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PR confidence and budgets hit according to PRCA

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By The Drum Team, Editorial

January 19, 2012 | 2 min read

PR consultancies' confidence and client budgets declined in the final quarter of 2011 according to new findings published today.

On the positive side new business activity grew and consultancies continued to predict they would recruit extra staff, according to the PRCA's agency trends barometer report.

Francis Ingham, PRCA chief executive, said: “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.”

Some survey participants broadly agreed with the findings.

Allan Watts of 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 from Aspectus PR added: “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.”

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