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.