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Thursday, May 8, 2014

Counselors Academy Spring Conference

I enjoyed speaking at the Counselors Academy Spring Conference this week in Key West, Florida.  The camaraderie was, as always, terrific and inspiring.  The presentation by Aaron Blank, CEO of the Feary Group in Seattle, Washington, in my opinion, was the award winning presentation, about the challenges of adopting a beautiful boy in third world Ethiopia.  You could have heard a pin drop and few in the room were able to contain emotion.  Check out the amazing non-profit foundation Aaron partnered with 

My topic “Game On- CEO Success Playbook” was very well received.  The handouts were even more valuable than the presentation.  Anyone wanting a copy of the handouts, please email me at

Tuesday, March 18, 2014

Participate in SGP's 2014 Annual Benchmarking Survey

Want to be the first to receive valuable PR industry benchmarking intel?  It's easy: participate in SGP's 2014 Annual Benchmarking Survey today.  

The resulting market intelligence benchmarking report will be published this June 2014.  Data by firm size, location and specialty will be shown.  Even better yet, we'll include an analysis of industry trends.  Respond by Friday, April 4, 2014 to gain early access to the data when it gets released.  Your proprietary data will be handled with complete confidentiality. A signed NDA will be forwarded upon request.  You can click 
Open the Survey to complete online or open and compete with Excel

Wednesday, August 14, 2013

Omnicom-Publicis Merger- What’s next in M&A?

By Rick Gould, CPA, JD

The Global marketing communications industry was forever altered by the news that U.S. based Omnicom and Paris based Publicis Group will be merging in the coming months.   The media called this a “merger of equals,” creating a market valuation of $35 billion.  Publicis chairman Maurice Levy and Omnicom Chairman John Wren will serve as Co-CEO’s each at the helm for a 30 month period.

I ask if joining two of the largest holding companies increases valuation?  This was a merger that will combat the two big competitors, in digital and emerging markets- Google and Facebook, as well as rival WPP. This could be indicative of what’s to come in the industry.

There have been many recent quality deals in the PR M&A space.

·         Finn Partners acquiring Widmeyer Communications & M. Silver Associates, both SGP facilitated transactions that we believe will be win-win for buyer and sellers.

·         Padilla Spear and CRT/Tanaka merging their firms

·         London based Lewis acquiring Davies in Boston

·         And now Omnicom and Publicis Group doing the merger

We believe there will be several additional transactions by end of year.  I suspect WPP will be reacting to this transaction in the near future with a major acquisition.  CEO Martin Sorrell is a master dealmaker and will not like being #2.

What this shows is that even the giant holding companies acknowledge that they are lacking in certain highly specialized areas- such as the digital area, the growing Asian and Latin American markets, like China and Brazil and top talent that can help grow these sectors.

·         It will allow pricing power

·         It will allow intellectual capital

·         It will allow size and growth and cross-referring

So what does this mean for the PR industry and potential buyers and sellers of firms?

·         Strategic acquisitions will continue as buyers realize they have a need for certain niche specialties.

·         Many one office firms will acquire in locations that will facilitate and improve client service.

·         Firms are realizing that “bigger” is usually “better”.  That with size there are economies of scale and these economies go straight to the bottom line.

Buyers believe they can improve the operations and profitability of firms they acquire once the inefficiencies of integration no longer exist.  Their bottom-line will then improve and down the road they will exponentially increase the value of their firm. 

Sellers want to sell to larger, more prestigious firms
·         They are losing pitches that they would have won if bigger.

·         They are of the age where the timing to sell is right.  Many are of the boomer generation in their 50’s, 60’s, 70’s.

·         They realize having the financial resources and intellectual capital of the buyer firm is a huge advantage in winning and retaining clients.

The Omnicom- Publicis merger is a signal that the M&A arena in PR is active and will only increase in the future months. 

Monday, June 17, 2013

PR Agencies Profitability Flat in 2012

By Rick Gould, CPA, JD

U.S. PR agency profitability increased to 18.8 percent of Net Revenues from 18.6 percent last year.   

A total of 111 prominent agencies based coast to coast and Canada, participating in our annual survey reported that average percent which compares with a 15.6 percent in 2010, 13.5 percent in 2009, 15.6 percent in 2008 and a 19.7 percent margin in pre-recession 2007.

Firms under $3 Million were at 18.7 percent (down from 20.5%). The firms in excess of $3 Million up to $10 Million netted 18.2 percent (up from 17.4%), those in excess of $10 Million up to $25 Million netted 19.2 percent (up from 16.8%) and   those in excess of $25 Million netted 21.4 percent (up from 18.6%), very respectable in challenging economic times. So all categories but the less than $3 Mill improved their bottom line.  There were other indicators as well that “size” matters.

One of the most significant findings of the survey is that what I call the “Model Firms”, the dozen agencies consistently meeting or exceeding the SGP model performance target criteria, continue to remain far above average during these recessionary times. In 2012, as in previous years, they averaged an operating profit margin well in excess of 20 percent, partly due to their ability to hold professional staff salaries to under 40 percent of net revenues, total labor cost at 50 percent and operating expenses at around 25 percent. This should be the goals for all firms.

Revenue per professional staff was up to $210,539 from $209, 945 last year. Firms in excess of $10 million in net revenues averaged in excess of $230,000, consistent with last year. This benchmark is the most significant indicator of profitability. In addition the nation’s PR agency field did not increase their hourly rates in 2012. I believe this uniform minor decrease in billing rates is indicative of a fairly flat economy and is consistent with little growth of the industry in both net revenues and operating profit.

Productivity, measured by billable time utilization, has been far below optimal levels. “The goal for account executives should be at least 90%, a goal reached by almost all firms achieving 20% profitability.” 

Wednesday, May 1, 2013

Senior PR Pros Need Not be put out to Pasture

By Art Stevens

There are more pr firms with annual fees of under a million dollars than most people realize.  There are two primary categories:  small firms that are recent start ups by pr professionals who got the entrepreneurial itch.  And those headed by more senior practitioners who have headed their smaller firms for a number of years but never achieved greater critical mass.

Firms headed by senior practitioners make up the greater percentage of small firm ownership.  And these pr pros are finding new life in the pr agency world rather than being put out to pasture because of their age.

Larger agencies, and I don’t necessarily mean giant agencies, are striking deals with these senior pros to bring both their long time valuable professional experience as well as their book of business into their organizations.

For the larger agency absorbing a smaller business it’s an opportunity to get into a new niche or a complementary one and generate greater critical mass.  If the larger agency is seeking to sell in the near future it’s a means, also, to generate a greater purchase price.

For the senior owner of the small agency it’s a means to jump starting a career and becoming an important player in a larger firm. The pr agency industry is changing dramatically.  There are more mergers and acquisitions taking place this year than at any similar time during the past ten years.  Critical mass and consolidation seem to be the order of the day.

Until recently, smaller agencies – those under $1 million in net fee income – were largely ignored by larger buyers.  But once the trend of buying pr businesses extended to firms well under $10 million in net fee income, the magnifying glass extended to the smaller agencies.

So if you’ve got an agency that does roughly $500,000 a year and you’re a senior pr professional, there’s a bold new world awaiting you.  It’s a world where your knowledge, experience and savvy are more app

Tuesday, March 26, 2013

How do you improve your bottom line and increase value? Embrace Benchmarking!

By Rick Gould, CPA, JD

Wouldn’t you agree that knowing the key PR firm benchmarks by size, region & specialty would be a valuable tool in assessing your business?  Wouldn’t you agree that having the actual billing rates and utilization/productivity percents of your PR industry peers can assist you in proactively managing your firm?  Embrace benchmarking and gain these valuable keys to unlock profitability in your firm.

Our initial deadline for responses to our latest annual benchmarking survey was last Friday, March 22.  Dozens of firms requested extensions of 2-3 weeks, and we granted all of them.  Why?  Because we are told year after year by the most successful PR firms that our benchmarking results guide their profitability throughout the year. 

If you haven’t already participated, email me today to request an extension too.  We will resend you the survey. Participants are the first to get the full results.  Our survey reports help participating firms turn unprofitable businesses into profitable ones, as well as build value to the firm.

I’ve surveyed the industry about benchmarking for over 20 years. Benchmarking data can give you insight into profitable hiring, firing, rent rates, T&E expenditures, benefit offerings, operating costs and minimum monthly retainer levels.  The Revenue Per Professional metric has become the most important indicator of profitability.

Take the survey today and participate by clicking on this link.  I guarantee it will be worth your time.

Contact me directly with questions or comments: direct line 212-896-1909, or

Tuesday, November 13, 2012

The Million Dollar Milestone: Supporting Growth from One Million, Two Million and Up

By Rick Gould, CPA, JD

Reaching one million dollars in net revenues is a major milestone in the growth and profitability of a PR firm.  What happens, in my observation, is that when a PR firm owner surpasses one million in net revenues their attitude changes.  Their confidence builds.  Their value builds.  It puts them in a different class, a different grouping:  The Million Dollar Milestone.  But two million is even better, although both milestones come with very similar perceptions and challenges.

What I observed in the past five months at the four conferences I have been a speaker at (Counselors Academy in New Orleans, PR Boutiques International in NYC, Canadian Council of PR Firms in Toronto and, most recently, Worldcom Group in Vancouver) is that the majority of the member firms in these groups are under two million in net revenues.  Opportunity exists for these firms to get to two million and beyond.

Getting to two million is a major challenge, though.  When a firm is less than one million it typically includes an owner and 4-5 account executives. The owner could be earning good money - as high as 40% - but the “value” of the firm is low because the firm is missing key value-building elements.  When you are ready to sell your firm, any buyer will want you to have a #2, a Senior V.P., that can bring in business and manage staff.   You will need a second in command to realize increased value.  You need a #2 that is highly incentivized, possibly even with actual stock or phantom stock, or with whatever it takes to keep the #2 around for the term of your earn-out/buyout after a sale.

When you make a commitment to grow from one million to the two million dollar revenue milestone you are really building an infrastructure and a brand.  Building effective staff at different levels- account coordinators to account execs, to account supervisors, account managers, to VP‘s- create a real pyramid that is powerful and attractive.  It creates the foundation for growth and profitability, which boosts the ultimate value of your firm.

Another obstacle to reaching revenue milestones is growth gridlock.  You can’t seem to grow beyond where you are.  More focused management and administration is likely needed but you probably don’t want to spend the dollars for a top administrator or V.P. or part-time CFO.  So you attempt to do it yourself.  As a result, your marketing efforts decline, your new business pipeline erodes and your business stagnates.  Stuck at the Million Dollar Milestone.  And it may stay there for years, which may not be a level that can weather changing market conditions in the future.

At that point, you may decide to bite the bullet and take less salary.  Or bring in a junior partner who buys-in for cash.  Or give up equity to an investor so you can afford to hire the right people.

If you push through to the two million milestone without well thought-out plans for value-adding business elements, you will most likely get stuck again.  Except now you have larger clients who are more demanding and require quicker, better service from higher quality staff.   You need to invest again in your infrastructure, and you must keep doing that at each Million Dollar Milestone if you want to achieve continuous growth.  It is necessary; it is a must-do.  And, logically, it is imperative that you raise your fees and billing rates to keep pace with leading model benchmark firms.  This is the ultimate secret to generating the funds to support Million Dollar Milestones.