August 25, 2021
Many PR agencies profited significantly during the pandemic
New research shows that PR agencies increased their rates in 2020 despite a global health pandemic, corresponding economic crisis, and its blow to PR firms and most of their clients’ industries.
Gould-Partners’ report revealed there was a whopping 23.5% increase in the hourly billing rate from $193 per hour in 2019 to $240 per hour in the following year.
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Billing rates across various staff positions
This increase wasn’t restricted only to firms. Across different staff positions, billing rates made remarkable jumps as well. Let’s examine them below:
- Compared to $360 in 2019, PR agency presidents/CEOs pegged their services at an average rate of $417 per hour in the following year.
- Executive and senior vice presidents typically charged $325 in 2019 but charged an hourly rate of $366 in 2020.
- The year 2020 bore witness to vice presidents charging $319 compared to $285 charged the previous year.
- Rates for account managers grew from $238 per hour to $256 per hour.
- Senior account executives billed $217 compared to the former rate of $190 per hour.
- Account executives recorded a new rate of $179 as opposed to the former rate of $160.
- Account coordinators billed a new hourly rate of $143 compared to 2019’s $125.
Expectedly, chief executives at the mega PR agencies boasting more than $25 million in net revenues recorded unprecedented growths in terms of billing rates. From an hourly rate of $452 in 2019 to $483 per hour in 2020, this has been the biggest increase yet.
However, it’s been a game of luck for firms of lower capacity. Here’s the breakdown:
- Presidents/CEOs at agencies making $10-25 million recorded a drop in their hourly billing rates from $391 in 2019 to $388 in 2020.
- Firms with net revenues between $3-10 million had an increase from $380 per hour in 2019 to $400 per hour in 2020.
- Presidents/CEOs at the smallest of firms, those recording below $3 million in net revenues, dropped from the average hourly charge of $320 in 2019 to $307 in 2020.
Other significant discoveries from the Gould-Partners’ report
Some other notable insights from the Gould-Partners’ report are:
- While the utilization rate among PR staffers sported a remarkable boost, there’s still much room for improvement.
- Chief executives at PR firms stationed in the New York/New Jersey region billed, on average, way higher on an hourly basis than agencies in other parts of the country. In hot pursuit are firms in Canada, Northeast United States, Northern California, Southeast United States, and the Midwest.
Rick Gould, the managing partner of Gould-Partners, explained to O’Dwyer’s that the most profitable firms’ refusal to yield to clients’ requests for reduced rates played a major part in the increased profitability, even in the midst of a pandemic.
Axia Public Relations’ thoughts on this insight
While we have ultimate respect for our professional colleagues who choose hourly billing, we have ethical and financial reservations about hourly billing. We hold the opinion that the model sets PR firms and their clients at odds with what’s in each other’s best interests. Additionally, the model is usually backed by a low-pricing tactic that strings clients along.
Nonetheless, the entire scenario has lent credence to the fact that maintaining marketing efforts during an economic recession can yield far-reaching benefits. Equally beneficial in such trying times is a sturdy PR program. Soft-pedalling on either during an economic downturn would cost you more than you’d expect.
Read our guide to find out more about the mistakes companies make with their PR endeavors, as well as how you can steer clear of such errors.
Topics: PR tips