NEW YORK: The average client turnover among US PR agencies is 22% in 2008, one percentage point lower than 2007, according to the 2008 Survey of Client Turnover, the first-ever survey of its kind from StevensGouldPincus (SGP).
Technology took the biggest hit with a 30.4% turnover rate. By region, the Southwestern states (33.1%) and Northern California (31.6%) experienced the most turnover.
Respondents largely attributed client turnover to the economic downturn (31.5%) and management changes at clients' businesses (28.3%).
“The demand has always been sharp among tech companies in terms of PR services, and technology, as a sector, is hurting a bit,” said Art Stevens, managing partner at SGP. “Tech clients seem to have far greater management turnover than other industries. A new broom sweeps clean. When new management comes in, they're always reviewing the services organizations that have been working for it.”
The highest client attrition was experienced by agencies with $3 million to $10 million in revenues, with an average of 29.8%.
“Smaller agencies are finding it more difficult to compete against the larger agencies,” said Stevens. “Not to say smaller agencies can't stay active and competitive, but after review of the agencies they tend to turn to the bigger ones.”
The results were not all negative. Beauty and fashion, food and beverage, and public affairs all saw a drop in client turnover. And agencies have been able to make up for 80% of the lost business, Stevens added.
“We are in a different era than say the dot-com era when a lot of agencies lost 50% of their business for several years,” he said. “PR has become an even more vital tool to corporate America and various institutions around the country.”
SGP surveyed 81 respondents from firms of varying size and specialty about turnover for 2007 and 2008, the reasons for the turnover, and what firms are doing in response. The consulting firm plans to do the survey annually.