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The Public Relations Industry Market Assessment 2005
Key Note Publications Ltd, May 2005
Public relations (PR) activities have traditionally worked alongside those of marketing and advertising to influence public perceptions of any given organisation, product or service. Often seen as somewhat shadowy, PR does not receive as much attention as its more glamorous siblings; however, its role is increasingly important to the organisations that it serves and it is for this reason that we are publishing our first The Public Relations Industry Market Assessment report.
As an industry, PR is slightly younger than either marketing or advertising. In these days of globalisation, as organisations are having to demonstrate greater accountability — in corporate governance, in their responsibilities to society and to the planet, and in the way in which they communicate with their employees, shareholders and the world at large — it is nonetheless a growing industry.
Like most industries, PR suffered a setback during the bear markets between 2000 and 2002, but, while recovery has been slower than hoped, 2004 saw a slight return to growth and all the commentators to whom we spoke during the research process of this report are optimistic that 2005 will see the industry becoming a lot more bullish.
As with advertising and marketing, the larger agencies offer the full plethora of PR services — from branding to crisis management — although very specialised PR communications, such as those surrounding financial dealings, tend to be handled by specialist agencies: this report lists the top 20 financial PR agencies by the number of deals they handled during 2004.
The industry can also be generally divided between agency and consultancy practitioners and those serving in-house for their employers. An organisation's in-house PR capabilities do not, however, preclude the use of an outside agency, which might be employed for specific launches, for example, or for specific services, such as corporate communications or crisis management to address negative media comments.
McDonald's was the target of much negative media coverage during 2004 as the obesity debate gathered momentum. Manufacturers of those foods that are high in fat, sugar and salt (HFSS) are addressing the way in which they market their products and are also turning to PR to find positive messages to promote. The Institute of Public Relations (IPR) created a separate Health and Medical subgroup in October 2004 as a platform for those of its members concerned with this area of the industry.
The growing emphasis from clients on return-on-investment (ROI) is also of concern to the industry. The IPR has been involved in two major research studies to consider the role that PR can potentially play. The first was entitled Unlocking the Potential of Public Relations — Developing Good Practice; this was jointly funded by the Department of Trade and Industry (DTI) and was published in November 2003. It prompted the second study — Best Practice in the Measurement and Reporting of Public Relations and ROI — which was published in March 2004.
Both studies point to the changing role of PR, from merely gaining as wide a coverage in the media as possible for its clients to a much more precise and measurable coverage, which can be proven to affect the target audience's attitudes and behaviour.
The PR industry is being held more accountable; so too are the organisations served by the industry. In addition to demonstrating their corporate social responsibility (CSR) — defined by the Global Alliance for Public Relations and Communications Management as how private enterprise affects (and is affected by) social, economic and environmental issues — new legislation came into effect in April 2005 obliging all quoted companies to produce Operating and Financial Reviews (OFRs), with non-quoted large and
medium-sized companies producing Directors Reports. These will result in much greater financial transparency, allowing shareholders to more easily evaluate a company's performance and prospects.
This report also looks at the services that support the PR industry. Both in-house and agency practitioners outsource their news distribution to specialists whose contact databases are growing increasingly large in order to embrace the global scene in which many of today's organisations operate. Many news-distribution agencies also monitor the different media for mentions; this is an area equally served by specialist agencies that have been in the newspaper-clipping business for many years and one that is also changing as larger companies make strategic acquisitions here to increase their portfolios in order to serve a wider market. Technology plays an increasingly important role here: search-engine technology allows the scanning of online media to be performed quickly and efficiently, while e-mail allows the rapid dissemination of both news and results.
Internationally, the US and the UK are the largest users of PR, but inroads are being made into rapidly developing territories, notably China and India.
In order to gain insight into the industry, we spoke to several leading industry spokespeople. All echoed the findings of the IPR/DTI report — that qualifying the size and scope of the PR industry is problematic. However, this report goes some way in describing the scope of the industry as well as detailing its concerns and activities. The report also examines in detail some of the key players within the industry — both those that are established and those that we believe will have an important role in the future.
Primary research among key industry spokespeople further details the industry concerns as well as looking forward to how the industry will grow over the next 5 years (2005 to 2009).
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