In 2013, the PR industry witnessed income growth of eight per cent, which is a disappointing drop from the 11.5 per cent seen in 2012. There is some way to go before growth returns to the pre-recession days of 15 per cent.
Promisingly, growth was evenly spread across the sample, with approximately 76 per cent of consultancies showing growth and more than half with growth of eight per cent or more. This year, as last year, the smaller consultancies seem to have done well, with only seven of the smallest 30 suffering a decline, and 21 of them showing growth above the average for the Top 150. Those at the very top of the table also did well to avoid income erosion.
What we can see is a 'squeezed middle', with those agencies sitting between £1m and £3.5m fee income accounting for ten of the 11 consultancies suffering double-digit declines. This demonstrates the vulnerability of this group. This may indicate that clients are either choosing larger agencies that can perhaps offer more services or an international perspective, or, on the other hand, are spending money with smaller niche players that perhaps offer lower costs.
The average gross income per head has increased by less than one per cent to £93,800, which is less than inflation, so in real terms it has decreased. While we see slower, albeit healthy, growth in income, keeping costs down and fighting margin erosion will be the challenge going forwards. Ultimately, the future of the PR consultancies will be determined by their ability to keep up with the changing landscape of marketing and attract and retain the best talent to set them apart from the competition.
Esther Carder, partner, Kingston Smith W1