NEW YORK, NY, June 20, 2019—U.S. PR agency profitability was 16.3 percent of net revenues, according to PR professionals responding to the annual Benchmarking survey conducted by Gould+Partners.
A total of 43 prominent best of class, quality firms were invited to participate. 41 firms participated, per Rick Gould, CPA, J.D., managing partner of the New York City-based M&A Advisory firm that specializes in the communications and creative services sectors.
According to the survey, firms with under $3 Million in revenue netted 14.9 percent. Firms in excess of $3 Million up to $10 Million netted 12.3 percent, while firms in excess of $10 Million up to $25 Million netted 18.8 percent. Shops in excess of $25 Million netted 15.7 percent, indicative of flat organic growth of the larger firms.
“One of the most significant findings of the survey is that, among G+P ‘invited firms,’ the agencies consistently meeting or exceeding the G+P model performance target criteria continue to remain profitable during slow or recessionary periods,” Gould says.
He adds, “In 2018, as in previous years, these firms averaged an operating profit margin well in excess of 20 percent, partly due to their ability to hold professional staff salaries to under 40 percent of net revenues, total labor cost at 50 percent and operating expenses at around 25 percent. This should be the goal for all firms. Any decrease in operating profit was totally attributable to an increase in labor cost without a corresponding increase in fees.”
Other noteworthy findings in the study include:
- Revenue per professional staff was $253,054, up from $239, 917 in 2017.
- Total overhead averaged 25.4 percent, 1% higher than the previous year (24.4%)
- Staff turnover for the year averaged 22.9 percent versus 24.7 percent last year.
- Firms under $3 million in net revenues averaged 28.7 in turnover, consistent with the past two years.
Gould+Partners provides M&A Advisory services for Public Relations Firms and Creative Services Agencies for increased profitability and is the PR industry source for key profitability benchmarking statistics/insights and successful mergers & acquisitions (M&A) transactions. From our experience gathering and evaluating relevant statistics and insights, we are uniquely qualified to advise and counsel our 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