How Social Media Is Helping Public-Relations Sector Not Just Survive, but Thrive
NEW YORK (AdAge.com) -- In 2009 Katie O' Brien was looking for an agency partner to help her launch a major digital effort. The global digital marketing manager at Ben & Jerry 's issued a brief to a traditional digital shop and a traditional PR agency, Edelman. The plans they brought back were, in Ms. O' Brien's own words, "night and day."
The biggest difference, she said, was that one understood social media better than the other -- and it wasn't the digital agency. "The digital shop didn't try to understand what we were trying to accomplish with the campaign," said Ms. O' Brien. "What Edelman brought back was extremely strategic, it told a story and took into consideration all of the different spaces -- earned, owned, paid and social. It hit on everything. I felt like they got our voice and maybe because their roots are in PR it was never just about buying banner ads with Edelman."
Like every other marketing sector, the PR industry took a beating in 2009. But unlike the last major downturn in the PR business, which was brought on by the dot-com bust and 9/11, the industry is experiencing a much quicker rebound this time around -- and a good part of the credit might to social media.
With marketers looking for both social-media and digital guidance, PR has seen increased and broader assignments from current clients, closer relationships with CMOs and a much bigger pipeline of new-business pitches.
Three-quarters of the 59 agency CEOs and CFOs surveyed by the Council of PR firms reported growth in the first half of 2010 vs. 21% in 2009. A majority (81%) of those surveyed are also expecting growth in 2010 overall revenue. And 75% said the new-business pipeline is stronger than it was a year ago compared to 33.8% who said the same thing last year.
Spending on PR will hit $3.4 billion in 2010, an increase of 3% over 2009, according to Veronis Suhler Stevenson, a private-equity firm that publishes annual reports on the state of the PR industry. It expects that number to hit $4.4 billion by 2014. John Suhler, co-founder and president, said growth in the industry is being accelerated by a significantly increased rate of client adoption of social media and word-of-mouth marketing techniques.
PR, up until now, "wasn't central to a corporation's overall branding strategy," Mr. Suhler said. "There is now an opportunity for the PR profession and practitioners to use these [digital] tools and make PR a more important part of the communications arsenal."
In their second-quarter earnings calls, Omnicom Group and Interpublic Group of Cos. reported increases in business of more than 7% for their PR divisions. Tom Harrison , chairman and CEO Omnicom Group's Diversified Agency Services, which oversees the holding company's PR shops, including Ketchum, Fleishman-Hillard and Porter Novelli, said part of the improvement in business is because of the dual role PR plays for marketers.
"PR can prepare a brand or product for its target market while also preparing the market for that new brand or product," Mr. Harrison said. "There isn't another discipline in all of communications services that can do that for a brand."
"More and more it's being taken for granted by marketers that social media and digital falls in the PR space," said Harris Diamond, CEO of Interpublic's Constituency Management Group, which oversees Interpublic's PR shops such as Weber Shandwick, Golin Harris and MWW Group. "And the whole engagement concept and lack of trust people have in authority figures or characters telling them what to buy or where to invest plays to our strengths."
PR shops have played major roles in developing, creating and executing digital and social efforts for key clients. Ketchum has worked on efforts for Kodak, Dr Pepper, Best Buy and FedEx. Weber Shandwick has helped clients such as Pepsi and KFC while Edelman has handled efforts for eBay and Quaker. And PR agencies within WPP were behind Ford's highly praised Sociable Drive campaign.
ConAgra tapped Ketchum to work on the digital effort for Chef Boyardee's Club Mom, launching in December. While many marketers have automatically given this type of work to digital shops because social media largely lives online, digital is really just the way social media is distributed, said Brett Groom, VP of content activation at ConAgra.
"The space is about listening and understanding what has impact with consumers," he said. "PR agencies are more fundamentally aligned with the social-media structure and [know] how to figure out what things might resonate with consumers far better than a digital shop, which is more about the technology."
Edelman CEO Richard Edelman admits that the digital shift is critical to the business increase but said companies have never faced more challenges on reputation than they do now, which has resulted in even more work. "We're seeing the combining of corporate reputation and brand marketing and that plays to PR's strengths," Mr. Edelman said.
MaryLee Sachs, worldwide director of marketing communications at WPP's Hill & Knowlton, said internal communications work is also driving new business. "Marketers are beginning to realize that the consumer is not the be all and end all, and that there are a lot of other stakeholders that can influence the business, most of all employees," she said.
The fact there's debate over whether marketing and PR should remain separate is evidence of PR's growing importance, said Ray Kotcher, CEO of Ketchum. "You are going to start seeing decisions about whether marketing should report to PR," he said, adding that he's witnessed significant budgetary shifts from creative agencies to PR shops at some clients.