LOS ANGELES: PR departments that closely align their own goals with their companies' strategic business goals receive greater executive support, have larger budgets, and have a higher perceived contribution to their organizations' success, according to a new survey.
Conducted by the USC Annenberg Strategic Public Relations Center (SPRC) on behalf of the Council of PR Firms, the survey evaluated more than 300 responses from a cross section of American businesses.
"Our profession has matured to the point where we are now finding solid proof that strong, strategically oriented PR functions are not optional - they're indispensable," said Jerry Swerling, SPRC associate director and coauthor of the study.
The survey in part examined Fortune's most-admired companies for clues about PR's impact on public perception. The companies that landed on the coveted list were more likely to have their PR heads reporting directly to the CEO. These companies also had a larger percentage of their gross revenue dedicated to PR, as compared to similar-sized companies not on the list.
Agencies of record were also a more common occurrence for most-admired companies. But for general respondents, the larger an internal PR department, the more firms a company will likely use. A full 85% of respondents work with outside firms.
Most-admired companies were also more likely to perceive their own organizations as "ethical, proactive, and anticipatory," and received greater support for PR from senior management.
However, the survey also found that PR pros themselves felt management undervalued PR as making less of a contribution to overall success than finance, marketing, or even IT.
"Influence on corporate reputation" was found to be the top way companies evaluate PR, despite the lack of quantifiable means for correlating reputation with PR.
The study also found that Fortune 500 companies spend disproportionately more on PR than smaller counterparts, with an average annual budget of $8.5 million, compared to $2.2 million for Fortune 501-1000 companies.
For Fortune 500 companies, that averages out to .03% of gross annual revenues.
But companies on the most-admired list spent on average four times as much on PR as comparable companies not on the list.
Overall, Fortune 500 companies allocated 25% of their budgets to agency fees, but the number was 23% for all respondents. On average, companies reported using two to three agencies.
PR BUDGET ALLOCATION TOWARD AGENCY FEES
REVENUE CATEGORIES % OF PR % OF TOTAL
$6bn+ (Fortune 500) 25 22
$3.1bn-$6bn (Fortune 501-1000) 12 9
$1.6bn-$3.1bn (Fortune 1001-2000) 23 16
$580m-$1.6bn (Fortune 2001-5000) 28 18
$100m-$580m (Fortune 5001-20000) 20 20
under $100m (Fortune 20000+) 27 15
TOTAL 23 100
219 responses to this question.
SOURCE: USC Annenberg Strategic PR Center/Council of PR Firms.