1. Thursday 12th MayPRCA Annual Conference on Consultancy Management Benchmarking Results 2005 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

2. Thursday 12th MayPRCA Annual Conference on Consultancy Management  5th annual PR industry benchmarking survey by Consensus Research  Three elements in survey –82 MD/CEOs(59% response) –66 Finance Directors(48%) –66 HR Directors(48%) Methodology PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

3. Thursday 12th MayPRCA Annual Conference on Consultancy Management Optimism returning PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

4. Thursday 12th MayPRCA Annual Conference on Consultancy Management PR Industry outlook for next 12 months Q11 Base: 82 MDs/CEOs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

5. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q3 Base: 82 MDs/CEOs Anticipated change in income 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

6. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q3 Base: 82 MDs/CEOs Anticipated change in income 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

7. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q3 Base: 82 MDs/CEOs Anticipated change in income 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

8. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q4 Base: 82 MDs/CEOs Anticipated change in operating margin 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

9. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q4 Base: 82 MDs/CEOs Anticipated change in operating margin 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

10. Thursday 12th MayPRCA Annual Conference on Consultancy Management Q4 Base: 82 MDs/CEOs Anticipated change in operating margin 03 vs. 04 vs. 05 PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

11. Thursday 12th MayPRCA Annual Conference on Consultancy Management Income forecasts 2004 vs actual income growth 2004 Forecast for 2004 survey - MDs Actual growth in 2004 - FDs All : +11% All : 0% Small : +15% Medium: +12% Large: +9% Very Large: +3% Small: +14% Medium: +5% Large: -2% Very Large: +3% Base: 82 MDs/CEOs, 66 FDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

12. Thursday 12th MayPRCA Annual Conference on Consultancy Management Reporting year 1999-20002000-20012001-20022002-20032003-2004 Income growth 21%10%-1%-2%0% Net pre-tax profit growth 25%-21%-11%18%17% (NB – basket of consultancies changes each year) Reported growth over time Base: Q2, 66 FDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

13. Thursday 12th MayPRCA Annual Conference on Consultancy Management So what problems associated with growth? PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

14. Thursday 12th MayPRCA Annual Conference on Consultancy Management Salary inflation Over-servicing Recruitment/churn costs Maintaining Profitability PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

15. Thursday 12th MayPRCA Annual Conference on Consultancy Management Base: Q6, 66 HRDs Average salary increases and bonuses – over time PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

16. Thursday 12th MayPRCA Annual Conference on Consultancy Management Survey year 200020012002200320042005 Over-servicing rate (as proportion of total net income) 22%21% 27%26%22% Over-servicing rate over time Base: Q8, 66FDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

17. Thursday 12th MayPRCA Annual Conference on Consultancy Management Survey year 200020012002200320042005 % of business on retainer 75%80%76%80%77%79% % of business project work Not asked 25% NB: includes some double counting, so %s add to more than 100 Retainer work vs project work over time Base: Q3/Q4, 66 FDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

18. Thursday 12th MayPRCA Annual Conference on Consultancy Management Survey year 20012002200320042005 % offering performance related deals to clients Not asked 19%29%27%36% NB: asked as “payment by results” in 2004 survey Previously asked as “performance related pricing” Performance related pricing over time Base: Q17, 66 FDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

19. Thursday 12th MayPRCA Annual Conference on Consultancy Management Incentives and benefits Recruitment Staff retention and recruitment PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

20. Thursday 12th MayPRCA Annual Conference on Consultancy Management Churn by consultancy size (excluding redundancies) Base: Q2, 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

21. Thursday 12th MayPRCA Annual Conference on Consultancy Management Churn by consultancy size (excluding redundancies) Base: Q2, 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

22. Thursday 12th MayPRCA Annual Conference on Consultancy Management Churn by consultancy size (excluding redundancies) Base: Q2, 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

23. Thursday 12th MayPRCA Annual Conference on Consultancy Management Next career moves Base: Q3, 66HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

24. Thursday 12th MayPRCA Annual Conference on Consultancy Management % = proportion introducing benefit in past 12 months Financial package Performance- related Benefits introduced in past year Q11b Base: 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

25. Thursday 12th MayPRCA Annual Conference on Consultancy Management % = proportion introducing benefit in past 12 months Career-related Lifestyle- related Benefits introduced in past year Q11b Base: 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

26. Thursday 12th MayPRCA Annual Conference on Consultancy Management Employment outlook for next 12 months Base: Q29, 66 HRDs PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

27. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUE PRCA SERVICE 1. Income growth AM training-commercial skills CMS Core competencies for new business directors Post pitch questionnaire Preview Profitability PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

28. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUE PRCA SERVICE 1. Income growth AM training-commercial skills CMS Core competencies for new business directors Post pitch questionnaire Preview 2. Margins CMS Best Practice commercial guidelines Profitability PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

29. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUE PRCA SERVICE 1. Income growth AM training-commercial skills CMS Core competencies for new business directors Post pitch questionnaire Preview 2. Margins CMS Best Practice commercial guidelines 3. Over-servicing Standard contract Negotiation skills training Benchmarking survey Procurement professionals Guide to transparent relationships (ISBA) CMS Profitability PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

30. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUE PRCA SERVICE 1. Income growth AM training-commercial skills CMS Core competencies for new business directors Post pitch questionnaire Preview 2. Margins CMS Best Practice commercial guidelines 3. Over-servicing Standard contract Negotiation skills training Benchmarking survey Procurement professionals Guide to transparent relationships (ISBA) CMS 4. Performance related fee agreements ISBA endorsed guidelines on structuring performance related pricing Profitability PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

31. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUEPRCA SERVICE 1. Salary Benchmarking survey People PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

32. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUEPRCA SERVICE 1. Salary Benchmarking survey 2. Staff retention Frontline breakfast seminars - 580 attended 2004 Research into AD and Associate Directors attitudes Conferences on career development, work life balance People PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

33. Thursday 12th MayPRCA Annual Conference on Consultancy Management ISSUEPRCA SERVICE 1. Salary Benchmarking survey 2. Staff retention Frontline breakfast seminars - 580 attended 2004 Research into AD and Associate Directors attitudes Conferences on career development, work life balance 3. Staff recruitment Guidelines for using recruitment agencies Employment contract templates Core competencies - Board Directors, ADs, AMs and AEs Web chats People PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton

34. Thursday 12th MayPRCA Annual Conference on Consultancy Management PRCA Benchmark Survey 2005 - Confidential Conclusions and suggestions  Take advantage of economic/market improvement  Beware erosion of profitability - recruitment, salaries and benefits  1% improvement in all areas - Staff - Client handling - Marketing - Sales - Financial  Use information and expertise available at www.prca.org.uk www.prca.org.uk  Enjoy rest of the day, including: - Financial management - Talent time bomb PRCA Benchmark Survey 2005 - Confidential PRCA Benchmarking Survey Hugh Birley & Richard Houghton