PR budgets rise by 9%, in-house spending up

NEW YORK: Despite recent cutbacks, and in a market where caution is the watchword, PR budgets are set to rise by a resilient 9% in 2001, according to the PRWeek Corporate Benchmarking Survey 2001.

NEW YORK: Despite recent cutbacks, and in a market where caution is the watchword, PR budgets are set to rise by a resilient 9% in 2001, according to the PRWeek Corporate Benchmarking Survey 2001.

NEW YORK: Despite recent cutbacks, and in a market where caution is the watchword, PR budgets are set to rise by a resilient 9% in 2001, according to the PRWeek Corporate Benchmarking Survey 2001.

However, the survey results also show a marked shift in PR budget allocation away from PR agencies. After years of dismantling, in-house teams will see an increase in their share of PR budgets, from 49% to 60% on average (see chart).

One agency chief said: 'Some companies believe in-house people can get closer to the business and the product, and they can manage the productivity better.'

Agency heads said the survey showed the PR industry was returning to normalcy. 'Last year was phenomenal by any measure,' said Fleishman-Hillard CEO John Graham. 'It's going to be a real opportunity for PR firms to prove their value to corporations and clients in these difficult times.'

At Ogilvy PR, which laid off 70 people in its technology practice this week (see story below), CEO Bob Seltzer described last year as a binge. 'We're back in the real world. Last year business was being delivered like chocolates on a conveyor belt. Everyone was gorging. Now, we're back to a hunter/gatherer model, where you have to go out and look for the business.'

Graham predicted: 'There will be a shakeout among firms who are not providing high quality service. Smart agencies will spend less time looking for people, and more time training the staff they've already got.'

'The good news is that turn-over is down,' added Seltzer, 'which will allow us to do this.'

Ironically, in the tech sector - which has been hardest hit by the current slowdown - PR budgets will actually rise the most, by 14%, although it's also in this sector that the highest cuts in budget are recorded. And the survey sample cannot account for the loss of income from clients who have gone out of business.

Published today, the survey polled 1,405 corporate and nonprofit clients with PR budgets ranging from dollars 20,000 to dollars 50 million.

- See Editorial, p. 10; Survey highlights, p. 18.





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