Profit margins are falling, and PR agencies are spending an average
of pounds 500,000 every year overservicing clients, according to the
PRCA’s annual benchmarking survey.
Although the agencies surveyed are still profitable, averaging a 14 per
cent profit margin, it is a notable decline from the 19 per cent average
two years ago.
Mark Mellor, a member of the PRCA’s best practice committee said: ’The
industry has grown at 14 per cent for two years running, yet
profitability is down, which means something is seriously wrong.’
The 2000 PRCA Benchmarking Survey includes information from 91 chief
executives and managing directors; 69 finance directors and 69 human
resource directors, and small, medium and large agencies.
The survey revealed that the top internal problems are all staff
related, with staff recruitment deemed the worst, followed by staff
Ironically, finance directors indicated that firms were not investing
great sums in training.
The survey also revealed that 60 per cent of companies have resigned
accounts in the last year because of overservicing, and 16 per cent
cited client aggression or abuse towards staff as the main reason.
Mellor said immediate action could be taken by agencies to set better
client expectations ’instead of running around doing whatever they