PR Revenue Increases, But Profitability Declines

The problem, according to industry data, is that PR companies are often unwilling to pass the costs of an array of added services on to their clients.

The Cost of More Communications: The PR field is growing, but at a decidedly sluggish pace. Top-line revenue grew a total of just 1.6% in 2013 compared with 2012, according to an exclusive study conducted by SGP Worldwide. The study includes responses from 258 agencies, with a total net revenue of $2.9 billion in 2013. While it was a mixed bag revenue-wise, all PR companies participating in the study share one thing in common: shrinking profitability. “The good news is the PR industry is growing. The bad news is that profitability is not growing at the same rate,” said Rick Gould, managing partner of SGP Worldwide. “It is going the opposite way, from 18.8% in 2012, to 15.8%” this year. The biggest problem, Gould said, is that PR agencies won’t pass growing labor costs on to their clients. Agencies continue to add new services for clients, ranging from paid advertising to video programming to social media, but apparently are not yet willing to have clients fork up for the extra freight.

Source: SGP Worldwide

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This article originally appeared in the June 9, 2014 issue of PR News. Read more subscriber-only content by becoming a PR News subscriber today.

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