NEW YORK—The public relations industry has turned the corner and is in at least partial recovery mode, according to new surveys conducted by the Council of Public Relations Firms. The surveys suggest that revenues have increased during the first half of 2004 against 2003, and the vast majority of firms believe they will continue to experience steady growth this year.
The results of the Council’s annual Business Practices Benchmarking Survey show that 89 percent of firms expect revenue to rise in 2004, while in 2003 only 44 percent projected growth for the year. Respondents saw a 13 percent increase in revenues over the prior-year period in the first quarter of 2004.
More recently, the Council conducted its quarterly Quick Survey for the second quarter, which found that three quarters of all participating firms experienced an increase in revenue for the first six months of 2004 versus the same period in 2003. On the new business front, 83 percent of firms have experienced an increase in new business activity; more importantly, almost two-thirds are converting more new business opportunities compared to last year.
In 2003, only 39 percent of firms reported a more successful conversion rate vs. 2002. The Quick Survey took place in July and polled more than 50 Council members.
“Clients know the value of spending communications dollars on public relations initiatives,” said Kathy Cripps, president of the Council of. “Increasingly, companies are interested in more targeted PR projects as the communications industry shifts away from traditional mass marketing,”
Two key indicators of agency productivity, the average revenue per professional and the average operating profit, both showed an increase in 2003. The average revenue per professional increased nearly 6 percent, with an overall average of $186,113. In 2003, the average operating profit margin per participating firm grew by more than 20 percent to 13.1 percent.
“Firms became more cost and time efficient during the recent downturn,” said Cripps. “However, profit margins should be higher than the current level; 15 percent-20 percent is the range I’d like to see the next time we conduct this survey.”
While 2004’s first half revenue figures suggest a significant improvement over 2003, PR professionals hesitate to predict a full industry recovery. According to many firms, clients are still conservative in their approach to controlling budgets as they continue to utilize fixed fees and retainers, and oftentimes are still hiring firms on a project basis rather than on long-term contracts.