PR maintains grip on marketing budgets

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As in previous downturns, one element of b-to-b marketing communications has remained relatively unscathed: public relations.

Why does PR historically maintain its grip on a company’s marketing budget? The major reason given is a simple one. "When youve got a $100 million ad budget and $100,000 public relations budget, marketers in general say, Leave the PR there, at least were getting some media exposure,’’ said Doug Dome, president-CEO of Dome Communications, a Chicago PR firm.

If anything, the status of public relations in the b-to-b world has risen in the decade since the last marketing downturn. PR has become more involved in the integrated marketing programs of b-to-b companies, particularly those in the technology sector.

Nevertheless, b-to-b marketers are demanding that their PR expenditures do more these days. "Companies are becoming better consumers of marketing communications," saif Jon Boroshok, president of TechMarcom, a PR firm in Westford, Mass.

Affordable service

A tangible impact of the slow economy has been a reduction in PR service fees. When dot-coms, encouraged by their venture capital backers, were building brand by throwing money at the problem, a typical public relations fee might have run about $50,000 a month. Today, a year later, fees can be had at a fraction of thata fact that has not gone unnoticed by b-to-b marketing communications directors.

"Even those companies that are happy with their agency want to know whats the going market rate," said Donavan Neale-May, founder of New York-based Neale-May & Partners. "People are coming to us, and they want to find out what we would charge to do what their current agency is doing. Then they take that information and go back and renegotiate the contract."

Even among companies checking rates, most are, more often than not, maintaining their PR programs. Kathy Lewton, president of the Public Relations Society of America, said PR is integral to overall communications strategy for b-to-b marketers.

"Public relations counselors and agencies work with clients that have other businesses as audiences not just in a tactical way, such as Well do a news release, but in a very strategic way," Lewton said. "These agencies are saying, Lets use research to understand your audience, then lets create lots of different ways to get the attention of and build relationships with those audiences. ’’

Dome says at least two of his firms b-to-b clientsBeltone Electronics and WorldCom Conferencehave maintained public relations programs while cutting ad spending. The programs are part of larger marketing strategies that would be weakened without the PR underpinning. For instance, a cornerstone of Beltones marketing is to parlay third-party endorsements into press coverage, something that Dome is still being asked to do despite the downturn.

These days, even a lifelong adman like Al Ries, chairman of Atlanta-based branding consultancy, Ries & Ries Inc., believes that PR is growing in importance. Indeed, Ries postulates that PR may eventually eclipse advertising.

"You cant build a brand by sheer force of advertising," he said. "You build it through publicity and third-party endorsements. When you have those, then you can shift to advertising." While ad agencies think they are in charge of brand building, Ries said, "long term its going to be a real shock to the advertising business when this thing turns around and makes PR people brand builders and ad agency people followers."

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