By Greg Hazley
The average profitability of PR agencies last year returned to its 2008 level after dipping in 2009 but remains far off margins of 2007, according to a survey by StevensGouldPincus.
The gains have come mostly by firms with revenue of more than $10M as smaller agencies dragged down the average profit margin last year, SGP found.
Profits have also apparently been bolstered by fee cuts as the average monthly minimum fee dropped to $8,385, down from $9,808 in 2009.
Average agency profitability hit 15.6% in 2010, according to SGP, up from 13.5% a year earlier and in-line with figures from 2008 as the economic downturn took hold. Last year’s up-tick remains off the robust 19.7% margins of 2007.
SGP polled 104 U.S. firms for its 10th annual “Benchmarking” survey, finding that smaller firms (those under $3M) brought down overall profitability for the bunch as that small segment registered profit of only 13.1%. In contrast, the largest firms, those topping $25M in revenue and charging a minimum monthly fee of $12,811, recorded a 16.5% profit margin, and firms with revenue from $10M-$25M ($12,222 average fee) surged to 17.8%. The mid-range firms from $3M-$10M also fared well at 16.2%.
For 2010, revenue per professional rose to $205,941, up from nearly $198K in 2009.
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