NEW YORK: US PR spending will break out of its doldrums and post double-digit-percentage growth over the next two years, according to an influential media industry report.
On the back of a recovering economy, PR spending will increase by 11.3% in 2004 and 12.5% in 2005, according to the Communications Industry Forecast, an annual report by the merchant bank Veronis Suhler Stevenson. Compound annual growth between 2002 and 2007 is projected at 9.2%. "PR is one of the stars in the whole communications industry," said Leo Kivijarv, director of research and publications for the bank. "Anything over 6% or 7% over a five-year period is considered very good."
Although the report predicts similar improvements for the advertising industry, the PR industry's gains will outpace those of other marketing functions, including business-to-business promotions, direct mail, and event sponsorships.
The report is based on figures from publicly traded communications companies, including WPP, Omnicom, and Interpublic. The report also covers a range of communications sectors, from consumer magazines to the internet to television and radio.
The recovery will be helped along in large part, Kivijarv said, by an attitude change about
how marketing dollars will be spent. In interviews, he said, clients have expressed an interest in getting "as much free publicity as they can get."
"The recession," he said, "has made marketers reconsider how they spend money."
The industry has been wracked by a few years of little or no growth and substantial losses as PR budgets have been slashed as part of the overall downturn. Worst of recent years was 2001, the year of terrorist attacks in New York and Washington, DC, when spending declined by more than 7%, according to the report.
The free fall was hastened with spending cuts in all major sectors except healthcare. The most dramatic decreases were in technology, government and nonprofit, financial services, and professional services.