Even Before Attacks, PR Budgets Showed Record Decline
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Even Before Attacks, PR Budgets Showed Record Decline

Even before last Tuesday’s catastrophes in New York, Washington, D.C., and Pennsylvania, the public relations industry had suffered the greatest decline in budgets in a decade, says the Harris survey.

Paul Holmes

HIGHLAND PARK—Even before last Tuesday’s catastrophes in New York, Washington, D.C., and Pennsylvania, the public relations industry had suffered the greatest decline in budgets in a decade, according to data from the Thomas L. Harris/Impulse Research client survey. Based on 1,500 responses from public relations clients, the average budget was down by 29 percent in 2001, from $3.1 million in 2000 to $2.3 million this year.
 
The terrorist attacks on the World Trade Center and Pentagon—and the resulting economic downturn—are expected to depress PR spending even further.
 
In-house PR departments absorbed the largest blow, with internal budgets down 40 percent from an average of $1.6 million to around $963,000. Agency budgets were down 17 percent, from $1.5 million to $1.3 million.
 
Spending cuts were greatest in community relations (down 52 percent to $113,000): employee communications (down 46 percent to $180,000); special events (down 39 percent to $203,000); and corporate media relations (down 23 percent to $585,000). Spending on Internet communications was down 65 percent, to $158,000.
 
Despite budget and staffing cutbacks, client satisfaction with agency performance improved in 2001. Almost seven in ten clients (69 percent) rated their agency’s performance as outstanding or very good, while only 8 percent rated their agency’s performance as fair or poor. An even greater number (81 percent) said they were either very or somewhat committed to their PR firms—up from 75 percent in the 2000 survey.
 
The survey was distributed to 3,452 client executives, with a response rate of 44 percent. Industries represented include computers and technology (14 percent of total responses); health and medical (12 percent), banking and financial services (9 percent), and information technology and telecommunications (8 percent each).
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