The typical PR consultancy is a well-managed business, making an
average profit margin of 18 per cent , according to the PRCA’s first
annual Benchmarking Study.
Fee income accounts for just 41 per cent of agency turnover, with work
outsourced to suppliers accounting for 59 per cent. But the survey
revealed that agencies with a greater proportion of fee income tend to
make higher profits.
Some 87 per cent of fees are still on a fixed retainer or fixed project
fee basis, with just 13 per cent of fees derived from hourly rate
charging or hourly ’top-up’ fees.
The study, conducted by the Harris Research Centre, showed that the 49
agencies questioned achieved a profit margin of 18 per cent. The margin
is high compared to profits of just over 10 per cent for many of the
large international firms. Average salaries across the industry were
pounds 71,000 at board level, pounds 37,000 at associate director level,
pounds 24,000 at account manager level and pounds 17,000 for account
executives. Board directors’ time is billed at an average of pounds 140
per hour, and an account manager’s at pounds 80 per hour.
Some 64 per cent of retainer clients have remained with their agency
since last year. However, just 23 per cent of retained clients have been
with agencies for over three years.
PRCA/Harris Research findings
The study showed that standards of training and evaluation are high
across the industry when compared to other small and medium-sized
Some 96 per cent of consultancies have a business plan, which compares
favourably with 75 per cent of SMEs.
So far 20 per cent of agencies have achieved Investors in People
accreditation and a further 39 per cent expect to attain it in the next
12 months. But just 31 per cent of agencies run graduate trainee
Richard Aldwinckle, chairman of the PRCA consultancy management
committee and deputy chief executive of Scope Ketchum, said: ’The
results show that PR consultancies are doing a lot of things right in
the way they go about running their businesses.’