1. Richard Houghton Carrot Communications Hugh Birley Lexis Public Relations

2. The PRCA Benchmarking Survey 2003 Results

3. 2003 Pointers for the future Clients want evidence to support investing in public relations –still an industry weakness Next 12 months will remain difficult: manage revenue and costs equally Look after the people you’ve got

4. Next 20 Minutes Clients Management People

5. Clients - Relationships Personal chemistry 58% (+6%) Sector knowledge 44% (+ 6%) Creativity 43% ( + 15%) 2003 Value for money was placed second at 48% Honesty/openness last for two years…

6. Retained vs project work Survey year20002001200220032004 % of business on retainer 75%80%76%80%77% % of business project work Not asked 25%

7. Future threats Clients exercising commercial pressure 6.5 ( - 0.4) Lack of evaluation 5.7 ( + 0.1) Unstable client relationships 5.3 ( - 0.3) Impact of procurement professionals 5.2 (+ 0.3)

8. Agency Management

9. Leads and pitches PRCA average –29% of leads result in pitches –48% of pitches are successful ( + 5%)

10. Pitch Success Agency Size20042003 V large57%52% Large48% Medium42%38% Small48%44%

11. Operating margin – net pre-tax profit as % of total net income

12. Over-Servicing Rate Survey year200020012002200 3 2004 Over-servicing rate (as proportion of total net income) 22%21% 27%26%

13. Future Threats Competitors buying business 6.1 (-0.1) Skills shortage 6.1 (+0.8) Other marketing disciplines 5.0 (new) Association of public relations with spin 4.9 (-0.8) Cost of pitches 4.5 (new)

14. Internal Issues Generating new business 82% (+4%) Client retention 75% (-10%) Maintaining profitability 64% (+1%) Quality of pitching 64% (+26%)

15. Performance related pricing over time Reported year2001200220032004 % offering performance related deals to clients Not asked 19%29%27% NB: asked as “payment by results” in 2004 survey Previously asked as “performance related pricing”

16. People

17. Employment outlook for next 12 months

18. People Issues 1.Morale 2.Retention 3.Recruitment 4.Training

19. Next 12 Months We’re feeling more positive about market We’re looking for more creativity to improve new business success rate We need to retain and motivate our teams –Reducing over-servicing from average of 26% maybe a great place to start Margins are on the up and should continue growing!

20. Thank you Questions?