Stunted growth: 2016 agency growth slips for third straight year

PR appears to be on a continued track of stunted growth, new research finds. The U.S. PR industry grew by just 4.8 percent, according to a new survey from Gould+Partners, the merger and management consulting firm specializing in the PR field. That figure is down from 6.6 percent in 2015, and 7.8 percent in 2014.

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The results of this survey were consistent with the results of the annual Best Practices Benchmarking report released in June, showing that operating profit decreased from 15.3 percent to 15.2 percent, and the Billing/Utilization report issued in July which showed that billing rates did not increase during 2016 at the same pace as salaries and costs.

Based on stats from 226 North American PR agencies, most categories of firms had less growth than the prior year. The $3-$10 million group had negative growth rate of 1.4 percent.

“We fully expected the results of this survey to be consistent with the red flags that were going up as a result of our Benchmarking survey,” said Rick Gould, CPA, J.D., managing partner of Gould+Partners. “Flat profitability and flat billing rate increases, especially among the firms under $10 million in revenue. The percent increase in labor costs have not been matched with increases in billing rates, retainers and project fees.”

Another interesting stat was the average annual net revenues for each net revenue class: Firms under $3 million averaged $1.51 million in net revenues. Firms from $3-$10 million averaged $6.02 million. Firms with more than $10-$25 million averaged just under $14.97 million, and firms in excess of $25 million averaged just over $162.07 million, according to Gould, who conducted the survey.

2016 PR agency growth slips for third straight year

The second part of the study focused on industry growth in the 10 regions of our focus and average net revenues for each of the regions.

2016 PR agency growth slips for third straight year

The survey is the fifth annual poll focused on net revenue growth by Gould+Partners, which has been conducting other industry wide surveys for 20+ years.

Read the full report here.


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