PR industry stays strong in downturn, claims accountancy firm Kingston Smith W1

PR is among the 'strongest performing' of the marketing services sectors, but costs may need to be cut further, according to Kingston Smith W1.

PR sector: stays strong despite downturn
PR sector: stays strong despite downturn

The accountancy firm's Marketing Monitor, a report into the financial health of the UK marketing services industry, said the PR sector enjoyed a 'good set of results' in 2009. Productivity within the sector remained strong, with gross income per head increasing to £103,239 and operating profit per head rising to £17,123 by December 2009.

Both figures are comfortably ahead of what Kingston Smith W1 suggests for a well-run agency, and were at their highest level to date.

But employment costs per head also increased, to £61,226 from £60,628, as did non-staff costs, albeit at a slower rate. The ratio of employment costs to gross income did decrease slightly to 59.3 per cent, but still remained above the accountancy firm's suggested maximum of 55 per cent.

The report stated: 'The PR sector has shown a good set of results, with healthy productivity and an increase in profitability. Once again operating profit margins continue to illustrate that PR is one of the strongest performing of the marketing services sectors.'

The prospects for the PR sector were also boosted this week by figures from Reed.co.uk, the UK's biggest recruitment website, suggesting the demand for candidates in marketing and PR was rising.

Its index measuring jobs available in marketing and PR leapt to 117 from 110 in February and 100 in December, despite a small decline in demand for new staff across all sectors. These figures back up findings from the CBI, which said financial companies were planning to boost their spending on marketing and PR.

However, the story for listed marcoms groups was less rosy, according to Kingston Smith W1. Two-thirds of listed marketing services groups saw income decrease during the first half of 2009 compared with the same period in 2008.

Profits across 21 listed groups fell by 45 per cent in the first half of the year, meaning that average operating profit margin fell from 11.8 per cent to 5.5 per cent.

The report did note that most costs had been severely trimmed across the board during 2009, meaning that profit margins should be greatly improved in 2010 even if income was flat.

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