It's business as usual for in-house PR professionals, according to
the 2001 PRWeek In-house Survey, but there is a distinct lack of
certainty about what the year ahead will bring as economic conditions
tend towards recession.
The results of this survey are based on a postal questionnaire sent to
PRWeek readers who work in-house. PRWeek designed and printed the
questionnaire, based on previous years' versions.
In total, 180 replied between 14 September and 5 October 2001, a
response rate of about nine per cent.
The majority of respondents to the survey did not expect their budgets
to go either up or down over the coming year, with 64 per cent saying
that they expected costs to stay the same. Less than one per cent said
they thought their internal costs would go down, while just under 20 per
cent expected them to go up. As far as external costs are concerned, 57
per cent expected them to stay the same, while two per cent thought they
would decrease and 13 per cent said they would rise.
Overall, the figures show that fewer PROs expected their costs to go up
- with most expecting them to stay the same. But even for the most
positive and negative respondents, the difference in budgets isn't
anything too remarkable. On average, across both sectors, if budgets are
going up, they will only do so by three per cent; if they're expected to
drop, it's only by 1.5 per cent.
It is possible, though, to see that the private sector is feeling less
confident than its public sector colleagues about the money that will be
made available to spend on PR in the coming year. Are we then looking at
a stagnant market on the verge of recession? Or are we looking at client
companies taking a 'wait and see' stance, where it is not yet known how
budgets will be affected in the coming year?
Ian Wright, Diageo director of corporate communications, and president
of the IPR, which has a large number of in-house staff, agrees there is
an element of uncertainty among his colleagues in the sector: 'People
genuinely don't know what's going to happen. I think the next few months
are going to be approached with caution. We've seen consultancies
shedding people and I'd be surprised if there's not at least a fairly
static period in in-house hiring.'
Wright points out that the in-house sector is in stronger shape now than
it was during the last recession: 'In the early 90s, in-house was not as
developed as it is now, particularly internal communications. It will be
interesting to see how people do invest over the next few months, as it
will be a good indicator of the maturity of the industry.'
This year, PRWeek broke the respondents down into turnover bands and
assessed how budgets had changed between 2000 and 2001. For the majority
of companies and organisations that took part in this survey, whatever
their size, internal and external budgets have either stayed the same or
risen slightly in the past year. Budgets did not necessarily increase in
proportion to the size of the organisation, however, although this is
likely to be down to an anomaly of the sample.
Respondents with turnover of up to £5m said internal costs had
risen from an average of £269,000 to £271,000, while
external costs had risen from an average of £179,000 to £210,000. For organisations with a turnover of £40m to £50m,
internal costs had risen from an average £483,000 to £617,000 between 2000 and 2001, while external costs had gone up from an
average of £193,000 to £245,000 over the same period.
For the most part, the amount spent by the PR department on outsourcing
is still considerably less than internal costs.
The number of people in in-house teams was fairly steady between 2000
and 2001, while 24 per cent increased in size, and only three per cent
decreased. Overall, the size of in-house PR departments seemed to even
out between 2000 and 2001.
The number of departments with only one or two employees went down from
44 per cent to 29 per cent, while the number with three to five
employees rose from 29 per cent to 37 per cent.
Similarly, 17 per cent of in-house PR divisions had six to ten people,
compared to 13 per cent the year before, and a further eight per cent
said they had 11 to 20 employees, compared to four per cent in 2000.
This even spread of employee numbers is more marked in private sector
companies, where only 26 per cent are part of teams of one or two, and
43 per cent are now in a team of three to five, compared to 28 per cent
the previous year. However, there was a slight downward shift for the
few companies with very big in-house departments. Those employing 21 to
30 staff went down from 4.3 to 2.9 per cent, and the number of
departments with more than 30 PR staff dropped from 7.5 to 6.8 per
cent.
It is a different picture in the public sector, where there was more
steadiness in the size of smaller teams, but where the number of
organisations employing 21 to 30 staff went up from 1.5 per cent to 2.6
per cent. Meanwhile those with teams of more than 30 rose from 4.5 per
cent to 5.3 per cent.
Whatever the size of the team, PR is generally being taken seriously at
board level. Overall, almost 40 per cent of PROs said the PR function
was represented on the board or on senior management teams in local
government. This was split between 32 per cent of private sector
boardrooms and almost 50 per cent of public sector organisations.
British Nuclear Fuels group director of corporate affairs Philip
Dewhurst says this is even more important during tough times: 'It's
important for chairman and CEOs to feel that they have the best
day-to-day information. Big companies that are suffering need good
quality in-house advice. The in-house sector will remain in good shape
as long as key individuals have credibility in the boardroom.'
Unsurprisingly, the biggest chunk of in-house PR resources goes on media
relations, which claims 32 per cent overall. Corporate PR and internal
communications each use up around 13 per cent of the available resources
overall, with consumer PR following on 11 per cent. Online development
eats up only 4.5 per cent of resources.
Wright says: 'If companies are sensible they will continue to put money
behind their brands. In this kind of atmosphere it's also crucial that
they don't cut back on internal communications, or communicating with
shareholders.'
When the results are split into the private and public sectors the
picture is not too different, although it's worth noting that the public
sector uses a bigger portion of resources for media relations (36 per
cent) compared to private companies (28 per cent). There is another gap
between private sector spend on business-to-business PR (10.4 per cent)
and that spent by the public sector on the same area (2.3 per cent).
Perhaps surprisingly, online development is less important to the
private sector than public organisations.
Media relations is by far the service in-house clients outsource most,
with 56 per cent saying this is a service they require of their PR
consultancies.
This rises to 64 per cent for the private sector, but drops to 42 per
cent for the public sector.
Encouragingly, strategic advice is the next most required function, with
42 per cent overall (47 per cent of the private sector and 32 per cent
of the public sector) saying this was what they needed from their
outside suppliers, showing that the stature of PR consultancies is
growing.
In-house clients still have plenty of complaints about consultancies,
though, with the biggest gripes being over promising (50 per cent) and
not the linked sin of delivering (43 per cent).
Almost half of the respondents, 46 per cent, said they spent less than
ten per cent of their budgets on external consultancies. A further 30
per cent overall said they spent between ten and 25 per cent of their
budgets on consultancies; 12 per cent said 25 to 50 per cent of their
budgets went on consultancy budgets, while a significant ten per cent
are spending more than half their budgets on outside expertise.
As far as evaluation is concerned, 93 per cent of respondents rely
overwhelmingly on media content analysis and press cuttings. While a
worrying 43 per cent, the next highest figure, say they use anecdotal
evidence or gut feeling as a means of evaluation. Only seven per cent
link PR with concrete business evidence of its success such as an
increased share prices or sales numbers on the climb.
Credible forms of evaluation could still then be considered a problem
area, and are perhaps linked to the fact that less than 50 per cent of
boardrooms contain a director who can provide direct communications
advice and experience. In this light the findings of the Turnbull Report
into corporate governance would appear to be even more important. In
stating that companies should provide an annual review of their
reputation, as they do with their finances, Turnbull states on the
record something that the PR industry has long been arguing for. But,
can in-house PROs play a role in driving it through? According to Tony
Stephens, Rentokil Initial general manager corporate affairs, the answer
is a resounding yes. 'Something like this should not be left to outside
consultancies. In-house staff really need to grab hold of this as they
are in a far better position to understand their business than anyone
else.'
