Agency profitability flat in 2012

Profitability of US PR agencies was flat in 2012, according to an annual survey from management consulting firm StevensGouldPincus.

Profitability of US PR agencies was flat in 2012, according to an annual survey from management consulting firm StevensGouldPincus.

Agency profitability increased 18.8% in 2012, compared with 18.6% growth in the previous year. While this growth is significantly higher than the 15.6% increase in 2010, profitability has still not reached the pre-recession figure of 19.7% in 2007.

Despite this, StevensGouldPincus managing partner Rick Gould says the numbers are a good sign for the PR industry, some of which are gaining larger portions of marketing spend on accounts.

The study surveyed 111 North American agencies including Edelman, APCO Worldwide, Finn Partners, MWW, and National Public Relations in Canada.

Revenue per professional is higher at larger PR agencies, the report found. PR firms with net revenue of more than $25 million saw an average of $230,990 in revenue per PR professional.

Agencies with net revenue between $10 million and $25 million posted an average of $222,500 per professional, and firms with $3 million to $10 million in net revenue averaged $206,699 per professional. Agencies bringing in less than $3 million averaged $198,584 per staffer, according to the study.

The study also found that fixed fees or retainers are more prominent among smaller firms, while larger agencies tend to use time-based billing methods. Overall, 48.9% of firms bill on fixed fees or retainers, while 45% of agencies bill based on time.  

Agencies earning more than $25 million in net revenue posted $10,598 in minimum monthly fees, while firms in the tier below saw an average of $13,364 in fees.

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