PRCA reports slump in new-client business

PR agencies are suffering from a downturn in new-business opportunities, according to a survey from the PRCA.

Its quarterly Trends Barometer, unveiled this week, reports that the new-business climate has become increasingly quiet, while 'over-servicing' of accounts by its members is at an all-time high.

The results - for the second quarter of 2006 - show 23 per cent of respondents reporting a 'quiet' new-business market, compared with just 11 per cent for the same quarter in 2005.

One likely explanation is the economic downturn at the back-end of 2005, according to PRCA comms manager Amy Fairbairn. Indeed, the results for 2005's final quarter reveal 39 per cent of respondents reporting new-business pipelines to be 'quiet'.

There was, though, a marginal increase in those claiming to be 'very busy'.

"Some sectors - particularly healthcare and financial - are doing well, but in general clients who have not already invested in PR are being very cautious with budgets. The economic climate that is not as buoyant as in 2005," said Fairbairn.

More positively for agencies, 52 per cent said they had bagged greater budgets from pre-existing clients, compared with just 31 per cent last year. But soaring over-servicing levels - 33 per cent report an increase in over-servicing, compared with 26 per cent in 2005 - suggests clients are forcing agencies to work harder than ever.

The PRCA said: "Over-servicing at 33 per cent is unsustainable for most agency business models. Agencies must be firmer in stating what clients can expect for the fees they are paying."

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