The margin decline at agencies with annual fee income above £5m was more pronounced than the entire market - as both converged on 12 per cent from a starting point of 15 and 13 per cent respectively.
Focus PR managing director Hilary Meacham, who co-presented the research at the PRCA’s annual conference last week, said: ‘More [agencies] expect things to get worse than better.’
Rising staff costs, commercial pressure from clients, greater involvement from clients’ procurement professionals and ‘discounted pricing’ were cited as reasons for the increased pressure on profits.
The number of new business leads agencies received per month fell by more than 20 per cent last year, and one in six pitches culminated in no agency at all being hired.
A rise in performance-related pricing was also a trend last year, according to the survey, which polled 65 MDs/ CEOs, 63 financial directors and 62 HR professionals.
As with PRWeek’s Top 150 (25 April), the Sarbanes-Oxley Act prohibited consultancies that are part of US-listed groups from taking part.
The PRCA also unveiled its Best Practice guide to help firms improve the ‘transparency’ of their relations with clients.