New York, NY, May 3, 2016—Operating profit for PR firms in excess of $10 million in net revenue grew to 19.5 percent this year (2015 results), compared to 17.5 percent in 2015 (2014 results), according to Gould+Partners annual benchmarking survey. The latest stats reflect the mid-point of the first 50 PR firms submitting. The final report will be issued in June.
The survey preliminary results, which was released Monday at the PRSA Counselors Academy Spring Conference in San Juan, Puerto Rico, shows that PR agencies with $10 million or more in net revenue are edging closer to the GOULD Standard benchmark of 20 percent profit.
“This is totally consistent with what we have been stressing for years: lower labor percent and lower operating expense percent equates to a higher operating profit,” said Rick Gould, managing partner of Gould+Partners. Another key benchmark is Net Revenue Per Professional. “Higher net revenue per professional is also an indicator of higher profitability and firm value”.
While agencies with excess of $10 million saw a significant bump in operating profit, all other PR financial categories saw a decline in profit this year. Profitability for firms from $3 mill to $10 million in revenue fell 3.2 percent and profitability for firms under $3 million fell 13.1 percent.
“What we see is that firms do not increase their rates or retainers each time they give raises,” Gould said. “So, in effect, the increased salary cost comes off the bottom line. We recommend that firms raise rates and retainers each time they give salary increases.”
Gould+Partners has been consulting PR and Digital Media agencies for increased profitability for more than 30 years. The New York-based company is a key PR industry source for profitability benchmarking statistics / insights and successful mergers & acquisitions (M&A) transactions. Gould + Partners, which gathers, and evaluates relevant statistics and insights, is uniquely qualified to advise and counsel clients on what is needed to grow and become best in class. Consulting Digital and Public Relations Firms to a new level of success is our specialty and privilege.