Firms slash forecasts and count new business to stay ahead, saysstudy

NEW YORK: Agencies reduced their average projected revenue growth

for 2001 to 11% during the first quarter of this year, according to a

study by the Council of PR Firms.

The study found that at the end of last year, agencies had hoped to

boost business by 21% - a figure that has now been halved at most


This is partly due to drops in budgets by current clients. An unlucky

10% of agencies have seen their clients' available cash fall by 40%, but

most agencies have experienced a decrease in client budgets of up to


Revenues might be falling, but in many cases agencies are being

pressured by their parent companies to maintain profit targets, said

council president Jack Bergen.

This requires two things: accelerating new business efforts, which 68%

of agencies named as their number one strategy for dealing with the

recession; and cost-cutting.

Twenty-two percent of the 60 agencies that responded to the survey said

that cost reductions are their top priority.

When asked how they achieved this goal, 43% named head count reductions,

reflecting the recent flurry of pink slips among PR firms. Putting

limits on individual salary raises was named by 37% of agencies, while a

little more than 33% said they had adopted a hiring freeze.

Other techniques identified by the poll as ways agencies are addressing

the economic uncertainty include making improvements in productivity and

measuring the effectiveness of accounts.

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