News analysis: Why PR isn't sharing in the advertising recovery

Heads were scratched yesterday after PR's poor showing in a very positive IPA Bellwether Report. Explanations from the industry's heavyweights range from the optimistic to the dismissive.

Ketchum CEO Denise Kaufmann believes the result is down to two trends
Ketchum CEO Denise Kaufmann believes the result is down to two trends

While an upturn in advertising revenue is always a good news indicator for the economy in general, autumn’s edition of the Bellwether brought a little chill for PR people.

The record increase in companies revising up marketing spend – at 12.3 per cent net, its highest rate for 13 years – was juxtaposed by a decline in PR spending of 1.7 per cent.

But don’t panic … yet, says Huntsworth chief executive Lord Chadlington.

"As a rule, PR budget cuts follow advertising into a recession – advertising is cut first because the budget numbers are so much larger, but, conversely, as we come out of a recession, clients look for a quick sales upturn and immediately switch on the advertising volume.

"Over the next two quarters we should expect PR budgets to move ahead. If they don't, we should all worry – it could mean that we are losing the digital battle – and that would be very serious indeed. Watch this space."

Don’t read too much into the figures, cautions CIPR CEO Jane Wilson, adding: "Bellwether shows a slight net reduction in PR budgets overall, but the overwhelming majority of respondents report no change in their PR budget across the financial year.

"The CIPR’s 2013 State of the Profession report showed that roughly half of all respondents said that in their organisation, PR and marketing were increasingly working together and similar numbers said they were sharing responsibility for digital media and branding with other department. This may be showing through in this survey."

However, PRCA director general Francis Ingham dismisses Bellwether as "consistently bollocks".

"We set no store by it at all. It gets it wrong every single time, I don’t know why it always gets it wrong, but it does and it is at odds with other research, such as the PRCA quarterly barometer and the PRWeek Top 150," Ingham asserts. "Everything that we have picked up from the market indicates that PR agencies have every reason to be bullish."

Integration, integration

Several commentators attest that integration of disciplines is influencing PR’s performance.  

"The last few years have required budget holders to find more efficient ways to do business and when clients saw their communication budgets shrink, they asked for efficiency through integration," notes Ketchum London CEO Denise Kaufmann.

"As a result we’ve seen our clients increasingly ask us to lead or actively contribute to 360° campaigns. Most of the top ten agencies will be responding to the calls for integration (even though some will outsource certain aspects of the work to specialists)."

Kaufmann describes the Bellwether results as reflecting the coalescence of two significant trends: integration and "the mainstreaming of digital".

"There will always be traditional PR firms or traditional advertising shops or digital companies, but the old channel-based thinking is rapidly decreasing. This is a brilliant opportunity for PR firms to do what we always have always excelled at: managing relationships across the spectrum of stakeholders. 

"We’re rapidly shifting to a stronger PESO model, delivering paid, earned, shared and owned media channels.  Clients love ideas that work across multiple markets and platforms. From our point of view the future looks very positive indeed; we don’t see a mass extinction in PR any time soon, in fact we believe this is really a time of tremendous evolution."

At the more pessimistic end of the spectrum is Heather Baker, CEO and founder of TopLine Communications, who believes that PRs are losing out through lack of discipline.

"It's no surprise that PR budgets are going down when marketing budgets are going up. It's because so many PR agencies fail to justify their value, which means marketing directors can't justify the spend. They still think about PR as generating coverage, without realising that the coverage you generate is a means to an end and not an end in itself. PR is still an important part of the marketing mix, but it needs to be tied back to business objectives."

While there is little consensus as to the greater meaning of the Bellwether figures, it would appear that there is little need to panic.

Greater integration might be interpreted as other disciplines encroaching on PR’s territory or as a great opportunity to move up the food chain, while the inexorable rise of all things digital is as much an opportunity as a threat.

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