Every year, since 2001, the Public Relations Institute of Australia has run a business benchmark survey aimed at helping its PR consultancy members run growing , professional and profitable businesses.
Like many industry benchmark studies, it compares individual firm performance on a range of metrics against aggregated sector results. In plain english, it tells you things like how your salary costs compare to industry averages, whether the industry intends to hire more or less, whether firms anticipate growth, what client turn-over rates are, what staff turnover rates are and what kinds of products and services PR firms are diversifying into.
When you’re in charge of strategic planning and business operations in a PR consultancy (or even if you’re a single operator), the insights are incredibly helpful.
Our director Adam Benson has a unique perspective on this because he was one of the instigators of the benchmarking study and has been involved with it nearly every year since, including this year.
While we can’t go into much detail about the study as the full results remain the property of the PRIA and participant firms, it is worth noting a few macro trends that have emerged over the years.
If you’re about to hire a PR firm and you’d like a few more insights into how the sector is travelling and perhaps some of the areas to pay attention to when it comes to selecting a PR firm to partner with, this article might be useful.
Here’s the first big point.
The labour market is tight for mid to senior PR consultancy professionals – and it’s getting worse. The PR sector has had a structural challenge in its labour market for nearly a decade now. A separate PR study last year looked into the reasons behind this and the contributing factors are:
- More than 30 per cent of staff turn over in consultancies – with most turn over happening in the mid to senior level (the level that clients are most exposed to).A proportion leave to have families and never return, a large percentage take on higher paid positions in-house, which consultancies simply can’t match, others go overseas and the rest shuffle between consultancies as participants in the war for talent.
- The inability to hire from overseas. The PR sector was included in the Governments’ recent review of 457 class visas last year exacerbating an already chronic issue.There has been a huge amount of heavy lifting by the PRIA to engage with government to sort this out as there was limited consultation at the time. Nevertheless, the impact is being felt today.Consultancies have always supplemented the local workforce with clever international talent who added international perspective, global best practice and cultural diversity into consultancies. Many immigrated, naturalised and have become industry leaders in our sectors.
Given our already stretched labour market, to say the consultancy sector was dismayed at this decision in relation to our sector is an understatement.
What does that mean if you’re hiring a consultancy?
1. Whether you like it or not, there will be a changing roster of staff on your account to some degree.
(Our agency has one of the lowest turnover rates in the country so we’re a little blessed in this regard, but not immune from it). No-one can guarantee people won’t change jobs (including our clients) but what should be evident in your consultancy of choice is a mature approach to account team management.
How does the consultancy ensure they’re building some redundancy into your service team? Do you get visibility to several different people who are building knowledge about your business and needs, or do you mostly work one-on-one.
You don’t need the consultancy CEO turning up at every meeting, but you definitely want to see an account director and some of the up and coming team members reasonably regularly so there isn’t a single point of failure if your primary contact moves on.
You might also want to know what kind of knowledge management platform the consultancy uses. At least if you do lose an account manager or other important consultancy contact, there should be some kind of repository the replacement account person can easily access that helps them get up to speed on your account quickly and efficiently. This would include work in progress (current and historical), financial history, and project history.
2. Prices are going up as the war for talent escalates.
Consultancies are doing their best to deliver good value to clients, and they have to remain competitive, but the business reality is that competition puts pressure on salaries, and at some point, when there’s a limited pool of resources, those prices are going to get passed to clients somehow. I don’t think we’ll see sharp price shocks but billing rates in consultancies have been fairly stable for about six years, (and I mean really, really stable) so you may see rate cards start to move.
I’m pretty sure every consultancy that increases their prices in the next two years will be working very hard to demonstrate a commensurate increase in value if they can, but sometimes that value will be giving you a stable, knowledgeable account team that generates additional efficiency every year they work with you. (Some of our clients have been with us for more than ten years – we can just about read each others organisational minds).
3. Job title creep.
This is where people are given job titles which simply don’t match their experience or skills. It happens because some consultancies struggle to back-fill vacancies so they boost less experienced people into more senior roles so they present a complete team to a client. It also happens because recruiters pump up less senior people and offer them to desperate consultancies. PR Account Manager or Senior Account Manager has a history of being a much abused job title that features heavily in job title creep.
We literally lost a junior receptionist not that long ago to a much more senior role at another consultancy – and it’s not the first time. Now, I know we hire well and our people are amazing, including our front office team… but I don’t know too many clients who think a very functionary junior office worker (even one with a PR degree) should be giving advice about their communication issues.
The less experienced practitioners with the not-junior job titles often have a horrendous experience once they (and the client, and the consultancy CEO) realise they’re out of their depth and unfortunately can explode into metaphorical flames, leaving the industry for good, or bounce onto the next job before their mess catches up with them.
It’s not good for anyone in the end – clients, the junior, the consultancies that lose them, the consultancies that get them and the industry more widely.
How do you protect yourself against this when you’re a client? Make sure your account team knows their job. The best way I know you can do that is ask for the Professional Framework levels of every person offered up to you by the consultancy.
If they don’t know what the industry employee grading standard is for the PR sector (recognised by government and compliant with the Australian Qualification Framework) and developed in joint by the PRIA, consultancy CEOs and communication leaders, consider running far, far away or ask them to align the team to it. (Tip: if you see a consultancy running SEEK ads without an AQF, they probably don’t know about the Framework).
If you need a refresher – here’s the Professional Framework. It’s reviewed every few years as our sector evolves.
Here’s the second big point.
PR consultancies are diversifying rapidly. Ten years ago, 85 per cent of PR consultancy revenue was media relations, on average.
Of course there were (and still are) specialist firms that focused on community engagement, employee comms, issues management, investor relations and government relations. PR firms have often also been event producers and writers, but, broadly speaking, you rang a PR firm because you wanted more media coverage for your brand.
Today, 51 per cent of revenue, on average, for PR firms comes from media relations. Traditional media has thinned but organisations still need to tell their stories – so increasingly they’re activating all communication channels to do that – some becoming publishers in their own right. They’re turning to the obvious profession to help them. Public relations.
What’s interesting is that PR firms are still often getting calls about how to build an organisation’s media presence in the first instance.
However, given a consultancy’s initial need to engage with executive spokespeople, customers, subject matter experts and industry influencers to build their clients’ media profile, they usually develop an incredible depth of knowledge about their client. They become trusted advisors to boards, CEOs, HR directors, business line managers and a myriad of others. So when it becomes evident that all of that knowledge could be put to broader use, clients are often very open to discussing other consultancy services.
If you look at our own offering today compared to 30 years ago when our firms started, you’ll find a high-end design studio, front end web developers, data managers, digital strategists, digital lead generation teams, event managers and corporate and consumer writers. We even run our own call centre.
What does that mean when you’re hiring a PR firm?
Think about what extra value and efficiencies you might potentially drive if you partner with a PR firm that’s clearly got diversified communication services on offer.
They’re not going to try to solve every communication problem you give them with a media release. They’re going to think about the whole picture from SEO, SEM, social lead generation, content development for your marketing automation system, media relations, even advertising.
I appreciate that in some larger firms, PR is absolutely aligned to a corporate affairs or PR team and others look after other elements of marketing and comms. However, most companies in Australia aren’t that large and a more holistic communication agency can be a great asset – provided they have a truly strategic approach – not just a bunch of disconnected services.
So, if you’re looking at changing agencies or hiring one, consider some of the points above before getting too far down the track.
If you’d like more insight or ideas about what best practice firms should look like, get in touch.