INTERNATIONAL: Agencies hit hardest as US 2001 PR budgets plummet

NEW YORK: PR budgets in the US fell by an average of 21 per cent in 2001, according to PRWeek's annual Corporate Survey.

Just as spending on PR soared in 2000, so it fell in 2001, with the 1,259 in-house PROs who responded to the survey revealing a cut in spend from an average of 0.22 per cent of annual revenues in 2000 to an average of 0.14 per cent of revenues in 2001.

Agencies have been hit the hardest. For the third year running, corporations increased the percentage of PR handled in-house.

In 2000 an average of 43.3 per cent of budget was allocated to agencies.

That fell to 32.4 per cent in 2001, and is predicted to fall to an average share of 26.7 per cent in 2002.

FedEx V-P of corporate comms Bill Margaritas said: 'In-house staff and resources are generally seen as fixed costs, so when the economy slows and department heads are asked to take a look at variable costs, it is agencies that get cut back.'

But there was some good news for the industry as it moved closer in its quest for universal access to the boardroom. Last year, 42 per cent of heads of corporate communications reported directly to the president or CEO. This year, that figure was up to 51 per cent.

The survey also suggests budget slashing has stopped. While 31 per cent of respondents said their PR spending for 2002 would be below spending in 2001, 41 per cent are anticipating a flat year and 29 per cent revealed the plan to increase spending this year.

Another positive sign is that 20 per cent of in-house departments aim to increase staff levels, compared to ten per cent planning to reduce numbers. There was also evidence of an increase in spending on employee communications and public affairs.

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