PRCA BENCHMARKING SURVEY
21 June 2007
Conducted by Evo Research
Contact: Russell Bell 07747 194581
Background
2
•
Annual PR industry benchmarking survey undertaken by Evo
Research
•
Three elements in the survey:
– 65 HR Director questionnaires (49%)
– 79 MD/CEO questionnaires (60%)
– 58 FD questionnaires (44%)
•
Four consultancy size bands defined by income:
– Small: up to £850K
– Medium: £851K - £2.5 million
– Large: £2.51 - £5 million
– Very large: greater than £5 million
Finance Directors
Industry growth - Small consultancies
Figs in £000s
Income
£750
Net pre-tax profit
+11%
£567
£500
£509
£250
£120
£97
£0
2005
2006
Base: Q2 58 FDs
4
+24%
Industry growth - Medium consultancies
Figs in £000s
Income
£1,750
Net pre-tax profit
+12%
£1,500
£1,518
£1,250
£1,358
£1,000
£750
£500
£252
£206
+22%
£250
£0
2005
2006
Base: Q2 58 FDs
5
Industry growth - Large consultancies
Figs in £000s
Income
£4,500
Net pre-tax profit
£4,000
+10%
£3,500
£3,590
£3,000
£3,261
£2,500
£2,000
£1,500
£1,000
£510
£405
+26%
£500
£0
2005
2006
Base: Q2 58 FDs
6
Industry growth – Very large consultancies
Figs in £000s
Income
£10,000
Net pre-tax profit
+15%
£8,000
£8,402
£7,291
£6,000
£4,000
£2,000
£1,323
£1,337
+1%
£0
2005
2006
Base: Q2, 58 FDs
7
Operating margin
Net pre-tax profit as % of total net income
20%
14%
15%
14%
14%
13%
10%
15%
15%
2005
2006
13%
12%
5%
0%
1999
2000
2001
2002
2003
2004
Sm: 21% Med: 17% Lar: 14% V Lar: 16%
Base: Q2, 58 FDs
8
Reported growth over time
Income
Profit
50%
40%
30%
38%
25%
18%
20%
17%
21%
17%
10%
12%
10%
8%
0%
-1%
-2%
0%
-10%
-11%
-20%
-21%
-30%
99-00
00-01
01-02
02-03
03-04
04-05
Base: Q2, 58 FDs
9
(NB – basket of consultancies changes each year)
05-06
Over-servicing rate
40%
30%
26%
27%
25%
22%
20%
22%
21%
21%
2000
2001
2002
24%
10%
0%
2003
2004
Base: Q8, 58 FDs
10
2005
2006
2007
Offer payment by results/performance related pricing
40%
38%
36%
35%
2005
2006
30%
29%
27%
20%
19%
10%
0%
2002
2003
2004
Base: Q17, 58 FDs
11
2007
HR Directors
Churn by consultancy size
2006
2005
36%
33%
27%
27%
24%
21%
24%
24%
22%
14%
Total
Very large
Large
Base: Q2, 65 HRDs
13
M edium
Small
Churn by job level
37%
33%
34%
27%
27%
24%
10%
Board/
Partners
Associate/
Div'l Directors
Account
Directors
Account
Managers
Base: Q2, 65 HRDs
14
Account
Execs
Trainee
Account
Execs
Support/
Admin
Next career moves
42%
M oved to new
consultancy
28%
16%
M oved to in house
position
15%
5%
Freelance/Consultant
14%
22%
Complete career
change
Did not return from
mat/pat leave
27%
2006
7%
3%
Base: Q3, 65 HRDs
15
2007
Staff retention strategies (past 12 months)
More training/
development
69%
Salary increases for all
staff
57%
More focus on defined
career path planning
55%
Salaries up by more than
cost of living
43%
35%
More flexible working
31%
More staff parties
23%
Larger bonuses
More sabbatical
opportunities
Encouraged parttime/reduced hours
15%
11%
Q28 Base: 65 HRDs
16
Average salary increases over time
10%
9%
7%
7%
6%
1999
2000
2001
2002
5%
2003
Base: Q6, 65 HRDs
17
6%
2004
5.5%
2005
2006
Average bonus as % of salary over time
8%
7%
6%
6%
5%
3%
1999
2000
2001
2002
2003
Base: Q6, 65 HRDs
18
3.5%
3%
2004
2005
2006
Benefits introduced in 2006
18%
Sabbaticals
15%
Long service awards
15%
Special days
Subscriptions
14%
Commission for new business
14%
PMI
14%
Personal performance bonus
12%
Bonus based on co performance
12%
Happy hour etc
12%
Further education sponsorship
12%
11%
Low/no interest loans
Career
Lifestyle
Performance
Financial
Base: Q11, 65 HRDs
19
Flexible working options offered
62%
Working from home
38%
57%
Part-time working
40%
48%
Core hours with flexi
start and finish time
37%
23%
20%
Additional holiday
23%
Shorter working days
Job sharing
Contracted hours/ accrue
time off
15%
8%
6%
5%
5%
Q16 Base: 65 HRDs
20
Senior staff
Junior staff
MD/CEOs
Client relationships: key drivers of success
56%
59%
Personal chemistry
47%
49%
Creativity
39%
Sector knowledge
45%
33%
30%
Value for money
24%
Demonstrating ROI
29%
30%
Trust
Regularity/ level of communication
Demonstrating success thru' evaluation
Measurable objectives
Honesty / openness
23%
15%
19%
19%
17%
22%
14%
11%
8%
Q15 Base: 79 MDs
22
% = proportion
selecting as one
of top three
drivers
2006
2007
Top 6 threats to PR industry success
7.3
Shortage of skilled
consultants
6.9
Clients exercising
commercial
pressure
6
6.5
5.4
5.4
Lack of evaluation
Increasing imp. of
procurement
professionals
Instability of client
relationships
Staff poaching by
competitors
5.3
5.3
5
5.1
5
4.8
Q1 Base: 79 MDs
23
10 = very serious threat
1 = not a significant threat
2007
2006
Income growth forecast 2007 vs 2006
2007 forecast
2006 forecast
42%
28%
27%
26%
22%
20%
18%
14%
19%
11%
Total
Very large
Large
Base: Q3, 79 MDs
24
M edium
Small
Operating margin growth forecast 2007 vs 2006
2007 forecast
2006 forecast
32%
22%
24%
21%
25%
21%
18%
18%
17%
7%
Total
Very large
Large
Base: Q4, 79 MDs
25
M edium
Small
Top 6 internal business issues
67%
Generating new
business
66%
63%
Client retention
64%
59%
M aintaining
profitability
65%
Staff recruitment
58%
54%
Staff retention
54%
58%
% = proportion
selecting as
‘critical internal
business issue’
52%
Quality of pitching
48%
2006
Q2 Base: 79 MDs
26
2007
New business leads and pitches
Types of new business lead (past year)
Organic/
new work for
existing
clients
24%
Re-pitching
for retainer
business
7%
Other
3%
- 46% reactive leads result in
new business pitches
- 34% proactive leads result
in pitches
Reactive/
response to
brief
36%
- 52% success rate with
pitches following reactive
leads
- 43% success rate for
pitches following proactive
leads
Proactively
sought
30%
Qs 6,8,9 Base: 79 MDs
27
Other aspects of leads and pitches
• A majority of consultancies (57%) say that 40% or more of the new
business briefs they receive have no stated budget
• 15% of new business briefs don’t result in work for any consultancy (e.g.
contract cancelled by client)
• Eight in ten (82%) have experienced delays between winning new
business and the work actually commencing
• 26% of these have experienced delays of more than six months
Qs 10,11,13, 14 Base: 79 MDs
28
Industry outlook for next 12 months
37%
11%
2007
40%
2006
5%
2005
2%
2004
3%
2003
52%
64%
14%
35%
Get worse
Improve
Q16 Base: 79 MDs
29
Income forecasts vs actual income growth
Forecast in 2006
survey - MDs
30
Actual growth in
2007 survey - FDs
All : +20%
All : +17%
Small : +27%
Small: +11%
Medium: +19%
Medium: +12%
Large: +18%
Large: +10%
Very Large: +11%
Very Large: +15%
The end