Not to be the Debbie Downer in the room, but why are things so good in PR?
There are sectors of the industry hurt by the generally sluggish global economy, but any overall turmoil in the micro-economy of the U.S. PR industry has not been as apparent as some expected earlier in the year. In interviewing executives in January and February about their 2007 revenue numbers (which were predominately positive), most were cautious about predictions for 2008, especially in technology. But there’s been an apparent exhale lately resulting from a solid first three quarters of ’08 in PR.
Why? Because PR is no longer a leading indicator of economic recession, according to one school of thought headed by Harold Burson, who is blogging away his observations at 87. Burson says the impact of a global economy that’s losing steam has been different from the dozen or so recessions he’s seen at Burson-Marsteller in its 55 years in the biz.
Where PR and communications budget cuts were the often the first sign of rough economic times in the past, it hasn’t happened in the current recession. “Of the several public relations firms with which I have discussed the subject, none has suffered reduced fee income or profits,” he says. “In face, at the current rate of activity, 2008 promises to be the best year for agencies since 2001/2002” after the tech bubble burst and things started humming again.
The hits that have come in PR this year are a direct result of devastation in sectors like financial services and the real estate/mortgage field which have trickled down to put some hurt on PR. While Hunstworth was up overall, the company reported PR revenues in the first-half dropped 40 percent in the IPO and M&A categories, although that drop was offset somewhat by litigation and crisis work that usually stems from a troubled industry.
Burson gave a handful of reasons why he thinks PR has proven to be so resilient amid larger malaise. The “work in progress” that is the digital era has kept companies committed to spending as part of the “experimentation” that is taking place. Burson also says the increased use of research in wooing and retaining customers “has renewed interest in what we old-timers call product publicity,” and the fragmented nature of the global economy (tech is up, autos are down; Asia is up, North America is not, for example) no longer has all the PR chips in one basket, so to speak.
Of course, as Chadlington suggests, the worst may yet be to come.