Holmes Report 21 May 2010 // 11:00PM GMT
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Few would disagree with the statement that 2009 was the most difficult year for the public relations industry since the dot-com bust of a decade ago. Clients were eliminating campaigns, cutting budgets, extending the time it took to make decisions, and pressing agencies to reduce their fees. At the same time, competition from other disciplines—particularly in the digital and social media space—was on the increase.
In every downturn prior to this one, some agency leaders have made the case that public relations should be countercyclical. In tough times, it was suggested, savvy marketers would cut their advertising budgets, take a small percentage of their savings and invest it in public relation and thus get the same bang for considerably fewer bucks.
That view always seemed to me to be based on the view that those same savvy marketers were quite content to misallocate their budgets during good times—a dubious proposition. It also pre-supposed that the PR industry had done enough to convince marketers of their ability to deliver real, measurable evidence of return-on-investment, which has not always been the case.
This downturn, however, was slightly different. Many of the best marketing-focused PR firms either continued to grow, held their own, or—at the very least—declined less precipitously than agencies in related fields such as advertising.
There were several reasons for this. First, the weight of evidence that PR can provide a significant ROI has been growing, not necessarily because of the industry’s own efforts, but because clients are developing increasingly sophisticated marketing mix modeling techniques that often show public relations in a positive light.
Second, the growing importance of digital and social media—which demand traditional PR virtues such as transparency, authenticity, credibility, engagement and dialogue—have provided a significant source of new revenue. And third, PR agencies are significantly better managed today than they were 10 years ago.
On the public affairs front, there was plenty of work, with a more activist government forcing companies to address major policy issues or risk costly government oversight. The healthcare arena was as resilient as it always is. And while life was more difficult for firms in the corporate reputation business, many companies needed help communicating change management initiatives and many companies maintained their commitment to CSR despite the downturn.
The result was a year of declining revenues for the industry as a whole—we estimate fee income was down in the mid-single digits in North America—but nowhere near as bad as it might have been. And by the first quarter of 2010, agency principals were reporting signs of a turnaround. The industry appears well-positioned to return to growth.
Paul A. Holmes, Editor-in-Chief
To download a PDF version of the 2010 North American Report Card, please click the link below.