According to the University of Southern California Annenberg School's director of public relations studies, public relations professionals "have won the battle for a seat at the table ... (but are) rightly being asked to pay the cover charge for that seat: a rational way to assess the value to be gained from the expertise we bring to the table with us."
While we continue to seek the "holy grail" to help us measure our value, public relations spending continues to rise, increasing more than 220% over the past decade. That, coupled with current economic uncertainties and an increased trend toward integrated communications programs, has caused clients to take a harder look at how firms bill for their services, and in some instances, how firms are managed.
To help clients and outside compensation consultants better understand how public relations firms bill and how their fee structures differ from those of advertising agencies, as well as to better facilitate discussions about fee compensation, the Council of Public Relations Firms' CFO Roundtable has developed "Trends in Public Relations Fee Compensation." This document explains public-relations-firm fee structures, provides common definitions for key financial terminology, and provides easy-to-follow financial models. It's free to Council members; non-members pay $10.
As we generate more proof that public relations is a strategic business tool capable of impacting corporate reputation, sales, and employee morale, and as major national media continue to cover the Council of Public Relations Firms' Industry Documentation and Rankings and its Economic Annual Report, the public relations industry is recognized as a viable business. While the Economic Annual Report dispelled the myth that public relations firms were recession-proof, it did show that the pro-cyclical public relations industry fared far better than its advertising counterparts during tough economic times. In fact, despite an ever-weakening economy and plunging corporate and market confidence, the latest Quarterly Economic Report (October 11, 2002, by Jaime de Pinies, chief economist, Golin/Harris International) projects a flat year for the PR industry, with healthcare continuing to see impressive positive growth. The report is available at www.prfirms.org.
While this may be encouraging news, the Council's CFO Roundtable is continuing to monitor firm financial progress using quarterly Quick Surveys. In addition, this month, the CFO Roundtable will release its annual Business Practices Benchmarking Report, which assesses more than 40 operating ratios and highlights ways to reallocate resources and identify future savings. It's free to participating Council members; non-members pay $300.
To supplement the Benchmarking Report, the Council's CIO Roundtable commissioned the 2002 Information Technology Capabilities and Expenditures Study. The results of this study will help CIOs and CFOs better understand the breadth of technology used in public relations firms, as well as their associated costs. The CIO Roundtable advises firm managers to keep an open mind when looking at new technology. CIOs and CFOs together should identify ways in which technology can positively affect the business, while at the same time objectively evaluate the cost and effectiveness of implementation.
While technology spending doesn't necessarily decrease during challenging economic times, it's best to continually monitor IT spending as it pertains to what opportunities are currently available to grow our business. It's free to participating Council members; non-members pay $300.
Jeff Herskowitz, CFO of Ogilvy Public Relations Worldwide, serves as the chairman of the Council of Public Relations Firms' CFO Roundtable.
The CFO Roundtable guides the Council's financial and agency management programs.
Jeff Schnee, EVP of global information technology of Weber Shandwick Worldwide, serves as chairman of the Council's CIO Roundtable. This group guides the Council's technology initiatives and reviews and evaluates new software, data providers and innovations.
For more information about these groups, to order copies of the reports mentioned, or to join the Council of Public Relations Firms, please contact the Council at 877-PRFIRMS (877-773-4767) or visit us online at www.prfirms.org.
- This column is contributed and paid for by The Council of PR Firms.