Posted by & filed under Digital marketing, digital pr, General PR, online pr, tech pr, Technology PR.

According to the latest NMA UK Search Marketing League Table, Net Planet Media achieved income (or gross profit) of £5.2m last year. Based on a head count of 24, that works out at just under £220K gross profit per employee. Pretty impressive by anyone’s standards. Bigmouthmedia topped the table with a total income of £13.4m.

This is the first time that NMA have used income rather than turnover as the measure for ranking – interestingly, a number of the higher placed firms from last year (based on turnover) were “unable” to supply figures this year – notably The Search Works and iCrossing.

As guide editor Nic Howell explains: “This year we’ve made an important change by basing some of the financial rankings on the income, or gross profit, that companies earn from their given specialism. This brings the Marketing Services Guide into line with its sister publication, theTop 100 Interactive Agencies guide, as well as other tables published by Centaur and other publishing groups. But we also believe that, as the industry matures, for certain sectors turnover is becoming a less useful measure of what a company earns for its expertise. In search, for example, with Google having withdrawn agency remuneration, there’s less incentive for agencies to buy paid search on behalf of their clients. We expect to see agencies earn money from consultancy fees rather than commission and kickbacks.”

However, given that Google’s Best Practice Funding really only ended in February of this year, we will have to wait until next year’s table in order to truly see the impact this will have on search marketing agencies profitability. For example, Netmediaplanet derives 100pc of its revenue from paid search – I have no idea whether or not they benefitted from Google’s BPF, but will be interesting to see if they can maintain or improve on last year’s impressive financial performance.

Here’s my quick analysis of the overall table:

Average gross profit per employee for the top 30 UK search marketing firms is around £70K. Having said that, there is a very wide range – all points between £220K and £10K.

In 2007, the top 30 agencies employed 1258 people – last year, this figure had dropped to 1154. I appreciate that we aren’t really comparing like with like given the new criteria being used by NMA.  However, even though some agencies have clearly  increased staffing levels eg Bigmouthmedia, some have obviously dropped eg Latitude, down to 98 from 120.

Another interesting trend was the number of search marketing firms who are creating or expanding their own online PR teams. According to Jack Hubbard of 14th ranked Propellernet in a recent interview: “The growth in demand for and subsequent expansion of our online PR team is taking the industry by storm. Bringing together creative PR’s and analytical search experts is generating some great new thinking, and pushing new frontiers for our clients. I’ve never been so excited to be in this space.”

Given Volvo’s recent well documented decision and Ruder Finn’s just published research that shows a great degree of “irritation” by clients with PR firms when pricing online PR proposals, the current robust financial figures for search firms – combined with their obvious expansion plans into the realm of PR – shows that the PR industry needs to continue to work hard to justify its place at the client table.

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