By Rick Gould, CPA, JD1. The PR agency business will not only survive but also prosper. Our recently completed Economic Uncertainty Survey reported two-thirds of the 157 firms polled believed their revenues would increase in 2010. Only 14% believed they would decrease. Our report will be available to the public on January 11. Participants will receive it on December 29.2. Profitability will increase for firms who cut back operating costs in 2009. The labor force, trimmed significantly during the recession, will be able to handle more work at increased efficiency. Additionally, firms increasing their billing rates will improve their bottom line. The dismal 11.6% average operating profit of 2009 will slowly creep up to the 20% level that was attained in 2007. 3. The M&A marketplace in PR will become robust once again. Many firms contemplating a sale in the past couple of years will now be ready to actively pursue opportunities. Holding company firms, historically the most active buyers, will be strategically acquiring firms. Many prospective sellers have realized that their growth potential is limited without the resources, staff and brain trust of a larger regional and/or global firm. 4. Firms will increase their commitment to and budget for training.Training second tier staff to be more entrepreneurial will be seen as a necessary investment. With today’s financial challenges, senior account staff can no longer solely manage accounts. They need to also manage the “profitability” of those accounts.5. Finding quality, experienced staff will remain a major challenge in 2010. Recruiters, experiencing a very flat 2009, are already collecting resumes for aggressive distribution in the coming months. You should be doing everything possible to retain quality staff and keep recruiters from luring them away to other competitors. Creative incentive plans are available and should be utilized. 6. Firms will be more aggressive in marking-up rebillable costs to clients. The past two years have witnessed a decrease in this practice. However, for many years it was commonly accepted that rebillables were marked-up 17.65% over cost. The cost of tracking rebillables is cumbersome and should absolutely be recouped, either through a mark-up policy or through the assessment of an administrative fee. 7. There will be an increasing need for new media/interactive divisions. Firms that grow in this area will stay ahead of the competition. Funds should be budgeted to invest in highly skilled staff and advanced equipment to support these areas. 8. Return on Investment (ROI) will remain an issue with clients. PR ROI needs to be discussed and promoted on the same value level as ROI of ad agencies and other marketing service specialties. 9. Brand-building will continue to be a high priority. For both the PR agency internally and for their external clients, brand building online and through new media outlets will take priority over many other projects. 10. Trust and ethics will remain a major necessity for agencies and their clients. A Healthy and Prosperous New Years to All!!
Ready to find out how we can help you?
It all begins with a conversation with Rick Gould. Call us today to find out how Gould+Partners can help you to maximize profitability of your agency and build value to your firm.