PR gets specialised

Public relations is becoming an integral part of overall marketing campaigns, and the line between PR and advertising is being blurred by activities such as the production of viral videos. This has contributed to the industry’s relatively strong performance over the past five years, particularly in comparison with advertising services.

The increasingly technologically and complex array of potential communication channels presented by the emergence of new media has also benefited the industry by boosting outsourcing of PR services. It has become increasingly difficult for in-house PR and communications teams to keep up with new media developments and opportunities. In many cases it has become more effective to outsource to PR firms that can offer comprehensive strategic guidance and have specialists in new media fields such as website optimisation and social media.

IBISWorld estimates industry revenue will grow at an average annual rate of 1.4% over the five years to 2009-10. The global financial crisis and resultant uncertainty over the economic outlook saw marketing budgets trimmed in 2008-09 as businesses looked to cut costs. This flowed through to the PR industry and revenue contracted during that year.

During 2009-10, however, the industry has recovered somewhat, with a marginal increase in revenue. Revenue growth was strong prior to 2008-09, largely reflecting economic conditions and their impact on marketing spending. Also contributing was the shift toward allocation of a greater proportion of budgets to below-the-line activities, and the timing of federal and state elections and major campaigns by government departments.

Over the outlook period, the PR industry is expected to continue to benefit from the increasingly common use of new digital media in engaging and communicating with clients’ customers. Increasing communications about environmental issues, including the carbon footprints of clients and their carbon reduction strategies and offsets, is expected to be a major new area of communication and work for this industry.

Continuing growth from contracting out of PR services will also occur. A key issue for the PR industry over the outlook period is that some further consolidation, globalisation and integration of services may continue, with more attention being paid by clients to the effectiveness of their campaigns.

IBISWorld estimates industry revenue will grow at an average annual rate of 3.4% over the five years to 2014-15. This growth relates to forecast stronger economic growth, which will see stronger growth in advertising and marketing budgets. Of importance over the period will be the continuing strong transfer of marketing and promotional expenditures to PR, in line with the demand for more direct and cost-effective means of communicating with customers, and recognition of the increasing importance of communicating with a range of stakeholders and others that can influence a company’s financial and operational performance.

Key success factors for operators in the industry:

• Highly trained workforce. Skilled, creative and qualified staff are required to carry out client briefs.
• Having a loyal customer base. To develop over time a base of repeat clients and to ensure that a significant component of fee income comes from repeat work from satisfied clients.
• Optimum capacity utilisation. To ensure that staff spend the maximum time possible on chargeable hours to client work.
• Well developed internal processes. To have the ability to monitor time and costs spent on projects and evaluate these against the agreed budget.
• Production of premium goods/services. To provide quality service to clients, delivering quality products to clients both within time and budget.
• Having a good reputation. Word-of-mouth recommendations are important to attracting new clients.

Robert Bryant is the general manager of business information firm IBISWorld.