financial performance of marketing services companies.



On the whole, the study found the PR industry to be in decent health.

Average operating profit margins almost doubled to 13.8 per cent, but

WKS believes 15 to 20 per cent is achievable.



- Leader, p10.



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