Standards and profits rise at consultancies

The typical PR consultancy is a well-managed business, making an average profit margin of 18 per cent , according to the PRCA’s first annual Benchmarking Study.

The typical PR consultancy is a well-managed business, making an

average profit margin of 18 per cent , according to the PRCA’s first

annual Benchmarking Study.



Fee income accounts for just 41 per cent of agency turnover, with work

outsourced to suppliers accounting for 59 per cent. But the survey

revealed that agencies with a greater proportion of fee income tend to

make higher profits.



Some 87 per cent of fees are still on a fixed retainer or fixed project

fee basis, with just 13 per cent of fees derived from hourly rate

charging or hourly ’top-up’ fees.



The study, conducted by the Harris Research Centre, showed that the 49

agencies questioned achieved a profit margin of 18 per cent. The margin

is high compared to profits of just over 10 per cent for many of the

large international firms. Average salaries across the industry were

pounds 71,000 at board level, pounds 37,000 at associate director level,

pounds 24,000 at account manager level and pounds 17,000 for account

executives. Board directors’ time is billed at an average of pounds 140

per hour, and an account manager’s at pounds 80 per hour.



Some 64 per cent of retainer clients have remained with their agency

since last year. However, just 23 per cent of retained clients have been

with agencies for over three years.



Leader, p9



PRCA/Harris Research findings



The study showed that standards of training and evaluation are high

across the industry when compared to other small and medium-sized

enterprises (SMEs).



Some 96 per cent of consultancies have a business plan, which compares

favourably with 75 per cent of SMEs.



So far 20 per cent of agencies have achieved Investors in People

accreditation and a further 39 per cent expect to attain it in the next

12 months. But just 31 per cent of agencies run graduate trainee

schemes.



Richard Aldwinckle, chairman of the PRCA consultancy management

committee and deputy chief executive of Scope Ketchum, said: ’The

results show that PR consultancies are doing a lot of things right in

the way they go about running their businesses.’



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