Agency Watch: Profitability Returns to ’08 Level

StevensGouldPincus’ annual Best Practices Benchmarking survey of PR agencies, released July 2011, finds that agency profitability in 2010 rebounded from a 2009 four-year low of 13.5% of revenues back to exactly what it was in 2008, 15.6%.

In addition, SGP “Model Firms”—12 agencies consistently meeting or exceeding the SGP model performance target criteria—continue to remain far above average during tough times. In 2010, they averaged an operating profit margin in excess of 20%, partly due to their ability to hold professional staff salaries to under 40% of revenues, total labor cost at 50% and operating expenses at under 30%.