EDITORIAL: In-house PR is coming back

The tide has turned. As the 2001 PRWeek Corporate Benchmarking Survey shows (see p. 18), agency spending in 2001 is expected to decrease from 43.3% to 33.6%; while in-house spending will go up from 49.8% to 60.5%. In-house PR is returning.

The tide has turned. As the 2001 PRWeek Corporate Benchmarking Survey shows (see p. 18), agency spending in 2001 is expected to decrease from 43.3% to 33.6%; while in-house spending will go up from 49.8% to 60.5%. In-house PR is returning.

The tide has turned. As the 2001 PRWeek Corporate Benchmarking Survey shows (see p. 18), agency spending in 2001 is expected to decrease from 43.3% to 33.6%; while in-house spending will go up from 49.8% to 60.5%. In-house PR is returning.

For years, it's been a one-way street, as media relations, crisis communications, annual reports, even internal communications have all been outsourced to PR agencies. Not surprisingly, PR agencies have made hay. Many agencies have reported 20-30% compound organic growth for several consecutive years.

This one-way traffic seemed likely to continue. The advice given by agencies is impartial, without the interference of in-house politics and entrenched loyalties. The technology and training make agencies a ready source of willing talent. And, when push comes to shove, it's so much easier and cheaper to fire an agency than to downsize a department.

Of course, not all of the growth in agency revenues can be put down to a change in budgetary allocations down the years: the strength of agency performance is also a reflection on the growing appreciation of PR as a management discipline; on the proliferation of the media, and the challenges they present; and the efficacy of agencies in providing the services demanded by in-house clients.

By the same token, agencies are often the first to be hit when budgets are cut. When the economy tightens, corporations scale back external spending to protect internal resources.

But the statistics from the PRWeek Corporate Benchmarking Survey 2001 suggest that it's not just the economy which is hurting agencies. After all, most in-house PR departments report that they will actually be increasing budgets.

The conclusion we draw from the statistics is that agency underperformance - and client dissatisfaction - must also be a factor. While in-house PR departments have come to rely increasingly on agencies, they have lost a lot of their control. Mean-while, as Ogilvy CEO Bob Seltzer warned several months ago, agencies - surfeiting on too much business - have become arrogant, boasting of the business they've turned away, while simultaneously proving unable to fulfill their promises to clients.

This spiraling sentiment merely signals an all-too familiar problem for PR agencies, one that was dogging the industry at the start of the last downturn: the lack of talent that has been available to agencies. The fact is there aren't enough bright, talented individuals capable of offering valued strategic counsel to clients. And the worry is that as in-house PR departments now add to their internal resource once again, they'll dip into the same underfunded talent pool.





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