6.1.07

PR: Crisis what crisis?


My colleague Simon has written an interesting post at Simon Says on the perilous state of the PR industry following the publication of the latest research on the sector by Lighthouse.
The general thrust of the research (mainly American I think) is that PR companies are in a mess financially and many will go bust. Indeed, anecdotally I have heard of two major agencies in the North of England that have gone tits up but gentlemanly honour forbids me from saying which ones – they are both based in Harrogate.
Lighthouse notes: “High-volume PR that weakly reflects brand values is not valued by the board. As a result, PR is disrespected. It holds a trivial position in most organizations.
“PR's inability to produce valuable results is reflected in under-resourcing and under-pricing by agencies. Most agencies' pre-tax margins are a miserable 3.6%. Twenty percent of agencies price below cost. Their sales growth conceals forthcoming ruin. A further 44% of PR companies barely break even. The remaining one-third of agencies deliver real value, but their profitability is also threatened by consultancies that price below cost.”
Over at GREEN this has not been my experience. We’ve just had one of our best years in terms of sales and profitability. And in the first two weeks of January we have four new business prospects that we are pitching for.
The problem is clients – isn’t that always the case – some get it immediately and understand the benefits of robust, honest media relations and reap the benefits (thankfully most of our clients). The doubters tend to treat it as advertising even though advertising failed when it drifted from its scientific roots to become a creative art form (I’ve always thought advertising art directors calling them selves Creatives rather pretentious). Their goal is to make famous adverts, not famous products or business returns.
There is a danger that PR goes the same way. Good PR companies, however, will continue to be successful because they are good at delivering on their client’s bottom line – whether that is selling more cheese (nod to Wensleydale), creating a unique co-creation company (nod to Ladybank Company of Distillers) or encouraging people to adopt a great bread brand (nod to Warburtons). All this involves a lot of damned hard work by dedicated professionals.
I didn’t intend to write this as a paean to my company rather than to point up that maybe some companies deserve to go by the way – because of bad PR and bad financial management. And clients should remember that you get what you pay for…
As Analyst Equity points out: “PR can play a crucial role in bringing the brand to life. However, PR needs real understanding of how customer perceptions are changing in the target markets if it is to align the brand to customers. The reality is that few PR managers even align their campaigns to the corporate marketing plan, let alone aligning their campaigns to customers: in-house PR managers know how few agencies ask for the marketing plan; PR agencies know how few clients offer it. PR can transform brand perceptions, support sale-making push-pull marketing programmes, and integrate PR into the wider business marketing engine.”

2 comments:

Anonymous said...

Any clues concenring the two possible closure in the Harrogate PR world? (hamerrichard@hotmail.com)

Ian Green said...

Yes and no. I've been given the names of two agencies that have been deemed to be in trouble. But I think it would be unfair of me to give say who is who as I am only dealing with rumours here.
And rumours are a dangerous thing - to the extent I regret making the annoucement in the first place - mea cupla!
However, when I confirm the facts I will post again.
Thanks for the comment though.