PR spending forecast to increase 3.7% this year

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New York--Spending on public relations is expected to grow 3.7% this year, according to the first-ever Economic Annual Report conducted by PR firm Golin/Harris International on behalf of the Council of Public Relations Firms, an industry trade association.

PR spending in 2001 totaled $2.7 billion, and Golin/Harris expects that number to increase to $2.8 billion this year. The firm's conclusions are based on modeling assumptions tied to Gross Domestic Product (GDP) growth numbers and general advertising spending figures.

"We had to make a couple of heroic assumptions," said Jaime de Pinies, exec VP-chief economist at Golin/Harris. He said he expects an 8% to 10% growth rate for PR in 2003.

Kathy Cripps, president of the Council of Public Relations Firms, said companies increasingly are realizing the benefits of PR, "but are cautious and slow to commit to budgets."

De Pinies agreed that more companies are recognizing PR as a valuable, direct and cost effective means of marketing in both the b-to-b and consumer sectors. He noted PR growth from 1995 to 2000 "systematically outperformed ad growth by a ratio of two to one," based on spending figures from the top 50 PR firms and top 500 ad agencies. Those numbers are derived from BtoB sister publication Advertising Age and O'Dwyer Publications.

Separately, Abbott "Abe" Jones, managing director of AdMedia Partners Inc., said mergers and acquisitions of PR firms by agency holding companies dropped sharply after Sept. 11.

There were 29 transactions in the first half of 2001, and only 10 in the second half. Within his own company, Jones said three deals were put on hold after Sept. 11 and work on them did not resume until 2002.

"Deals are getting done [in 2002], but they are much more strategic," he said. Jones said most deals are for less than $10 million and take much longer to complete than before.

--Carol Krol

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