Independent Firms Flat in 2002; Seeing Some Growth in '03
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Independent Firms Flat in 2002; Seeing Some Growth in '03

Revenue for agencies submitting their numbers to the Council of Public Relations Firms was flat in 2002, up just 0.8 percent domestically. Those numbers do not include revenues from the largest communications holding companies.

Paul Holmes

NEW YORK—Revenue for agencies submitting their numbers to the Council of Public Relations Firms was flat in 2002, up just 0.8 percent domestically. Those numbers do not include revenues from the largest communications holding companies, most of which suffered a decline in revenues of between 5 and 15 percent last year, but which elected not to provide numbers to the Council.

But there was good news on growth in another survey, conducted during the first quarter of 2003 by consultant Al Croft, which found profits and revenues up at a majority of firms.

While the Council survey included data from 214 primarily independent U.S. public relations firms, led by Edelman and Ruder-Finn, the publicly traded companies represented 60 percent of the total income in last year’s survey, meaning this year’s data is less than representative of the state of the industry as a whole.

The publicly owned companies claim the Sarbanes-Oxley Act, designed to encourage greater corporate transparency, actually prevents them from releasing data about the income of their PR units. Ruder Finn recently resigned from the Council after it capitulated to the large firms and declined to publish agency rankings this year.

The Council did release some data, however, showing among other things that healthcare market showed the most impressive growth in 2002, up 7.5 percent, with the consumer/retail bouncing back, up 4.5 percent. Community relations activity was up 9.6 percent.

Of the firms that submitted data in 2001 and 2002, 48 percent reported an increase in revenue over 2001.

“We are encouraged by some of these numbers, which suggest that public relations is increasingly becoming a valuable strategic business tool among the world’s leading companies,” says Council president Kathy Cripps. “We believe that 2003 will be even more reflective of the true value of public relations.”

According to the Croft study, the majority of independent PR agencies did better the first quarter of this year than they did in either the first quarter or the fourth quarter of 2002.

Croft, industry consultant and editor of Management Strategies, says 59 percent of agencies generated more income in the first quarter of 2003 than they did in the first quarter of 2002, and 68 percent of respondents reported increased profits in the same time period. Just 27 percent of agencies reported lower income and 21 percent reported lower profits.
Agencies increased income an average 15 percent and earned a median of 30 percent more profit in the first quarter of this year than the first quarter of 2002.

Meanwhile, a recent survey of owners of independent public relations firms revealed that 60 percent of them said getting rich was important to them.

The survey, conducted by PRSA’s 2003 secretary, Art Stevens, also revealed that 90 percent of the agency owners who responded would start and run a public relations firm again if they had it to do over. The vast majority (80 percent) said that an owner of a public relations firm could get rich while only 5 percent said that wealth can only come by selling the business.

“Many public relations agency owners find it difficult to transition from public relations professional to the owner of a business,” Stevens said. “There’s an ongoing conflict between doing and managing.  Most of us love the practice of public relations and working with clients. We routinely immerse ourselves into providing services and our talents to our clients.

“This comes at the expense of wearing a business owner’s hat and driving revenues, profits and new business.  Many public relations agency owners aren’t making nearly the kind of money they should through this benign neglect. They’re not the kind of driven entrepreneurs you find in other businesses,” Stevens says.

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