COVID-19 marcomms survey: 'Fewer redundancies, pay cuts and performance declines in PR'

PR agency leaders are less pessimistic about the ability of their businesses to handle the coronavirus crisis than bosses of firms in other marcomms disciplines, a comprehensive new study on business performance and staffing has found.

COVID-19 marcomms survey: 'Fewer redundancies, pay cuts and performance declines in PR'

PR leaders are planning fewer redundancies and salary cuts than their peers in other marcomms disciplines, and believe the decline in their agencies' performance will be less severe.

A Moore Kingston Smith survey of 130 agencies in advertising, design, digital, PR, media buying, and TV and film found major downward revisions in key business performance metrics, including revenue and profit margins.

The study is the most comprehensive indicator that communications agencies are less likely to struggle than adland and other harder-hit marcomms areas.

Of the different disciplines, PR leaders displayed better than average confidence (see chart below) and are planning to take less dramatic measures to contain costs during this crisis.

Expected revenue levels have been dramatically revised down since Moore Kingston Smith carried out a similar survey in January.

Back then, 70 per cent of respondents were expecting fee income growth and a third predicted growth of more than 20 per cent in 2020.

According to the findings of the latest research, which was carried out in late April, less than two per cent of the businesses surveyed are expecting growth and only four per cent indicate revenue will be flat.

No PR agency surveyed is expecting revenue growth, but a higher proportion (43 per cent vs 18 per cent for rest of survey) expect only more moderate revenue declines of 20 per cent or less (see performance charts below).

It’s a similar story with profit. Pre-COVID-19, 90 per cent of agencies predicted the same or an increase in profits, but now only 11 per cent anticipate this.

Profit margin predictions have also softened. In January, about 40 per cent said they would make more than 15 per cent net profit margin; this has reduced to less than a quarter.

A lower proportion of PR consultancies predict losses than firms in other disciplines, while a higher proportion of PR agencies had healthier cash reserves than their peers.

On the staffing front, a lower proportion of PR firms are planning to make redundancies and pay cuts compared to the rest of the agencies surveyed.

PR agencies are also more likely to share salary cuts evenly across their organisations.

The results paint a similar picture to those of a recent PRCA poll, which indicated that at least half of PR agencies were planning to make redundancies, with the majority of these unsure about numbers.

A higher proportion of PR agencies in this latest study have indicated they will furlough staff.

Both studies indicate PR agencies are willing to take decisive action to manage staffing costs, and that the communications sector is more confident about handling the crisis than peers in other disciplines.

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