Most shops offer PR services, or at the very least manage the outsourcing of it for their clients, but they still regard it as a subordinate service. How do we know this? Because Kipp Cheng, the chief PR executive for the American Association of Advertising Agencies, told us so. In fact, he passed along a new AAAA study that proves it.
While 77% of member agencies do offer public relations services, they treat it as a second class service because it generally is a less stable source of revenues than advertising, and because it generally represents paltry fees, according to findings of a just-released AAAA survey on the topic. The study, which polled 264 agencies in December 2003, found that nearly two-thirds (61%) described the average PR budget per client as being under $100 000. Only 29% said client PR budgets ranged up to $250 000.
Agency executives were divided on the stability of the two types of business. Forty-four percent of the respondents said advertising was a more stable revenue source, while 44% cited PR as being just as stable.
Nonetheless, agencies may have another incentive for cultivating more PR business: profits. More than two thirds (68%) of agency executives said that PR has higher profit margins than advertising, while 21% said it is roughly the same as advertising's. In this era of shrinking advertising commissions, PR fees seem like a logical diversification strategy for traditional ad shops.
More importantly, we sense another push toward integrated marketing communications. And this time, it's not coming from big, agency holding companies, or from professors of marketing. This time the drive is coming from marketers themselves who recognize that integrated marketing communications no longer is a goal, but an imperative. Witness Procter & Gamble's recent communication planning review. It may be some time before we see the results of those efforts, but we would assume that PR - in all of its manifestations - will play a more central role in the process.
Right now, according to the AAAA survey, many agencies are offering PR more as an "accommodation to clients", but others "have just started the practice and are seeing its benefits".
Not surprisingly, agencies identified many barriers to increasing their role in public relations, including:
-- New business: 31%.
-- Measuring results: 23%.
-- ROI is difficult to quantify.
But those sound like issues that could be applied equally to advertising, as well as PR. The biggest issues, we suspect, are cultural ones.
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