The PR industry's success in 2000 could create major problems for
agencies going forward if incomes continue to fall sharply in the
downturn, according to research published this week.
Creative services accountancy firm Willott Kingston Smith has published
its annual survey of the industry, confirming a boom 2000 for the PR
sector with raised turnover, profit margins and productivity.
But the threat of a full-scale recession means increases in staffing
during that year are now difficult to justify. WKS partner Kit Pogson,
said: 'Income levels need to be maintained in the face of the threat of
slowdown. I do not think it will be as bad as in the early 1990s as the
sector is better prepared, but agencies need to match staff to
income.'
During the period covered, staff numbers rose by 21 per cent, taking
staff costs on average to 54 per cent of gross income. Pogson says this
is already higher than ideal, which he put at around 50 per cent, before
the additional factor of a downturn put jobs at risk.
The survey uses the latest publicly available figures from the top 30 PR
consultancies measured by gross income. It is part of WKS's annual
report on the financial performance of marketing services companies.
On the whole, the study found the PR industry to be in decent health.
Average operating profit margins almost doubled to 13.8 per cent, but
WKS believes 15 to 20 per cent is achievable.
- Leader, p10.
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