Analysis: What potential for SMEs and PROs?

Beattie Media last week launched a secondary network - Platinum PR - in a bid to pick up business from SMEs. But does PR even register on small firms' radar?

As corporate collapses and City job culls grab business-page headlines, the importance of small and medium-sized enterprises (SMEs) to the UK economy is easily overlooked.

Given that SMEs - which produce more than 40 per cent of UK GDP - range from sole traders to firms with turnovers of millions, their PR needs vary enormously - as do the aims and approaches of PR agencies that work with them.

Aiming to reach £1m-worth of fees within two years, Platinum PR - which launched last week (PRWeek, 31 January) - is targeting the estimated 28,000 UK firms with between 50 and 249 staff. (The standard British definition of an SME is a firm with fewer than 250 employees; a 'small' business has fewer than 50).

But is the SME sector really a lucrative market for PR firms to tap into?

The Federation of Small Businesses head of press Stephen Alambritis believes that spending by SMEs on PR is at present 'fairly derisory'.

However, he says: 'SMEs forget they have some good stories to tell, for example an order from China or one employer who wrote off his staff's mortgages on the back of a huge order from America to thank them for sticking with him through tough times.

'On both occasions these entrepreneurs simply got on with "the business of doing business" and didn't have time to think about reputation issues; they don't have the budget, either - they're chasing invoices most of the time,' he says.

But Samantha Gemmell, who is a member of the CBI's Small Business Council and also MD of media production firm Creative Media Matrix, says SMEs cannot afford not to consider the benefits of PR.

'A small PR budget should give an SME greater exposure than the equivalent advertising budget as it should have longer-term effects,' she says.

From a basic business perspective, she adds: '£2,000 to prove a business case in the newspapers or through the trade press should yield a £10,000 contract.'

Platinum MD Anita Cullen says there is substantial demand among larger SMEs for 'a broad mix of communications work', ranging from website design and email marketing to events and helping to forge 'partnership opportunities'.

Larger SMEs may also need help on investor relations work. Editor of SME title Real Business Matthew Rock says PR agencies need to 'offer a more rounded business advisory role' in order to prove their worth, particularly in the current economic climate.

'PR agencies need to become a sounding board for the boss and not a media relations service, as, at SMEs, PR will be among the first budgets getting chopped when times get tough,' he adds.

Alambritis says business clusters or science parks are some of the most fertile scouting grounds for PR agencies keen to tap into SME business.

2thefore - the agency set up last summer by Glen Goldsmith, the former Text 100 UK managing director, to target SMEs (PRWeek, 2 August 2002) - works for Surrey Enterprise Hub, a South-East England Development Agency-backed project with around 50 affiliated firms.

Goldsmith says 'start-ups tend not to have a good grasp of PR'. He says his initial discussions with entrepreneurs are 'usually at a very basic level - they will often ask whether PR is the same as advertising'.

Goldsmith says even larger SMEs' marcoms budgets are usually no more than £50,000 to £100,000 per year, of which PR is just one strand. He says this sort of budget prohibits major spending on additional areas such as evaluation.

Last month Windsor-based Robert Zarywacz launched a media relations service - pressme - which 'provides media exposure that SMEs require at a reasonable price' (£55 plus VAT for one press release).

But Gemmell, for one, argues 'one-off press releases, which is what most SMEs do, don't work. You need sustained exposure.'

In defence of his firm's offer, Zarywacz says: 'Ad hoc PR may not be ideal but it gets SMEs on the first rung of the PR ladder and they may want to go on and then use a larger agency.'

Alambritis advises any PR agency targeting SMEs to avoid using phrases such as 'pitch', 'consultants', or even 'public relations'.

'Corporate jargon just doesn't register with small firms,' he cautions.

Zarywacz says many SMEs he has has spoken to compare the jargon common in corporate PR to that of the IT sector.

He adds: 'The challenge is to convert people to PR - a lot of SMEs are frightened. They won't know what to say and who to say it to.'

It is ironic, of course, that most PR agencies are themselves SMEs (and most admit, if only in private, to not handling their own PR particularly well).

As the PR industry's own entrepreneurs take a break from chasing their own invoices they could pay a visit to the local business park and see whether there's any promotional work - or business consulting - that needs doing.

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