PR sector optimism cools and over-servicing creeps up, says PRCA report

Optimism among PR consultancies remains strong but has cooled, according to new research that also suggests that over-servicing is on the rise.

PRCA's Francis Ingham: Industry starting to stabilise after "unchained optimism" of economic growth
PRCA's Francis Ingham: Industry starting to stabilise after "unchained optimism" of economic growth

A survey of PRCA member consultancies found that 48 per cent of leaders reported the fourth quarter of 2014 made them feel more optimistic about the industry. This represents a 27 percentage point decrease on the same quarter of the previous year. The number stating that it made them feel the same about the industry doubled, from 25 per cent to 50 per cent.

Meanwhile, many practitioners report that over-servicing is beginning to rise again, according to the PRCA’s Consultancy Barometer Q4 2014.

The proportion reporting that it increased significantly in the last quarter has risen from zero to four per cent in a year. The proportion of respondents stating it had increased marginally almost doubled (up from 14 per cent to 27 per cent).

Agency heads have also reported a shift in where their new business is coming from. There has been a 10 per cent swing from existing clients to new clients in the past year, with the results now standing at 32 per cent and 68 per cent respectively.

More than half (54 per cent) predicted that staff numbers would increase, only a two percentage point decrease on last year’s findings. Similarly, 36 per cent reported that graduate recruitment would increase in the next quarter (a minor reduction of three percentage points).

Clients’ budgets continue to paint a mixed picture of the industry. While six per cent reported that they had increased significantly (up from zero per cent) and 31 per cent reported that they had increased marginally (down from 42 per cent), the majority (51 per cent) stated that their budgets remained unchanged.

Optimism about the wider UK economy has cooled. In the fourth quarter of 2013, 75 per cent stated that it would improve over the following 12 months and 19 per cent claimed it would stay the same. In the same quarter of 2014, the percentage of respondents predicting improvement dropped to 40 per cent, while 48 per cent suggested it would stay the same.

PRCA director general Francis Ingham said: "After the unchained optimism that came hand-in-hand with strong economic growth, we're starting to see the industry stabilise.

"We're still optimistic and we're still in a prize position compared to recent years, but we're seeing the over-servicing creep up and minor shifts away from the hugely positive figures we've previously seen.

"We've got to take this opportunity to get our house in order and to make sure bad habits and small changes do not obstruct the success we've enjoyed and will continue to enjoy."

CubanEight MD Sian Gaskell, who took part in the research, said: "At CubanEight we had a busy end to the year and our Q4 was a strong one. With new business, we took on three new clients and had a healthy pipeline. We also bolstered the team by 25 per cent and moved to a new office space to accommodate the growth.

"However, there has been a minor downside due to the uncertainty of the forthcoming election and this manifesting itself into a ‘wait and see’ approach from a couple of clients."

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