Corporates seek better value

Most PR agencies have been asked to reduce their fees in recent months, according to new research.

Top table PROs are present in making key boardroom decisions
Top table PROs are present in making key boardroom decisions

The survey by corp comms and PR recruitment firm VMA Search found that comms was regarded as increasingly imp­ortant – but suggests agencies would find the recession tougher than in-house teams.

According to the research, corporates are increasingly recognising the value of PR and showing commitment to their comms teams as PR is no longer seen as an optional extra.

Julia Meighan, VMA’s CEO,  said: ‘The industry has slowly fought its way to the position of being a core business activity, critical to a company’s success rather than the add-on that any new business function starts as.’

The qualitative survey of 135 comms directors and agency directors found 72 per cent of in-house comms directors had no plans to cut headcount – with 23 per cent even pledging to grow their teams.

However this commitment to in-house comms operations appears to have had an impact on the agency world.

The report found 54 per cent of corporates were looking to cut PR budgets with that translating to a reduction in fees.

Three out of five PR agencies said they have been asked to reduce fees in recent months and 56 per cent of fin­ancial PR agencies are seeing clients demanding more work for the same fee. As a result agency bosses said there would likely be redundancies of up to ten per cent across the industry.

‘FTSE firms are doing one of two things,’ said Meighan. ‘They are either cutting costs by reducing agency spends or cutting costs by trimming their own comms functions and putting more project work out to agencies.’

But while most are seemingly choosing the former opt­ion, nearly half of agencies reported an increase in project work and more than a third are dealing with more change management related issues.

While the majority of res­p­ondents expected the current recession to be deeper than that of the early 1990s, there was conviction that PR would not be hit in the same way.

One in-house survey res­pondent said ‘never has the
value of comms currency been so high’, while another rem­arked ‘organisations that retain a strong voice during a recess-ion tend to come out of it stro­nger than those that do not’.

How I see it

Angus Maitland

Founder, Maitland

PR’s position within corporations has changed. Internal comms heads have a much higher status within firms. Crisis issues can be seriously damaging and these days there is greater realisation that PR is a small price to pay for a insurance against something going badly wrong.

Emma Waddell

Head of PR, TUI Travel UK

A PR team has an important part to play in getting messages out and driving tactical sales. If companies’ budgets come under pressure it is easier to scale back agency use rather than cut internal headcounts. Reducing agency spend gives flexibility to adapt resources and it can always be increased again when business picks up.

Proportion of in-house teams that will not cut headcounts

Say this recession will be more serious than early 1990s

Minimum months that most think recession will last

Level of headcount cut predicted in agency world

Of agencies looking to increase client numbers

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