Researchers at the University of Southern California conducted a Generally Accepted Practices (GPA) study that aims to provide practitioners with data to better Communications or PR functions in their originations.
From our experience, the PR function is among the first to be cut back when a company faces economic hardship. However, most public companies choose to increase their spending on PR functions despite the recession.
But unfortunately, while corporate PR departments may be getting more support than ever, the money that is allocated to agencies is not growing accordingly. The percentage of total budget that is spent on PR Agencies is in decline. All public and private companies report that they are cutting back their relationships with agencies.
The good news is that corporations tend to work with more agencies at a time. The average number of PR Agency hired by corporation increased from 2.5 in 2002 to 3.6 2011. So, why corporations hire more PR agencies? Agencies have what corporate can’t resist. Unique perspective, marketing insight and strategic point of view are rated among the most important reasons in the GPA study. Corporation’s own PR employees may have a deep understanding about its own company and industry, but they may fail to think from a new perspective because they have been there for too long.
This trend may be telling us that corporations are shopping for agencies that have certain specialty to serve their needs. It means that mega PR agencies can no longer dominate the PR outsource market. Small but specialized agencies have more possibilities to win a contract. If you look at the services that are used by corporations, it is even more encouraging for relatively small agencies. More companies tend to hire agencies for strategic reasons which means they hire for brains not for muscles. It is also interesting to see that there is still a fairly big market out there for Low-strategy and Low-Tactic agencies. My guess is these agencies are hired just for their arms and legs. They are hired when corporation don’t want to add more personnel on their pay roll.