PRCA Consultancy Economic Barometer Points to Difficult Period Ahead

London, 19th January - The PRCA today released its quarterly agency trends barometer results looking at industry performance for the last quarter and expected performance for 2012. Figures show that consultancy confidence and client budgets declined in the final quarter of the 2011 calendar year, while new business activity grew, and consultancies continued to predict they would recruit extra staff.

Francis Ingham, PRCA chief executive commented: “The final quarter of 2011 was a difficult one for many consultancies. Optimism about the country’s economic prospects is at an all time low for recent PRCA Barometers. That pessimism is inevitably affecting how consultancy heads view their own businesses’ future. The decline in MD optimism for their own prospects has been marked over the past three quarters. This decline mirrors falling client spend, which has moved from plus 42 to minus 17 between quarters 2 and 4.

“The shift towards project work rather than retainers appears to have been reversed somewhat, and their use of freelancers has stabilised, reflecting that shift.

“Expected graduate recruitment continues to decline however, a fact of which the PRCA is well aware, and which we aim to address through our university partnerships and our apprenticeships programme.

“The two brightest areas for consultancy heads are that new business activity is strong, meaning that good agencies can continue to grow at the expense of their less effective competitors; and that consultancy heads are positive that overall staff numbers will continue to increase, as over-servicing levels broadly plateau.

“Nonetheless, consultancies entered 2012 more worried about the country’s prospects than at this point last year. A difficult trading period lies ahead, during which it will be more important than ever to prove the bottom line advantages effective PR advice delivers.”

 

Survey participants broadly agreed with the results.

Allan Watts, Orchid Communications, said: “The market is still very nervous. More than ever clients want to work with agencies that are transparent and don't over promise.”

Alastair Turner, Aspectus PR, commented: “The first six months will be challenging but I think that things will pick up at the back end of the year with hopefully some clarity on Europe, pull through from the Olympics/diamond jubilee and an election in the US.”

An anonymous participant stated: “Eurozone turbulence makes the first half of 2012 very difficult to predict. A speedy resolution - however that comes to pass - will be crucial in order to provide for the market. Even a disorderly break-up would mean that business can begin to plan with some certainty on what the future looks like.”

 

Results

 

Question

Q4 2011

What have your clients done with budgets

 -17

How busy would you describe the level of new business

  32

What happened to over-servicing levels

    5

Has the last quarter affected optimism for consultancy

    2

Has the last quarter affected optimism for PR industry

 -14

What will happen to general economic condition of UK PR industry in 12 months time

 -39

What will happen to staff numbers in next quarter

  16

What will happen to graduate recruitment in next quarter

-16

What will happen to use of freelancers in the next quarter

   2

What proportion of income was from retained work

43%

Is business from new or existing clients

 N2

 

 

1. FOR THE PERIOD 1 OCTOBER TO 31 DECEMBER WHAT HAVE YOUR CLIENTS DONE WITH BUDGETS?

 

Decreased marginally                                    28%

Decreased significantly                                   7%

Increased marginally                                     16%

Increased Significantly                                    2%

Stayed the same                                            47%

 

 

2. HOW WOULD YOU DESCRIBE THE LEVEL OF NEW BUSINESS BETWEEN 1 OCTOBER AND 31 DECEMBER?

 

Busy                                                                 51%

Quiet                                                                26%

Very busy                                                         16%

Very quiet                                                          7%

 

 

3. DURING THE LAST QUARTER WHAT HAPPENED TO YOUR OVER-SERVICING LEVELS?

 

Decreased Significantly                                   0%

Decreased marginally                                    19%

Increased marginally                                     19%

Increased Significantly                                    5%

Stayed the same                                            57%

Do not over service                                         0%

 

 

4. HAS THE LAST QUARTER MADE YOU FEEL MORE OR LESS OPTIMISTIC FOR YOUR CONSULTANCY?

 

Less optimistic                                                  28%

More optimistic                                                  30%

The same                                                           42%

 

 

5. HAS THE LAST QUARTER MADE YOU FEEL MORE OR LESS OPTIMISTIC FOR THE INDUSTRY?

 

Less optimistic                                                  30%

More optimistic                                                  16%

The same                                                           54%

 

 

6. DO YOU THINK THE GENERAL ECONOMIC CONDITION OF THE PR INDUSTRY WILL IMPROVE, STAY THE SAME, OR GET WORSE OVER THE NEXT 12 MONTHS?

 

Get worse                                                           51%

Improve                                                              12%

Stay the same                                                    37%

 

 

7. WHAT WILL HAPPEN TO STAFF NUMBERS IN THE NEXT QUARTER?

 

Staff numbers will decrease                               7%

Staff numbers will increase                               23%

Staff numbers will stay the same                      70%

 

 

8. IN THE NEXT QUARTER WHAT WILL HAPPEN TO GRADUATE RECRUITMENT RELATIVE TO THE SAME PERIOD LAST YEAR?

 

Decrease                                                           21%

Increase                                                              5%

Stay the same                                                    74%

 

 

9. IN THE NEXT QUARTER WHAT WILL HAPPEN TO THE USE OF FREELANCERS RELATIVE TO THE PREVIOUS QUARTER?

 

Decrease                                                            28%

Increase                                                              30%

Stay the same                                                     42%

 

 

10. WHAT PROPORTION OF YOUR INCOME FOR THE LAST QUARTER WAS DERIVED FROM RETAINED WORK?

 

21 - 30 %                                                              7%

31 - 40%                                                               9%

41 - 50%                                                               9%

51 - 60%                                                               12%

61 - 70%                                                               19%

71 - 80%                                                               26%

81 - 90%                                                               16%

91 - 100%                                                             2%

 

               

11. IS YOUR NEW BUSINESS PRIMARILY FROM NEW OR EXISTING CLIENTS?

 

Existing clients                                                   49%

New clients                                                         51%

                   

                                                                                                              - ENDS -

For press enquiries please contact Tom Hawkins tom.hawkins@prca.org.uk I 020 7233 6026

About the PRCA

Who we are: Founded in 1969, the PRCA is the professional body that represents UK PR consultancies, in-house communications teams, PR freelancers and individuals. The PRCA promotes all aspects of public relations and internal communications work, helping teams and individuals maximise the value they deliver to clients and organisations.

What we do: The Association exists to raise standards in PR and communications, providing members with industry data, facilitating the sharing of communications best practice and creating networking opportunities.

How we do it and make a difference: All PRCA members are bound by a professional charter and codes of conduct, and benefit from exceptional training. The Association also works for the greater benefit of the industry, sharing best practice and lobbying on the industry's behalf e.g. fighting the NLA's digital licence.

Who we represent: The PRCA represents many of the major consultancies in the UK, and currently has more than 250 agency members from around the world, including the majority of the top 100 UK consultancies. We also represent over 70 in-house communications teams from multinationals, UK charities and leading UK public sector organisations.

 

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