Results of 2004/5 Healthcare Communications Association (HCA) Benchmarking Survey

The 2004/5 Benchmarking Survey of Healthcare PR Companies reveals that Agencies predict an optimistic future. Average turnover and net income figures rose by 20% and 15% respectively between 2003 and 2004 and 82% of Agencies are expecting growth in gross billings in the forthcoming year.

However, the survey recognised that Agency growth is not without its challenges. In a year where 91% of Agencies expect to be increasing headcount, recruitment and retention was identified as the most significant business issue facing the industry.  In particular, Agencies highlighted the limited pool of high-calibre candidates at senior and middle levels. 

Not surprisingly, recruitment costs represent a significant expenditure, and have increased by 33% between 2003 and 2004.  While staff incentive schemes were common, the majority of this expense was recruitment agency fees.

Staff retention is important with Agencies experiencing on average a 23% rate of turnover. The survey illustrates a strong focus on developing, motivating and keeping good quality staff.  Flexible working is more common with consultants looking for part-time positions and training spend is projected to increase.

“The survey has confirmed a need to grow the talent pool of healthcare PR consultants”, said Fiona Hall, chair of the HCA Benchmarking Subcommittee.  “We need to do a better job at attracting people at all levels into the discipline, from the pharmaceutical industry, from other fields of PR and also directly from university.  The HCA are currently considering recruitment as a focus for next year.”

Improvements to the pitch process

The survey shows that new business makes a significant contribution to Agency growth.  In 2004 the average number of pitches was 11 with Agencies spending approximately 10% of the prospective fee for the programme on pitch preparation.

Given this significant investment, it is not surprising that Agencies suggested a number of changes that could be made to improve the process.  In particular, Agencies would like to see clearer briefs, better communication and clarity throughout the process and more realistic time-scales.  It was also suggested that fewer agencies should be invited to pitch - the stated ideal number was either 2 or 3 depending on the budget size - and this could be achieved if clients improved selection at the credentials stage. 

Furthermore, 26% of unsuccessful pitches were related to cases where no Agency was appointed, a figure that has increased year on year since 2002, and represents a worrying trend, considering the resources that go into preparing a pitch.

“Pitching for new accounts consumes a great deal of both Agency and Client resource and the HCA believes that the process can be improved for both parties.  Later in the year, we are soliciting feedback from clients on this topic via the Industry Benchmarking Survey and we hope to be able to identify common themes and areas for improvement,” says Fiona Hall. 

Impact of procurement

Agencies were asked to assess the impact of the procurement process on their business and its day-to-day operations.  The procurement process was felt to be beneficial where it fosters a true partnership between client and agency with the potential for long-term commitments.  Paradoxically agencies noted an inappropriate commoditisation of agency services and increased pressure for volume discounts.  2004 also saw an increase in clients requesting performance-related pricing - either percentage fee withheld dependant on results' or, more positively, the occasional ‘bonus for over-achievement'.

However, when asked about programme evaluation, practices remain inadequate in 2004 with just 5% of the total budget allocated to evaluation, significantly lower than the 10% rule of thumb recommended by the HCA.  In addition, the majority of the evaluation budget is spent on measurement of immediate outputs, most notably media coverage and events, as opposed to analysis of outcomes and impact of the PR activity on the client's business.

Agency fee breakdown and budgets

For the first time this year's survey analysed the type of service provided and revealed that a diverse range of activities are being undertaken. While media relations is the largest single area, on average it represents less than a quarter of Agency total fee income.  Opinion leader development /Advocacy, Education and Strategic Counselling all make a significant contribution.  The split between fee from UK accounts vs. international accounts was 55.7% vs. 44.3% respectively.  There was an indication that mean budgets had declined compared to last year.

About the survey

The HCA Agency Benchmarking Survey has been running for three years.  In 2004/5 a record 22 Agencies participated in the exercise, representing an increase of 16% compared to 2003/4.  Later in the year, a parallel Benchmarking Survey for Industry will be conducted to assess industry practices and priorities for PR.  The Healthcare Communications Association is an independent, not-for-profit organisation that exists to drive the highest standards and promote best practice, innovation and excellence in healthcare communications.  The HCA offers significant benefits to both the pharmaceutical industry and healthcare consultancies, and already counts many of the leading organisations in both sectors among its members.