In the last several weeks, economic indicators have seemed to paint a picture of the US economy that is anything but rosy. The US dollar is trading at an all-time low, unemployment is still relatively high, and credit rating agency Standard & Poor's downgraded its outlook on US debt to “negative” from “stable."
Despite an economic recovery that seems to be stuttering, the PR industry is enjoying growth that could be characterized as downright bullish. A report last summer from PE firm Veronis Suhler Stevenson (VSS) indicated spending on PR will reach $4.4 billion by 2014, up from $3.4 billion in 2010.
That is an annualized growth rate of 5.6% in four years—and although it's below pre-recessionary levels of 10.1% it's still expected to far outpace the general economy.
In fact, corporate in-house marketers and other executives tell PRWeek they are making significant investments into PR in 2011.
Ellen Davis, VP of the National Retail Federation, says the advocacy organization plans to make 10 to 12 new hires in its government relations and communications department. One of those recent new hires is Tita Freeman, former VP, communications and strategy of the US Chamber of Commerce.
FedEx plans to hire roughly 10 new staff in its communications department as well, says Bill Margaritis, corporate VP, worldwide communications and investor relations for FedEx.
So what gives with this seeming tale of two economies? Is the uptick in PR business just a bubble, or is it a sign of sustained recovery?
Jeffrey Stevenson, managing partner of VSS, believes it is the latter, to a point.
“Notwithstanding all kinds of issues the country has in terms of debt, I think it is still an improving economy, not a worsening one,” he says. “There is still a lot of negative news about the economy to focus on, and from a media consumption point of view that probably gets more headlines, but I think today is a lot better than a year ago. A lot of the growth is going in the right direction.”
Still, he says while the industry has benefited from an improving economy, he says a lot of PR's robust growth has to do with the shift in marketing dollars from general advertising. “That has more to do with it than the macro view on where the economy is headed,” he says. “PR is more measurable, and marketing spend in general is moving towards more measurable, ROI-oriented vehicles.”
Margaritis agrees growth in PR reflects an improving economy, but he says its growth has also, in part, been helped by the recession, as senior leaders are looking at value more than ever in their marketing decisions.
“Leaders are very discerning now in their executive decisions to determine where money goes, and I think decisions are ultimately being driven by value and demand,” he says. “Communication departments are now starting to deliver more value for our businesses, and decision makers are more aware of this and are committing dollars to it.”
Demand for those dollars, he says, is being heard in a number of PR disciplines at FedEx, from corporate culture and sustainability, to crisis communications and emerging market outreach. Decision makers see an increased value of earned media and social media in shaping opinions versus paid media, he says.
“We have people from various divisions of our company, including customer service, HR, and IT, who would like to have value-add services to support their digital and social media programs,” says Margaritis. “It is starting to resonate with executives that you get a higher ROI with authentic, earned media channels through both traditional and new media.”