A new report reveals some good news for the PR industry—at least for those firms applying business-building best practices.
Best-in-class North American PR agencies increased their hourly rates in 2017 over averages of all firms from 2016, according to the research from PR industry-focused merger and management consulting firm Gould+Partners.
Based on responses from 35 selected PR agencies based in the U.S. and Canada, billing rates are now averaging $484 per hour for CEOs of agencies with $25 million or more in net revenues, and $325 per hour among agencies with under $3 million in net revenues.
Productivity—measured by billable time utilization—has been far below optimal levels
According to Gould+Partners managing partner Rick Gould, CPA, J.D., account executives are billing out only 86.0 percent of their theoretical yearly capacity of 1700 hours. And while some account executives are averaging as high as 95 percent, others are averaging as low as 70 percent. The average for all firms was 86.0.
“At least 90 percent should be expected for account staff not involved in management and new business,” Gould said.
Revised scope of this year’s report
“What I decided to do for the 2018 report was throw away ‘averages’ for all firms. Averages should not be good enough. All firms should strive to implement the billing rates for ‘best of class’ firms,” said Gould.
“So, I selected 37 firms, most of which I have been tracking for years. I reached out to the CEOs, requesting their participation. Thirty-five submitted, one submitted past the deadline and one could not submit because of their CFO leaving the firm, and no one was available to complete the survey,” he explained.
“I realize that for this year only, the comparison to 2016 is not as meaningful because for that survey, we included all firms, many having below average billing rates,” he said. “For this survey and future surveys, we will track only ‘best of class’ firms. Those firms hopefully will raise the bar, raise the billing rates for all firms, and elevate the PR industry to a higher level.”
The survey, an annual poll focused on billing rates and agency staff utilization, is produced by Gould+Partners. The M&A Advisory firm has been conducting industrywide surveys for 25+ years, including the recently released Best Practices Benchmarking Report and Industry Growth Report.