An alternative look at the PR Week Top 150 League Table


PR Week published its annual top 150 rankings of UK PR firms a few weeks ago. Adam Parker at Realwire has already produced a good analysis of the figures. I thought I’d throw in some further analysis to try and draw a clearer picture of the state of the UK PR industry.
First, some top line figures. Based on PR Week’s league table, the top 150 UK PR agencies in 2009:
Generated £814 million in fee revenues
Employed 7790 people
Worked on 5683 client accounts and 7154 client projects
Had an average monthly client PR retainer of £6K

In terms of this last figure (and others), I used a rule of thumb that says 80pc of agency fees come from retainer work and 20pc from projects. Clearly this will not apply across the board. Indeed, given the economic climate of the last year, it could be argued that project work should occupy a higher share of total revenue,  And looking at the number of projects that some agencies worked on, it would seem that perhaps even the majority of fee revenue came from projects.
Taking all of that into consideration, the 80/20 split at least provides a starting point for analysis.
On that basis, we arrive at an average monthly client retainer fee of £8K. However, it is worth qualifying this. First, given my rule of thumb, one agency skews the results hugely. According to the PR Week league table, Axon Communications only has one client – but on my ROT, this would provide an average PR retainer of around £179K per month. If we remove Axon from the list, then the average monthly retainer drops to £6K per month.
Next, let’s look at some other performance metrics.
1. Fees per earner
Fees per earner has been a standard metric for evaluating the relative performance of PR firms for decades. Looking at the PR Week figures for 2009, the fee per earner leader board clearly shows that financial PR is the place to be:
Agency                  Fees per earner (£000s)
Brunswick                   280
Finsbury                      280
Maitland                      280
WCG                              235
Financial Dynamics   190
Buchanan                     190
Gavin Anderson          190
Citigate Dewe Rogerson 171
Bell Pottinger Group* 159
Galliard Healthcare Communications 157
WCG is an anomaly (see below).
Of course, profit per earner would be an even better metric, but short of trawling Companies House for the data, the  fee per earner ratio is the one that must suffice for the moment.
Here is the bottom of the fee per earner table:
Agency                 Fees per earner (£000s)
Iris PR                    50
Wolfstar                 50
Bellenden              50
Luchford APM     50
Quantum Public Relations 45
GyroHSR/ Woolley Pau PR 41
Radio Relations 40
Finn Communications 29
Kenyon Fraser 28
ICE 22
Some immediate caveats. In a number of cases, PR fees represent only a proportion of total turnover ie the firm makes money from non-PR fee related activity and the staff numbers refer to the business as a whole. So the fee per PR earner ratio is clearly higher. (However, it does beg the question as to what percentage of total turnover devoted to PR should qualify a firm for entry into the league table).
Also, a number of these lower fee per earner agencies are based outside of London – so may argue that a lower cost base allows them a lower than average fee per earner ratio.
2. Ratio of staff to clients/projects
This metric takes the total number of clients and projects an agency works on and divides through by the total number of staff.  In theory, it should give an indication as to the average number of clients and projects that each agency employee has to deal with. Again, this comes with a number of caveats. Clearly project type, length and budget will vary enormously from agency to agency. Having said that, it is at least an attempt to provide some kind of indicator on agency workload. Combined with fee revenue, it gives a picture of which firms may be performing better than others.
Agency                            Client/project staff ratio                    Change in fee revs 09/08
WCG                                                       33.33
TVC Group                                            14.41                                           -8
Radio Relations                                    11.25                                             2
Grayling Communications                   6.87                                          -22
PPS Group                                               6.71                                            -31
The Reptile Group*                               6.27                                              -7
The Outside Organisation                    6.                                                  2
FWD                                                         5.50                                             -10
The PR Office                                         4.8                                                0
Myriad Public Relations                      4.                                                -3
Again, WCG should be treated as an extreme outlier.  One thing to note though is that nearly all of the agencies with high client/project to staff ratios saw revenue drops.
Odd curiosities

WCG
WCG (rank 138) employees only 3 staff according to PR Week – which leads to some anomalous results. Namely, its fee per earner figure is 235K. It also means it has the highest client/project to employee ratio of 33.33.
Grayling
Grayling stands out for the huge number of client projects it worked on in 2009: a total of 965. Coupled with retainer clients of 430, that’s a total of 1395 clients and projects. Based on my rule of thumb, the average Grayling client is paying around £2K per month. If they are paying more than this, then the average Grayling project is going to be around £1 – 2K.
Axon Communications
According to the PR Week table, Axon only has one client – but generates fee revenue of £2.6 million. Even allowing for the fact that project work may represent a larger than average share of revenue (41 projects), that still suggests that one client represents a large slug of revenue.
This is only a cursory analysis.  As ever, I’m always grateful to PR Week for producing the baseline figures. I’ve no doubt that further insight can be gained into the health of the sector and individual firms with more scrutiny.
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Comments

  1. Great analysis. There is also another factor to take into account is that the staff to fee ratio doesn’t take into account growth. The number of staff is the total employed by the END of the year, during the year the figure was lower and growing. Therefore the ratio isn’t that simple. I’ve not been able to work it out precisely (maths is beyond me!), but ours would be about £10-£20K higher per person if you took into account that monthly fee income at the end of the year was far higher than at the start.

  2. Nice work and thanks for the hattip :-) I am a little confused though by the estimate of £6k per month per retainer. Having followed your workings I get £9.5k per month. Am I doing something wrong?

    Total income £814m
    Less Axon £2.6m
    Gives £811.4m
    80% retainer income = £649.1m
    Total clients 5683
    Less Axon 1
    Gives 5682

    Average annual income therefore = 649.1/5682 = 114.2k
    Monthly = 114.2/12 = 9.5k

    I am guessing I have probably messed up somewhere along the way?

    • Andrew Bruce Smith says:

      Hi Adam – thanks for bringing your usual forensic eye to this! You have pointed out another caveat that I should have included in my original post (and which I admit I had missed first time round) – namely that my £6K per month calculation is based on only 122 out of the 150 agencies in the table – because 28 agencies (Sarb-Ox exclusions) didn’t include any figures for number of clients. On that basis, the total PR fee revenue for the 122 who did include client numbers is £432.7m. Divide through this by the number of clients (5683 – 1 Axon) and you get a monthly fee retainer of just over £6K per month.

      Of course – this means that total number of clients and projects worked on by the full 150 is clearly higher than the figure I have here (indeed, it means that the SarbOx exclusion agencies represent a total of £382m in fees – or 46pc of the total fee revenue for the whole top 150) – in which case it may be that the av. monthly retainer figure is higher – however, without any proper figures to look at, I don’t know.

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