The 2006 PRWeek/Cymfony Corporate Survey reveals that communicators on the corporate side are grasping the importance of new media and measurement - but not everyone has jumped in with both feet.
Corporations will sometimes say they run their communications like a political campaign, meaning they seek to emulate the intuitive, quick-thinking, fast-paced momentum that defines that culture. But what some companies may not realize is how much the political world depends on metrics, and not just instinct.
As Republican National Committee chairman Ken Mehlman told The New York Times' Adam Nagourney in a September 22 profile, successful campaigns take more than intuition. "Gut alone is crazy," Mehlman said. "Why do gut when you can go with objective information? Hope is not a strategy. And gut instincts are always less effective than objective analysis."
Companies, like campaigns, are dependent on hard data. Yet, according to the PRWeek/Cymfony 2006 Corporate Survey, only 51.1% of respondents have allocated some of their 2006 budget for measurement, and of those who did, more than half only allocated 1% to 5% of their budget.
Jim Nail, CMO at Cymfony, says the numbers don't match the interest that he sees in clients wanting to quantify the results of their efforts. But he does concede it's not always easy for clients to step into the measurement process. "All of marketing is so much about being tuned in," he says, "[but] taking that step back to measure is difficult."
Nevertheless, the majority of corporate communications heads whom PRWeek interviewed for this feature strenuously defend the need for measurement in any PR campaign.
"You can't control what you don't measure," says Mark Stouse, BMC director of worldwide corporate communications. "PR people [who] say, 'I can feel it in my gut,' may be correct, but a business executive is going to say, 'You want me to trust your gut?'"
"I come from the political world where you live on feedback; you can't do your job without it," says Gary Sheffer, GE executive director of communications and public affairs. "You can't translate anecdotal into [substantive]. Our influence within the company will be dependent on value through metrics."
An expansive role
The 2006 PRWeek/Cymfony Corporate Survey polled 219 in-house professionals, drawing primarily from the technology, consumer products and service, and financial and professional service industries. Nearly half had revenues from $100 million to more than $1 billion, and half had between one and five employees in the communications department.
Of all the various marketing communications functions that could fall under the PR department's purview, media relations (79.5%) was most prevalent at respondents' companies. The PR function also often oversaw crisis management (62.6%), employee and internal communications (59.4%), and special events (56.6%).
"A significant part of our function has to do with strategic communications - and altogether too much crisis communications," says John Buckley, EVP of corporate communications for AOL, referring to the data leaks and customer-service scandals that have plagued the company in 2006.
Tom Mattia, Coca-Cola SVP of worldwide public affairs and communications, affirms that in today's environment, the communicator is busy.
"When I think of the PR function at Coca-Cola, I think of an organization that, for the first time in 35 years [of experience in communications], is truly a 24-7, 365-day-a-year operation," says Mattia. "There is literally never a moment in any day where our products aren't being produced or consumed."
Budgets and staff
About 40% of respondents say their annual PR budgets are at least $250,000, and 21% say they are in excess of $1.25 million.
Stouse says his PR budget will be slightly above $2 million next year, and SAP's PR and communications budget is more than $20 million this year, notes Steve Bauer, VP of global communication.
AOL's Buckley says that while the company hasn't finalized its budget process yet, he knows the PR budget is in good shape because the company is overhauling its business plan by eliminating its paid model.
"With AOL going to a free model, we're going to be cutting our marketing costs that had been going into trying to get people to subscribe," Buckley says. "The company is completely mindful that when you cut your marketing budget, [it's] not a good time to cut your corporate communications budget."
PR departments are spending their 2006 budgets on a variety of functions, with most allocations going to media relations (18.6%), product and brand communications (13.1%), special events (9%), and employee and internal communications (8.7%).
"Our main focus is still media relations," says Eric Brown, senior director of worldwide PR at Network Appliance (NetApp), adding that its focus is split between IT and business media. Media relations takes up somewhere between 50% and 60% of NetApp's budget and time, and 30% is divided between thought leadership and online initiatives.
Coke has talked a lot of its decision to place more of an emphasis on internal communications. Says Mattia: "Internal communications is something that Coke hasn't traditionally done that well, but we're working to change that. Our people have the right to know more and [know] first, whenever possible. We're working with the bottlers on how best to do that."
While PR as a discipline has gained understanding and acceptance in the overall marketing mix, and, as a consequence, many corporate communicators are collaborating with, if not reporting to, CMOs, there has been little movement in the corporate survey over the past three years as to the respondents' reporting lines.
In this year's survey, about 44% of respondents say they report to the CEO, chairman, or president. AOL's Buckley is one such corporate communicator, reporting to CEO Jonathan Miller. Similarly, SAP's global communications function reports to its CEO and has for more than 10 years.
"Reporting to the CEO is vital for two reasons: It enhances the [role] of corporate communication on business decisions, and it's vital to have the CEO sensitized to how any particular action can have a reaction in the public domain," says Buckley.
Through talking to her senior clients, Porter Novelli partner and CEO Helen Ostrowski indicates that she has seen a growing visibility of the PR function across all senior levels.
"There has been a concern about where the reporting is functioning in the corporate level during the past couple of years," says Ostrowski. "PR is getting more visibility in the CMO universe, and the senior-most communicator [now] at least has a reporting line to C-suite."
The measurement question
Of all the topics covered in this survey, PR pros who spoke to PRWeek seemed to have the most to say about measurement. BMC's Stouse is blunt.
"To any PR professional leading an effort inside, if you have not carved off at least 10% of your budget to measure your impact, you're flying blind, and you have no way of proving your value," Stouse says.
SAP devotes somewhere between 1% and 5% of its budget to measurement, while NetApp devotes 10% of its PR spend to it.
In Silicon Valley and at tech companies, NetApp's Brown says many on the executive staff are engineers, who have a natural affinity for numbers and analysis.
"They'll say: 'We spent $100,000; what the heck was that? What did your competitors get?'" Brown says. "I decided early in my career that we wouldn't have emotional discussions; we would have fact discussions that could be put into a chart that the leaders could grasp."
Ostrowski believes that the number of companies including measurement in their budgets will increase.
"With trends like Procter & Gamble starting to add a lot more measurement, [that perception] is starting to change among corporations," she says. "If PR budgets continue to increase - they're growing at a faster rate in some surveys than advertising - that spend level will get a little more scrutiny at the C-suite."
Coke's Mattia says the company does allocate a percentage of its budget for measurement, but concedes that there are firms that "probably do more."
"You won't make good decisions just on the metrics," Mattia says. "You can't drive your car forward looking in the rear-view mirror."
Nail says the key is how corporate communications professionals use the measurement data.
"It becomes incumbent to go beyond simply what they've done," Nail says. "It's not just about achieving goals - it's about, 'Here's something we can better.' Some people are afraid of measurement because [they worry] it may make them look bad. But it can't if you go to the CEO and say, 'This is how we can do better.'"
A large number of companies that do not employ measurement programs make that decision for reasons of cost and resources. But there are some companies that see the effectiveness of PR efforts as something that cannot be programmed and quantified in this manner.
AOL's Buckley is one such person, and says: "I do not believe that a measurement service can tell me how we are doing in terms of our day in and day out. I am not under any pressure to justify our existence."
A key finding this year is that while PR professionals are paying more attention to the online marketplace, the numbers of adoption do not nearly reflect the hype. One-tenth of this year's respondents had established a blog - showing virtually no growth over the 2005 figure.
And while pundits discuss the explosion of new media, it doesn't appear that number will shoot up in 2007. Only 3.6% "definitely" expect to launch a blog in 2007, and 60% say they "probably" or "definitely" will not.
Four SAP executive board members - Shai Agassi, Léo Apotheker, Claus Heinrich, and Peter Zencke - maintain blogs, accessible to anyone who becomes a member of the SAP business community.
"We look at online communications holistically," says SAP's Bauer. "Our executive board members come in and write on topics designed to reach out to prospects, customers, and employees."
Stouse says he's getting ready to start his own blog.
"A lot of PR people see it as a bunch of loose cannons that [they] can't control, rather than seeing it as another channel of communications," Stouse says. [People] think it's controversial for a PR person to have a blog. I think that's completely missing
NetApp has been pleased with its blog reaching its intended audiences, and has been surprised by some developments.
"We expected the feedback and dialogue with customers, resellers, and partners," Brown says. "But our biggest competitor being consistently among the top five visitors to our blog is interesting."
Cymfony's Nail says that Microsoft is a great example of a company that has successfully deployed blogs to help alter its reputation.
"Microsoft had an insular reputation, but that changed by opening up [through video blog Channel 9] and showing up what the developers were doing," Nail says.
GE and AOL are two companies that do not have an official corporate communications blog, but do have employees who are blogging.
Tim Dyson, CEO of NextFifteen Communications, says companies that don't have a blog are missing a big opportunity "The notion of every company having a blog is a good one if you assume that every corporation wants to communicate," Dyson says.
While it is rare to talk to a PR professional in 2006 who doesn't refer to citizen journalists and bloggers as a crucial part of the media, the traditional media still hold their sway. As SAP's Bauer attests, "We want to increase SAP's corporate coverage among the tier-one business media."
But it is interesting and important to note how corporations are beginning to treat influential bloggers. SAP invited 10 bloggers, many of whom were small-company CTOs, to its 2006 Sapphire Conference and "treated them essentially the same way we would treat the mainstream media," explains Bauer.
With the importance of blogs rising monthly, the importance of monitoring the space rises equally. An equal percentage of small and large companies are monitoring blogs using blog search services like Technorati (32%), while smaller companies are more likely to employ traditional search, and larger companies are more likely to use paid monitoring services.
"Google is not the only place you want to be looking," PN's Ostrowski says. "There are other places to look and more services coming up determining which blogs are more influential."
"It's indicative of where things are at when it comes to the blogosphere," says NextFifteen's Dyson. "It's still an immature form of communication in the way it's monitored and measured. We're going to see a tremendous change in the next 12 months where better tools come out."
Those who don't use specialist services for blog monitoring have their reasons. Brown says that most of NetApp's systems are so cost-prohibitive, that there are only 10 to 15 bloggers who would talk about the company in their blogs.
AOL's Buckley and his team use blog search tools themselves, rather than outsourcing monitoring.
"We consider it to be the work requirements of all of us in corporate communications to check what is being said about AOL through [sources like] Technorati, Techmeme, AOL Search, and our own employee blogs," he explains. "We take the point of view that it's our responsibility to search what's out there."
Buckley says this approach has been very successful for the company, citing an incident in 2005 when bloggers claimed to uncover a change in AOL Instant Messenger policy that would infringe on users' rights.
"If you weren't paying attention, you couldn't successfully have it snuffed," Buckley says. "[That response] can only happen if it's part of your culture [that you're] responsible for keeping track of things and diving in."
Starbucks currently monitors blogs through the free tools available, but Anne Saunders, SVP of global strategy and communications, told PRWeek in an editorial meeting the company is moving to a paid system soon.
"It's becoming [more of] a media you must monitor," Saunders says.
Now that corporations have more tools to implement when creating their Web presence, they are increasing the focus on their Web sites. More than half of respondents say their Web site is an important vehicle for product and brand communications. Nearly one-third of respondents cite reputation management as an important part of their Web site.
Nail says that companies are starting to look at their Web sites beyond just a house for "transactional" information.
"It's still the leading-edge companies that are doing this; it's very 'mainstream' for a Web site to be very transaction-orientated," Nail says. "That was the Web 1.0 world; [it's important to start] thinking of the Web site as a place to engage your customer on a more emotional and brand-relationship level."
GE uses its Web site to showcase its thought leadership around the water scarcity issue.
"We're a big healthcare company, and we continue to pursue healthcare solutions," Sheffer says. "Those are the concepts we try to get across on the Web site."
A company's Web site is very important for community relations, say 31.5% of respondents, an approach that Starbucks takes to heart.
"Our Web site talks about new products and the things we do in the local community we feel are important," says Starbucks' Saunders. "At our best, we're a community gathering site. And a great way to do that is online.
We just haven't cracked that code yet."
The agency/in-house relationship
A PR or public affairs agency is used by 52.5% of respondents, roughly the same as the 57% that said they retained agencies in 2005. For every corporate communicator who feels that insider knowledge is the best way to direct PR efforts, there's another who believes that an external agency brings a "bigger picture" perspective and unique skills.
BMC selected Waggener Edstrom as its AOR in July 2006, when Stouse told PRWeek that it would tie billings to the business objectives. It planned annual PR billings to fall within the $1 million to $2 million range.
"There's an important reason why we chose WagEd as an agency; it is rapidly moving into a very unique place in the PR agency community by providing blogging expertise, both outbound and monitoring," Stouse says.
SAP's relationship with Burson-Marsteller goes back far longer, and it is a tight-knit one that brings much to both sides. "Our PR agency is a large part of our budget," confirms SAP's Bauer.
On the other side of the coin, AOL has been trimming its external PR counsel.
"We're very much outside of the mainstream of your respondents, but have significantly cut back of the use of PR firms," AOL's Buckley says. "We have a pretty small budget that goes for assistance on targeted things, as compared to a year ago, when we had a contract with RLM."
The company still occasionally uses RLM and other agencies on a project basis, but focuses much of its capabilities in-house.
"As revenues declined from 2002 on, cost cutting hit the corporate communications function, [and] we figured the better way for us to go was to build capacity in the company," Buckley says.
The agency usage picture does not look set to change much over the following 12 months. Of those respondents that didn't have an agency, only 5% said they expect to hire one this year.
"There are some companies we're seeing hiring more internally," Ostrowski says. "Some of it is more people who can help with execution; some of it is more strategic. Home Depot is taking a lot in-house."
2007 and beyond
Nail says that respondents' goals for 2007 provide a mixed message for the industry. Just over 50% of respondents said increasing coverage, helping meld advertising and communications together, and improving measurement were important.
"Increasing coverage is essentially what a PR person's job is, so it's good that improving measurement is essentially tied with it," Nail says. "But it seems like this has been a topic for a number of years. So while many people are still thinking about it as a priority for next year, it means that there's been a lot of progress."
AOL's Buckley says the company will be focusing a great share of its 2007 on sales, which 36% of respondents called important.
"Generating as much media coverage is vital; we will, in 2007, release a lot of new products in an exciting online space," he says. "Enough of that activity will generate consumer press coverage and translates into usage. We're selling a free ser-vice to users. We have always done that to a certain extent,
but it's qualitatively different when you move to a free business model."
The PRWeek/Cymfony Corporate Survey 2006 was open to all in-house communications pros. Respondents were invited via e-mail from PRWeek's subscriber list and a Millward Brown panel. There were a total of 219 completed from August 17, 2006, to September 5, 2006. Results are not weighted. Based on this sample size, the results are accurate to a margin of +/- 6.5% at a 95% confidence level.
Complete survey results, including breakouts of the information by industry sector and department size, are available for $150. Please e-mail Lisa LaMotta at firstname.lastname@example.org .