CORPORATE SURVEY REPORT 2000: How is corporate communications valued as we enter the new millennium? PRWeek surveys America’s companies to find the answer

It’s not easy to figure out the corporate PR landscape. On the one hand, PR is widely held to be more important and is more respected as a profession than ever before. PR budgets grew by 30% last year alone, according to the Harris/Impulse Public Relations Client Survey 1999.

It’s not easy to figure out the corporate PR landscape. On the one hand, PR is widely held to be more important and is more respected as a profession than ever before. PR budgets grew by 30% last year alone, according to the Harris/Impulse Public Relations Client Survey 1999.

It’s not easy to figure out the corporate PR landscape. On the one

hand, PR is widely held to be more important and is more respected as a

profession than ever before. PR budgets grew by 30% last year alone,

according to the Harris/Impulse Public Relations Client Survey 1999.

On the other hand, the last 10 years have seen unprecedented corporate

PR consolidation, with departments downsized partly due to mergers and

acquisitions, and partly as more business is handed out to the


As the PRWeek/BSMG Corporate Survey 2000 makes clear, corporate PR

people tend to run in small packs. The average US corporate PR employee

labors alone or with only one or two colleagues. Of course, as the size

of the company increases, so does the department. But even in companies

with revenues of more than dollars 10 billion, as many companies

employed five or fewer PR pros (26.7%) as employed 50 or more.

’Internal empire building was once the road to corporate success; now,

the opposite is true,’ says PR consultant Lee Levitt. ’Internal staffs

of all kinds have been slashed, and more work farmed out.’

Yet the picture as painted by the PRWeek/BSMG Corporate Survey is

actually pretty healthy. PR budgets are expected to increase by 6.9%,

well ahead of gross domestic product, estimated at 2.9% for 2000. And PR

budgets are expected to increase their share of marketing budgets, up

from 17.1% in 1999 to 18.6%.

So how does one tally these more modest numbers with the 30% growth

predicted in last September’s Harris survey? It may partly be the

economy. Gross domestic product in the last four consecutive years has

exceeded 4% per annum, suggesting that the economy is expected to


A more important factor is that this survey represents a wider

cross-spread of corporate PR departments. The revenue of a typical

client in PRWeek’s Corporate Survey was just over dollars 1 million.

Harris showed clients reporting an average PR budget of dollars 4.4

million. ’The Harris Survey polled only clients of the top 10 agencies,

so it shows the picture exclusively at the top end, among Fortune

500-type companies,’ explains Impulse president Bob Novick. ’The

PRWeek/BSMG Corporate Survey sample has a greater range (from less than

dollars 10 million to dollars 10 billion+), which makes it more

representative of the PR picture as a whole.’

CEOs and boardrooms

Even among this more typical company scenario, it’s clear that PR is

gaining respect among top leadership, with 47.7% of departments

reporting directly to CEOs or chairmen. Marketing execs oversee PR in

23.3% of the companies, and 4.5% each report to chief operating officers

and human resources executives.

Yet 59% say the PR function is not represented at the board level. Of

those who do have a seat at the exalted table, most have kept their

chairs warm for five years or less. In corporations with more than 50 PR

employees, this function more often is represented on the board (60%)

and has been for longer periods of time (8.3 years, on average).

Harlan Teller, executive managing director for Hill & Knowlton’s

corporate practice, sees these statistics as encouraging. ’The glass is

actually half full,’ he observes. Elizabeth Allan, president and CEO of

the International Association of Business Communicators, agrees. Her

organization’s studies show an increase in senior-level involvement.

’Access is more important than reporting,’ adds Ronald Culp, Sears’ PR

and government affairs VP.

Not being represented in board meetings isn’t necessarily a bad thing

for PR either, says Bruce Harrison, executive director of The Arthur

Page Society. ’The board room has become less of a room where managers

sit,’ agrees Harris Diamond, BSMG’s president and CEO. ’Boards have

changed from being mostly insiders to mostly external people.’ More

important than board representation is having a say in high-level

decision making on par with finance, law and HR. ’What you want is that

the CEO sees it as one of the top four staff functions,’ says Jack

Bergen, CEO of the Council of Public Relations Firms.

PR leaders most often report to CEOs in the healthcare (63.6%), retail

(55.6%) and publishing (57.1%) industries and are least apt to in

banking/finance (23.5%) and hi-tech (33.3%). Hi-tech corporate

communication leaders frequently call marketing executives boss. ’The

majority of hi-tech is about product,’ explains Larry Weber, CEO of

Weber PR Worldwide. ’That’s going to be down the food chain in the

marketing department.’

CEOs are also surprisingly hands-on about the hiring of outside


PR heads at companies with the largest PR budgets usually make their own

decisions about hiring outside PR firms, while CEOs will usually make

that call at corporations with mid-sized to small budgets. Power becomes

more delegated as companies grow because CEOs can’t oversee everything

themselves. ’It’s easier to have more direct reports to the CEO the

smaller the organization,’ Allan notes

Virtual PR

Web sites have become important identity-building venues and corporate

communicators are in their element. In-house PR pros almost always have

a hand in running their companies’ Web sites, with 70.2% saying they are

very involved. In contrast, only 38.4% said outside PR firms get

involved with their sites. Experts tend to interpret these statistics as

reflecting the need to quickly and efficiently update sites. Or perhaps

corporate pros don’t think of PR firms as having on-line expertise. ’It

would be expensive to have your outside PR agency directly involved,’

says Bill Novelli, associate public affairs director for the American

Association of Retired Persons. ’Web sites are still esoteric enough

that you need an onsite editor/Web master.’

PR departments in extremely large companies reported less hands-on

involvement with Web sites, again possibly reflecting diversification,

and more openness to working with outside agencies. Allan suggested that

the latter might be explained by large budgets, higher comfort levels

with PR firms, or greater in-house expertise at the agencies.

The statistics are somewhat contradictory. On the one hand, an above

average number of larger organizations state that the PR agency is ’very

uninvolved.’ On the other hand, these same organizations are more likely

to consider using a PR agency to help build or maintain the Web site in

the future. Perhaps it’s because Web sites usually are controlled by the

people who took the lead in establishing them, and thus, communicators

must sometimes play catch-up on the sites marketers initiated.

Yet most agree that the Web is an essential tool for communications.

Nearly 80% of the respondents said their companies used the Internet as

a communications tool, while only 9.6% use the Net to make money -

dispelling the myth that the Web is being developed as an e-commerce

tool. ’The mechanisms for using (Web sites) to close sales are still

being developed in many industries,’ notes Levitt. However, it’s

noticeable that in those fields more commonly using e-commerce - retail,

transportation and travel/leisure - PR plays a smaller role. ’I don’t

want to be a merchant,’ quips Culp, preferring to leave e-commerce to


A press-dedicated area on the Web sites proved popular, in use at 35.4%

of the companies responding and on the drawing board at another


Media centers are particularly favored in hi-tech (51%) and energy (50%)

companies, some speculate because of the complexity and/or relative

newness of their messages, and in the customer-focused consumer products


Large companies also more often have dedicated press areas, perhaps due

to abundant resources and plentiful press inquiries. Lee Weinstein,

communications director at Nike US, said his company’s news link has

significantly curbed media calls.

Crisis communications is moving into the cyberworld more slowly,

although industry prognosticators expect the pace to pick up. Only 42.3%

of respondents used their Web sites as crisis communications tools. ’The

Web is still too new for many companies to have had major crises since

it was developed,’ Levitt observes. That banking/finance was an

exception at 60%, left those who pondered the statistics scratching

their heads, although several felt it logical that 71% of transportation

industry Web sites were used in crises. ’Transportation people have

accidents,’ Novelli observes.

PR’s domain

The domain of the corporate PR pro is growing in every way. Nearly half

the respondents (45.1%) said the most senior PR position within their

company was a global one. And with continued corporate consolidation,

growth of the Internet and a global media market, that global outlook

may rise. ’As we survey our members, more and more of them are dealing

with audiences beyond their national boundaries,’ Allan notes.

In-house PR pros also have their fingers in many pies. Common duties

range from cor-porate communications, over which 88.8% have

responsibility, to external affairs, at 50.9%. Less common are public

affairs (35.6%) and investor relations (15.6%).

One of the complexities of PR lies in the fact that the PR function is

not always handled by someone in a PR or corporate communications


Executives in the marketing department typically have the most

wide-reaching responsibility, followed by folks in community relations,

although all departments covered a relatively wide field.

Pros in the corporate communications department were less likely to take

charge of advertising (54.8%) or marketing (32.5%), but more likely to

head up internal communications (80.2%) and investor relations


Public relations departments, on the other hand, were more likely to

look after community relations (79.3%) and external affairs (62.1%).

By budget, it was organizations with the smallest that tended to run the

kitchen-sink gamut. In fact, those with budgets under dollars 20,000 are

more often in charge of advertising and marketing than anything else


As budgets grow, those with the largest coffers aren’t likely to

supervise the more commercial activities, but are heavily involved in

internal communications (85.7%) as well as community relations and brand

management (71.4% each).

Diversification and delegation may again account for the shift, in

addition to the challenge of communicating with larger employee


Conspicuously missing from the corporate PR menu is investor


Only 15.9% of those responding work in departments that oversee IR.

That’s because CFOs and their staffs have probably been better equipped

to provide the arcane financial data that institutions require. However,

in the last 10 to 15 years, emphasis has shifted from institutional

investors to individual shareholders, Bergen notes, and online trading

and rising foreign investment will revive the need for communicators to

translate the numbers into plain language, he says. Others believe a

perception that PR types lack the needed analytical skills or knowledge

base may hinder efforts to bring IR into the fold, while they commonly

note that in many organizations, PR and IR folks work together closely

even if they answer to different bosses.

Staffing and budgets

As, the responsibility of the PR pro potentially widens, it’s clear that

corporate communicators are doing a whole lot with very little. A third

of respondents work alone, and 35% more have only one or two


In smaller companies, tight budgets might account for small staff size,

while lack of appreciation for PR or heavy use of outside agencies are

more likely explanations on the opposite end of the scale.

Not surprisingly, annual revenue closely correlated with the staff and

budget size. Retail topped the list of averages with dollars 5.7 billion

in annual revenue, 12 in-house PR people and dollars 4.3 billion in PR

spending. Close behind was transportation, averaging dollars 3.4 billion

annual revenue, dollars 2.5 million PR budget and 11.6 staff


The survey also revealed that 96% of the companies represented spend

less than dollars 5 million annually on PR, and 80% shell out less than

dollars 1 million.

’People are not putting enough money into PR budgets,’ notes


’The report is accurately showing how much room there is to


On average, PR accounted for 17.1% of total marketing budgets, as

previously noted, and that ratio drops as revenues increase. Culp says

he would be hard-pressed to spend 17.1% of what Sears lays out annually

for advertising.

PR, by contrast, is relatively inexpensive and companies often get a

bigger bang for their buck. ’I don’t think it’s because PR is less

important, it’s simply much more efficient,’ Bergen notes.

Salaries accounted for 28% of the average PR budget outlay, followed by

media relations (14%), corporate advertising (13%) and special events

(11%). While media relations may have great impact, it’s not that


’It’s a brainpower job in my view,’ Allan says. ’The hard costs of

execution aren’t necessarily high.’ It’s also clearly not as important

to clients as certain experts might suggest.

Research gets short shrift all around. It accounts for only 3% of PR

budgets overall, an average of dollars 30,000 per year for a company

spending dollars 1 million a year on PR; and 49% of companies didn’t set

aside any money for research at all. Those statistics reinforce Novick’s

all-talk, no-commitment suspicions about PR and research. ’They love

using research to further PR programs, but most companies hesitate to

use PR to evaluate those same programs,’ he claims. To increase their

budgets and influence, PR pros must invest in research to prove their

own value. Also, many executives don’t realize the cost of research has

decreased, Levitt notes.

As mentioned earlier, corporate PR practitioners predict budget

increases of 6.9% in the coming year. Thirty-five percent estimated

growth below 10%, and 23% expected no change at all. Although healthcare

PR departments represented the largest group of survey respondents

(23.1%), average budgets (dollars 565,000) and projected growth (4.2%)

were near the bottom of the scale.

Healthcare encompasses everything from nonprofit hospitals to

international drug companies. Brian McGlynn, corporate media relations

director at Pfizer, speculates that a plethora of smaller companies may

dominate the sample of healthcare respondents.

Thirty-two percent of the corporations responding employ no outside PR

firms at all, and another 37% work with only one, according to the


Only companies with PR budgets greater than dollars 10 million were

likely to employ five or more firms (71.1%), and they typically spent a

higher percentage of their budget on PR rising to in excess of 20%.

Client satisfaction

Corporate pros generally are satisfied with their outside representation

(59.4%), though that still leaves 40% who are either neutral or


Most don’t plan to change agencies (55.6%), but again that still leaves

17.7% who do, and 26.6% who don’t yet know.

Of the common complaints listed about outside firms, corporations were

most bothered by unexpected costs (38.5%), an area in which clearly many

agencies can and must improve. Other gripes were split fairly


However, small-budget companies often complained that their PR firms

don’t evaluate their industries well, and those laying down the biggest

bucks often were dissatisfied with staff experience levels, timely

delivery of work and accessibility to top PR executives. Bergen notes

those figures reflect the logic that firms have little incentive to

assign industry specialists to low-budget accounts and that the more

clients pay, the higher their expectations.

The PRWeek/BSMG Corporate Survey 2000 shows for the first time, the

complexity of corporate PR. Yet clearly its domain is growing, its stock

is rising and it’s winning a larger slice of the marketing budget as a


The PRWeek/BSMG Corporate Survey 2000 was conducted by Impulse Research

in January 2000. The results are based on 802 responses to a

questionnaire sent to corporate public relations executives in senior

and middle management positions. Seventy-five percent of respondents

headed the department.

The majority worked either in a corporate communications department

(38.6%) or a public relations department (27.8%). Other departments with

responsibility for PR were marketing (16.8%), marketing communications

(10.5%) and community relations (6.3%). The largest number of responses

were in healthcare (23.1%), hi-tech (15.3%) and manufacturing


A copy of the full report is available for dollars 300. Please contact

Jessica Sung at (212) 251-2600 or by e-mail:


Revenue of company                     dollars 1.4 billion

PR budget                                dollars 1 million

Increase in PR budget 2000                            6.9%

PR as % of revenue                                   0.08%

PR as % of marketing budget 1999                     17.1%

PR as % of marketing budget 2000                     18.6%

Number of in-house PR pros                             5.4

Number of agencies                                     1.6

External agency spend in 2000                        15.2%

PR as % of revenue

Publishing                                            0.26

Healthcare                                            0.19

Hi-tech                                               0.09

Transportation                                        0.07

Agriculture                                           0.07

Retail                                                0.07

Consumer                                              0.06

Banking                                               0.05

Associations                                          0.05

Energy                                                0.03

Average                                               0.08

PRWeek/BSMG Corporate Survey 2000.

Source: Impulse Research.

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