Firms' profit margins up

NEW YORK: The StevensGouldPincus Annual Benchmarking/Best Practices Survey found PR firms' average operating profit margins at their highest level since the study's 1987 debut.

NEW YORK: The StevensGouldPincus Annual Benchmarking/Best Practices Survey found PR firms' average operating profit margins at their highest level since the study's 1987 debut.

Firms came in with an average 22% operating profit in 2006, which the survey defined as "revenues, less total account labor cost, less total operating overhead."

Last year, the average was 13%.

"The past several profit margins weren't even close to this," said Rick Gould, managing partner at StevensGouldPincus. "It's never been consistently over 20%."

Gould attributed the outcome to factors associated with overall better management: greater control of labor costs, coming in at about 40% of revenues; increased productivity, with an average of about 1,700 hours spent on client work; and higher revenues per professional, averaging nearly $200,000.

"The reality check of 2001 is finally showing benefits," he said. "As horrible as [2001] was, it made CEOs become entrepreneurs."

The study also found that average monthly minimum fees were about $10,000.

The survey tracks 20 best-practice benchmarks. Results are based on data from 100 US firms with revenues ranging from $3 million to more than $25 million.

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