Making Sure Flat is Not the New Up

Smaller PR agencies continue to take it on the chin billings-wise. Part of the problem:
Shops valued between $3 million and $10 million are reluctant to raise their rates.

Maybe Size Does Matter? The Spring bloom, if you can call it that, has been a little more favorable to large PR agencies than small ones when it comes to juicing the bottom line. The average billing rate is down 8.4% for agencies, compared with late 2012, according to an exclusive report produced by Stevens GouldPincus on behalf of PR News. There was no change for agencies with billing rates between $3 million and $10 million. Things were more encouraging for larger agencies, with billing rates up nearly 8% for agencies with billings between $10 million and $25 million, and nearly 10% for agencies with billings of $25 million-plus. The report is based on the first 75 responses from SGP’s annual best practices benchmarking survey. Rick Gould, managing partner, who put the study together, said the decrease in billing rates is due to agencies mismanaging their fees as they relate to spikes in staff salaries. “Our billing rates analysis supports the stats of decreasing profitability,” Gould said. “PR agencies with under $10 million, have consistently given annual raises to retain quality staff, but they aren’t increasing billing rates and/or retainers at the same rate. Larger agencies are not making the same mistake.”


This article originally appeared in the April 28, 2014 issue of PR News. Read more subscriber-only content by becoming a PR News subscriber today.