The Economist, arguably the most respected of all global business periodicals, recently devoted a full page (January 16, 2010 issue) to the public relations business. It titled its article:
Other Firms’ Suffering has Bolstered the Public-Relations Business
The article is perhaps the most positive assessment of public relations in a major business publication in the past twenty years. Its special significance for public relations is that in about a thousand words of copy there is nary an appearance of the words “flack” or “spin” – nary an allegation that public relations professionals “obfuscate,” “whitewash” or are otherwise less than truthful.
In effect, the thrust of the article is that corporate CEOs (it’s also true of not-for-profits) increasingly recognize that public relations strategies and tactics can be effective in solving problems – especially in a time of economic adversity. It also positions public relations as the discipline most involved in capitalizing on the overwhelming versatility of the internet.
But the article actually understates the substantial role of public relations in the global economy. It treats only that portion of public relations activity handled by public relations/communications firms. The estimated amount spent on public relations in the U.S. in 2009 is put at $3.7 billion, an increase of nearly 3 per cent over the previous year. That figure includes only the fee income received by public relations firms for services provided in the U.S. It does not include out-of-pocket disbursements covering implementation costs of campaigns and programs or, even more significant, the monies expended by corporate or institutional or governmental internal public relations/public affairs/communications departments.
There are no reliable estimates on the totality of public relations expenditures in this country or elsewhere. Nor is there a clear-cut description of what activities fall within the rubric of public relations/communications. For example, some corporations include public affairs or government relations (lobbying) in their public relations budgets. Some regard corporate philanthropy as a subset of public relations. For various reasons, many corporations are skittish about disclosing their total expenditures on public relations.
But an educated (and conservative) guess is that the internal “spend” on public relations/communications is at least three to four times the amount spent with outside public relations/communications firms. That means the total U.S spend for services falling within the public relations classification is now in the $15/20 billion range – and growing year-to-year. One example of the industry’s growth: the annual revenues of the largest global public relations firms today approach a half-billion dollars, roughly half of that amount generated in the U.S. and half abroad.*
While the article correctly points out that “the rise of the internet and social media has given PR a big boost,” it repeats the myth that “PR has done well in part because it is often cheaper than mass advertising campaigns.” While some public relations professionals would concur, the fact is that no experienced marketer of a nationally or globally distributed consumer product would ever depend totally or even predominantly on public relations to sustain supermarket sales day-after-day, week-after-week, month-after-month. Paid advertising – both electronic and print – plays a specific and irreplaceable role in motivating customers to favor one product over another. Public relations can play an important support role in making paid advertising more credible, give it broader reach and an implied “third party endorsement” benefit. It’s seldom a case of either/or; the most effective result is usually a combination of the two – and that’s happening more and more.
As with other articles in broadly-based media, the Economist also views public relations as near totally media-centric – that the role of public relations is to obtain “free publicity.” While clippings and air time and mentions on blogs and the internet’s social sites are indeed important, significantly less than half the money spent for public relations is aimed at the media. In fact, monies expended on developing strategies in the public affairs area are probably more a factor in the growth in public relations than the advent of the internet (which itself has a role in seeking public relations objectives as well as achieving sales goals). Other significant growth areas ignored by the general media are internal communications and programs that derive from public demands that corporations be more socially responsible, i.e. the green movement is just one example. Thousands and thousands of hours are invested by public relations developing programs – strategies and tactics – that address these intangible issues that are transforming the way companies do business.
These observations are in no way intended to be critical of those who report on public relations in the general media. Instead, its intention is to remind fellow practitioners that we in public relations continue to suffer the fate of the cobbler’s children. We’re so busy explaining the businesses of our employers and clients that we have had no time to explain the role of public relations in today’s complex economic and social environments.
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* When Burson-Marsteller became the world’s largest firm in 1983, our worldwide revenue was $63.8 million – which translates into eight-fold growth in the past quarter-century for those public relations firms that are now at the top of the heap.