conducted by evo research contact: russell bell 07747 194581 prca benchmarking survey 21 june 2007
TRANSCRIPT
Conducted by Evo ResearchContact: Russell Bell 07747 194581
PRCA BENCHMARKING SURVEY
21 June 2007
2
Background
• Annual PR industry benchmarking survey undertaken by Evo Research
• Three elements in the survey:
– 65 HR Director questionnaires (49%)
– 79 MD/CEO questionnaires (60%)
– 58 FD questionnaires (44%)
• Four consultancy size bands defined by income:
– Small: up to £850K
– Medium: £851K - £2.5 million
– Large: £2.51 - £5 million
– Very large: greater than £5 million
Finance Directors
4
Industry growth - Small consultancies
£567£509
£120£97
£0
£250
£500
£750
2005 2006
Income Net pre-tax profit
+24%
+11%
Figs in £000s
Base: Q2 58 FDs
5
Industry growth - Medium consultancies
£1,518
£1,358
£252£206
£0
£250
£500
£750
£1,000
£1,250
£1,500
£1,750
2005 2006
Income Net pre-tax profit
+12%
Figs in £000s
Base: Q2 58 FDs
+22%
6
Industry growth - Large consultancies
£3,590£3,261
£510£405
£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
£3,500
£4,000
£4,500
2005 2006
Income Net pre-tax profit
+26%
+10%
Figs in £000s
Base: Q2 58 FDs
7
Industry growth – Very large consultancies
£8,402
£7,291
£1,337£1,323
£0
£2,000
£4,000
£6,000
£8,000
£10,000
2005 2006
Income Net pre-tax profit
+15%
Figs in £000s
Base: Q2, 58 FDs
+1%
8
Operating margin
15%15%13%
14%
12%13%
14%14%
0%
5%
10%
15%
20%
1999 2000 2001 2002 2003 2004 2005 2006
Base: Q2, 58 FDs
Sm: 21% Med: 17% Lar: 14% V Lar: 16%
Net pre-tax profit as % of total net income
9
Reported growth over time
Base: Q2, 58 FDs
(NB – basket of consultancies changes each year)
10%
17%
8%
0%-2%-1%
21%
12%
38%
17%
18%
-11%
-21%
25%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Income Profit
05-0604-0503-0402-0301-0200-0199-00
10
Over-servicing rate
24%25%
22%
26%
27%
21%21%22%
0%
10%
20%
30%
40%
2000 2001 2002 2003 2004 2005 2006 2007
Base: Q8, 58 FDs
11
Offer payment by results/performance related pricing
38%
35%36%
27%29%
19%
0%
10%
20%
30%
40%
2002 2003 2004 2005 2006 2007
Base: Q17, 58 FDs
HR Directors
13
Churn by consultancy size
27%
21%
36%
27%
33%
24% 24%22%
24%
14%
Total Very large Large Medium Small
2006 2005
Base: Q2, 65 HRDs
14
Churn by job level
10%
27%24%
33%34%
37%
27%
Board/Partners
Associate/Div'l Directors
AccountDirectors
AccountManagers
AccountExecs
TraineeAccount
Execs
Support/Admin
Base: Q2, 65 HRDs
15
Next career moves
3%7%
27%
22%
14%
5%
15%
16%
28%
42%
Did not return frommat/pat leave
Complete careerchange
Freelance/Consultant
Moved to in houseposition
Moved to newconsultancy
2006 2007
Base: Q3, 65 HRDs
16
Staff retention strategies (past 12 months)
11%
15%
23%
31%
35%
43%
55%
57%
69%
Encouraged part-time/reduced hours
More sabbaticalopportunities
Larger bonuses
More staff parties
More flexible working
Salaries up by more thancost of living
More focus on definedcareer path planning
Salary increases for allstaff
More training/development
Q28 Base: 65 HRDs
17
Average salary increases over time
9%
10%
7%
6%5%
6%
7%
5.5%
1999 2000 2001 2002 2003 2004 2005 2006
Base: Q6, 65 HRDs
18
Average bonus as % of salary over time
7%
8%
6%
5%
3% 3%
6%
3.5%
1999 2000 2001 2002 2003 2004 2005 2006
Base: Q6, 65 HRDs
19
Benefits introduced in 2006
Base: Q11, 65 HRDs
11%
12%
12%
12%
12%
14%
14%
14%
15%
15%
18%
Low/no interest loans
Further education sponsorship
Happy hour etc
Bonus based on co performance
Personal performance bonus
PMI
Commission for new business
Subscriptions
Special days
Long service awards
Sabbaticals
Career LifestylePerformanceFinancial
20
Flexible working options offered
5%5%
6%
8%
15%23%
20%
23%
37%48%
40%57%
38%
62%
Contracted hours/ accruetime off
Job sharing
Shorter working days
Additional holiday
Core hours with flexistart and finish time
Part-time working
Working from home
Senior staff
Junior staff
Q16 Base: 65 HRDs
MD/CEOs
22
Client relationships: key drivers of success
8%11%
14%22%
17%19%19%
15%23%
30%
29%24%
30%33%
45%39%
49%47%
59%
56%
Honesty / openness
Measurable objectives
Demonstrating success thru' evaluation
Regularity/ level of communication
Trust
Demonstrating ROI
Value for money
Sector knowledge
Creativity
Personal chemistry
2006 2007
% = proportion selecting as one of top three drivers
Q15 Base: 79 MDs
23
Top 6 threats to PR industry success
4.85
5.15
5.35.3
5.45.4
6.5
6
6.9
7.3
Staff poaching bycompetitors
Instability of clientrelationships
Increasing imp. ofprocurementprofessionals
Lack of evaluation
Clients exercisingcommercial
pressure
Shortage of skilledconsultants
2007
2006
10 = very serious threat
1 = not a significant threat
Q1 Base: 79 MDs
24
Income growth forecast 2007 vs 2006
28%
20%
14%11%
22%
18%
26%
19%
42%
27%
Total Very large Large Medium Small
2007 forecast 2006 forecast
Base: Q3, 79 MDs
25
Operating margin growth forecast 2007 vs 2006
22%21% 21%
18% 17%
7%
18%
24%
32%
25%
Total Very large Large Medium Small
2007 forecast 2006 forecast
Base: Q4, 79 MDs
26
Top 6 internal business issues
48%
52%
58%54%
54%58%
65%
59%
64%
63%
66%
67%
Quality of pitching
Staff retention
Staff recruitment
Maintainingprofitability
Client retention
Generating newbusiness
2006 2007
% = proportion selecting as ‘critical internal business issue’
Q2 Base: 79 MDs
27
New business leads and pitches
Types of new business lead (past year)
Other 3%
Re-pitching for retainer
business7%Organic/
new work for existing clients
24%
Proactively sought
30%
Reactive/ response to
brief36%
- 46% reactive leads result in new business pitches- 34% proactive leads result in pitches
- 52% success rate with pitches following reactive leads- 43% success rate for pitches following proactive leads
Qs 6,8,9 Base: 79 MDs
28
Other aspects of leads and pitches
• A majority of consultancies (57%) say that 40% or more of the new business briefs they receive have no stated budget
• 15% of new business briefs don’t result in work for any consultancy (e.g. contract cancelled by client)
• Eight in ten (82%) have experienced delays between winning new business and the work actually commencing
• 26% of these have experienced delays of more than six months
Qs 10,11,13, 14 Base: 79 MDs
29
Industry outlook for next 12 months
35% 14%
3% 64%
2% 52%
5% 40%
11% 37%2007
2006
2005
2004
2003
Get worse Improve
Q16 Base: 79 MDs
30
Income forecasts vs actual income growth
Forecast in 2006 survey - MDs
Actual growth in 2007 survey - FDs
All : +20% All : +17%
Small : +27%
Medium: +19%
Large: +18%
Very Large: +11%
Small: +11%
Medium: +12%
Large: +10%
Very Large: +15%
The end