The UK PR industry has reacted with surprise to a survey that forsees growth of almost eight per cent in clients' spending on PR and sponsorship during 2003.
The Havas-commissioned study - published last month and undertaken by London Business School's Professor Patrick Barwise and Kudos Research in the summer and autumn of last year - surveyed 727 chief marketing officers at companies spending at least £667,000 a year on marketing.
The survey examined actual and planned expenditure in the US, UK, France, Germany and Japan, on advertising, sales promotion, direct mail, interactive marketing and PR/sponsorship over three years (2001 to 2003).
Somewhat surprisingly, given widespread reports of shrinking global marcoms spend in the past 18 months, the results concluded that overall marketing budgets in the five countries were roughly static in 2002.
Those not yet seeing any break in the dark clouds will likewise be pleasantly surprised to see a prediction of 'modest growth' in clients' marcoms spend for 2003.
In the PR/sponsorship category specifically, clients' UK spending fell by six per cent in 2002 compared with 2001, according to the research.
But growth of an impressive 7.8 per cent is predicted for PR/sponsorship income in 2003.
Overall, both media advertising and PR/sponsorship have been losing share of overall marketing spend, while direct mail and interactive marketing have gained ground during the past 12 months, according to the study.
It suggests evidence of a long-term shift from traditional media advertising towards internet marketing and direct mail.
Alex Young, head of PR for agency search and selection firm AAR Group, says: 'In any downturn, direct response communications will see an increase in spend as clients need to see return on investment.'
However, overall she admits to being surprised by the findings in respect of PR, adding that she 'would have expected a decrease in PR spend to have been nearer ten to 15 per cent'.
Others in the industry suggest timing could be a factor. PRCA chairman Graham Lancaster believes the fact that much of the research was conducted in August could explain the optimistic prognosis in terms of UK PR budgets, saying the third quarter of 2002 proved especially tough for many PR agencies.
In response, Professor Barwise says: 'The numbers in the survey represent what a large sample of clients told us in the summer. When we asked them again in October the numbers hadn't changed significantly'.
Agency Insight MD Andrew Melsom says he detects a 'mood of exhaustion' among the clients and agencies he deals with: 'My instinct is that 2003 will be static or lower, in terms of overall marketing spend. I don't think we're anywhere near a tide of positive opinion yet.'
But Melsom is optimistic in respect of the PR sector, saying, in his experience, marketing budgets are increasingly being diverted into PR for 'efficiency' reasons.
In respect of the mooted shift towards direct marketing and interactive comms, Suki Thompson, managing director at another agency search and selection firm - The Haystack Group - stresses that boardroom influence is a crucial determinant of individual disciplines' claims on clients' overall marketing spend.
She says: 'While PR firms, ad agencies, media companies and brand consultancies have some relationships with their clients at board level, DM, interactive and sales promotion agencies have little or no influence.'
IPR director-general Colin Farrington stresses how measurement and evaluation - 'showing that pound-for-pound PR can generate far more value than advertising or other forms of marketing' - is key to achieving sustainable, long-term growth in clients' PR spend.
Looking forward, Young says: 'It's up to the PR industry to keep its cool. It's currently a "buyers' market" out there and consultancies are fighting tooth and nail for business that, in terms of fees, they wouldn't look at in a healthy climate.'
Lancaster says that 'unless you are very confident', PR agencies would be prudent to budget, on average, for income falls of around five per cent this year. He believes any significant fee income growth will most likely be seen in the second half of 2003 at the earliest.
But Barwise is unrepentant:'The UK PR industry would seem to be heading for growth in 2003. The exact figure, of course, depends on the overall economy - and if there's a war in Iraq, all bets are off.'
Despite the LBS study's relatively optimistic indicators, Farrington says the PR industry 'shouldn't breathe a sigh of relief too soon'. Finance directors at PR agencies - many of whom have been hard hit by clients' budget cutbacks - would second that sentiment as 2003 dawns.
The Havas/LBS report can be accessed at www.london.edu/marketing.