US PR budgets buck the economic trend soaring 21%

HIGHLAND PARK, IL - Despite the downfall in the economy, and in direct opposition to massive cutbacks in above-the-line advertising spending, the average corporate PR budget has swelled by 21% over the past year.

The 10th annual Thomas L Harris/Impulse Research PR Client Survey, released September 23, reported an increase on the average PR budget from $2.25m (£1.44m) in 2001 to $2.7m in 2002. Of that, internal budgets experienced a 24% gain, while external spending on agencies was up 19%.

"The results indicate that people are getting smarter about how to handle their media spending," explained Bob Novick, president of Impulse Research Corporation. "As more expensive media budgets like advertising are being cut, the emphasis is being refocused and placed on PR."

Richard Edelman, CEO of Edelman, agreed, "On the brand marketing side, corporations are buying into the notion that PR must come before advertising in establishing brand positioning."

The 1,540 participants (43% of the 3,575 recipients) were representative of 24 different industries. The largest category of respondents was health and medical services (16%), an industry that has done particularly well through the slump.

Figures for different PR disciplines show that corporate media relations proved to be the largest PR budget item for the second year in a row, although it declined 4% overall. Product media relations, investor relations, community relations, and research reported the greatest increase in budget over 2001. "Communicators have been enlisted to restore consumer and investor confidence, help with altruistic needs, and constantly try to define the value they create," explained IABC president Julie Freeman.

When the Harris/Impulse survey asked on what basis participants judge their PR firms' performance, 45% noted "measures results" as a key evaluation point - a 10% improvement from 2001. "The increasing trend of PR being seen as a marketing tool has resulted in it being more and more subject to the need of having its impact measured," said Novick.

The survey also reflects the changing agency landscape, as 30% of respondents noted that the agency they used was either acquired or had acquired another firm -- although there was no clear indication of whether this was good or bad. Eleven percent reported improved service after the change, and 11% reported a drop in service.

Overall satisfaction with agencies was up 5% from 2001, with 74% rating their firms' performance "outstanding" or "very good."

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