How can we make the PR industry more productive and profitable?

Mac Funamizu

Over the weekend I stuck my neck out and suggested that the PR industry needed to be more selective in its activities to release practitioners from the low paid, low productivity trap, short term future it faced by being so immersed in press relations.

Yesterday, I suggested that the industry is a poor performer among a range of sectors with significantly better productivity.

Peter Smith took me to task. He asked if I had any solutions!

In this post I want to extend my brief reply to him in the CIPR group in Linkedin. Here I explore some of the ways I believe the PR industry can escape the low cost trap it has got itself into and evolve into a much more powerful profession.

I did make the point that to see how we can enhance the profession, there is a case for looking at different sectors to see what they have done.

At this time, as the Fourth Estate, Parliament and the Police squabble of the role of journalists and their place in PR, we too can have the same debate. There is a good case for PR to look much more closely at the value of the involvement of journalists in PR. Much of the argument I exercised in my post last Saturday. Today, I would extend those arguments a little. There is a place for a form of press officer to be employed in building and maintaining relationships between and organisation and its press (radio and TV) news journalist publics. They can be drawn from the media, re-trained and deployed. In the same way, there is a case for similar skills in online video media, text based social media, Website design and deployment, SEO, social and event organisation for face to face relationship management, Augmented Reality, widgetry and so forth.

No doubt, as the profession evolves clients will expect PR agencies to have such skills available as a matter of course.

However, having such skills available will not achieve the sea change needed by the PR industry.

First the industry must be much more ambitious in what it wants to achieve. It might, for example set itself the target of being in the top quartile of economic sectors by way of productivity (using all three of the methodologies usually associated with economic productivity evaluation).

Secondly, the industry might, just as other industries have done, go to the PR and management colleges to identify how the industry can seek more productive services, make existing products and services more effective (profitable), train for and deploy them.

Thirdly, the PR sector needs take corporate management and practitioners along with it. No mean task and there will be exemplars and detractors and huge resistance.

The Chartered Institute of Marketing now includes a good module on Reputation Management as part of its Diploma. There is a good case for the PR institutions such as the CIPR, PRCA, IABC and the PR universities to make sure that senior management (the people who employ marketing directors/mangers) understand that press relations and reputation management are only a small part of the PR whole.

I do not want this post to be too overshadowed by the News of the World, hacking story but, it is by no means a co-incidence that a policeman thought that a News of the World journalist was his answer to solving his PR needs. Had the PR industry made its role clear, he would not today be appearing before a Parliamentary Committee.

Of course, it is reasonable to ask what kind of changes would David Phillips envisage that could make so much difference? Is this just whistling in the dark as the PR industry looses face because a bunch of ill informed politicians and policemen joined some equally poorly informed industrialist hired inadequates to 'do their PR'?

In all I would like to see a three fold increase in PR productivity over three years.

The plan will have to consider where early improvements in current practice should be made; where change can be implemented with lowest disruption and optimum return and finally how the sector can move towards greater reliance on advanced productive diversity in practice as well as people.

This means that:

1. A large proportion of the improvement would have to come from PR as it is practised today. That is, largely predicated on press relations and events management.
2. A range of enhanced value activities will need to be exploited which will inevitably mean a move up market into management consultancy and a move sideways to create greater breadth and depth in relationship management (and thereby reputation and brand enhancement).
3. A very significant deployment of opinion to show the value of a holistic approach to management of relationships by the most senior management of, even the largest, institutions.

There is a case of examining other industries which have been in a similar dilemma. Can the PR industry look at other sectors to get some idea of what is possible?

I was working in Bradford in the 1960's when the textile industry was imploding and in manufacturing in the 1980's when we saw carnage in areas like machine tools, car manufacturing and many others.

As I alluded to in my post in Linkedin, the companies and whole sectors that came through these times did a number of extra ordinary things.

Today, the apparel industry in the UK is strong and the fashion industry is worth £21 billion.

One only has to think of the high levels of productivity and quality achieved by the motor manufacturers by Nissan in Sunderland and Honda in Swindon or the Airbus aircraft manufacturing capability to see just how much can change when the effort is put in.

The £100 billion internet industry and the highly productive music industries in the UK are examples of how success can come out of adversity once the people involved realise the opportunities available and the production and change that is required to become globally competitive.

In examining what other sectors have achieved, can PR learn the lessons and move forward?

I can imagine some of the first things that the PR industry can do.

The first is to look at under performing activities and either ship them out to low cost suppliers or automated the process.

In almost every PR office and agency in the land there are interns. Many of them do lowly jobs like filling envelopes, maintaining libraries of magazines and newspapers, prepare clip books and other tasks that consume time and are labour intensive.

The task here is to look at the lowest paid people, examine the tasks they perform and the reasons for them and the enhance such activities to become less labour intensive, higher value and profitable.

If, for example the library activities (press clips, evaluation reports and magazine libraries) of interns was transformed into corporate intelligence, and insights to allow deeper understanding and acquisition of knowledge for all the client board of directors, the mundane jobs would become interesting and very valuable. So much of these tasks can be transformed using modern technologies.

At the same time some activities can be shipped out such that, for example, filling envelopes could be part of corporate social responsibility programmes giving work to the most disadvantaged in our society.

Having turned the intern's most dreary work into a highly significant, intellectually challenging and adsorbing services and removed the lowest value add activities, an immediate advantage is available to every PR office in the country.

What then of the next lowest paid member of staff. Here again, close examination of the activity, its transformation from low value to highest value can be achieved with imagination and application.

A typical example is the (I really can't believe I am writing this) chore of researching and building media and other lists.

Part of the role of the new intern activity will identify those clusters of interest (the nexus of values) and the people with particular interest in such values. Such activities are part of semantic search. If the Bank of England can use such capabilities (to identify economic trends) using Search and Twitter trends, so too can the PR industry. Its not just Twitter but many other forms of expression in media as diverse as computer games, motives for attending events, other social media, corporate transparency and other on and off-line activities that can transform the idea of finding opinion forming and behaviour enhancing activists.

From such developments, the junior account executive's life is transformed from magazine list building into transformative PR campaign management. From just lists of magazines and journalists the activity engages real people and the their motivations. The work of 26% of practitioners paid less than £25,000 per years (according to the PRW/PRCA sector report) is transformed into activities worth as much as a £40,000 a year Media Manager/account Director. The productivity gain is considerable.

This kind of activity is iterative. Take the lowest value activity and develop it into the highest value added activity until you reach the highest paid executive in the organisation/department and productivity enhancements will be extraordinary.

High on the list of priorities in the 70's was quality. Total Quality Management which examined those areas which had lowest quality was worked on until it had the highest quality returns and iteratively, all activity was examined and improved. This was followed by Right First Time. This "do it one and do it right" principle would cut approval costs very quickly.

In another time and in another industry, we went through such challenges and can now apply them to PR.

The first problem we faced then and PR faces now is being able to measure quality.

In almost every PR office you will hear the baleful cry of 'I am waiting for press release/tweet/blogpost approval'. Here is a measure of quality. Approvals, if they are needed should be a joy to give not a chore for the manager involved. Cutting number of people involved and approval times will cut costs significantly.

Imagine, if you will, measuring the uptake of press releases without the awful and demeaning phone round. "did, you receive my press release?" THAT sort of phone call is a symptom of poor quality. Measuring it will immediately focus attention on a productivity leaching activity.

Developing the 'Right First Time' capability is only one part of the process. The other is in motivating the approver such that approval is quick and a joy.

Some of this activity will, no doubt, include that good old fashioned process of delegating up the management chain. Most people delegate down and that is a PR mindset. Try working the other way round.

One of the other major developments we learned all those years ago was the need to be in the vanguard of innovative practice. In PR there are a lot of things we can do to innovate and at present, there are many ways we can enhance corporate relationship management with very exciting new approaches to PR.

I hinted at some of the areas we can look into. At the tactical level there are exciting opportunities in areas such as online video media, text based social media, Website design and deployment, SEO, social and event organisation for face to face relationship management, Augmented Reality, smart phone games, widgetry and many more. They all interlock. Would you believe that journalists like widgets too?

However, such activities are quite mundane when looking at what is available just over the current horizon.

In the development of the high value added sectors in our economy, decisions are constantly being made as to whether it is more effective to make of buy. This means that the PR industry may well become a major economic driver in its own right. It will need a much bigger supply base and that is no bad thing and a big advantage for the sector. The upstream economic value of say the UK Space industry is such that it is needed by governments to enhance national GDP, employment and global influence.

This is another advantage of making the PR industry more productive (as though growth, profitability and global leadership was not enough).

But the industry does have to go much further.

Being not the participant but the initiator of developing vision, mission, objectives and values at the most senior level is a start and when applied to organisational relationships is quite a challenge. It is a challenge that the PR industry is quite capable of meeting.

As greater transparency becomes the norm (and here we get back to one of the outcomes to anticipate from the Hacking scandal) and transparency technologies gain in momentum (a consequence of the semantic web and the Internet of Things), the PR sector will become ever closer to being the expert in developing facilitators as well as drivers of corporate effectiveness.

To be able to do these things, the overarching need is to re-look at the data from the PRW/PRCA research and take from it the urgent need to increase PR sector productivity by factors.

Image by Mac Funamizu http://petitinvention.wordpress.com

PR productivity sucks

It depends how you look at the numbers 

PR Week (15 July 2011) editor Danny Rogers bangs to PR drum hard this week making journalistic claims about the PR industry. He suggests to politicians that his survey, undertaken with the PRCA is proof of the massive and ever-growing value of PR to the British economy. Well, such claims make some people in the industry wince.


He is, after all a journalist and so might be forgiven for a bit of spin but the reality is that the PR is a pretty poor performer among the top flight sectors. Output per employee is dull.

The survey estimates that there are 61,600 people employed in public relations in the UK and that the industry has a turnover of £7.5 billion. This is an estimate combined with an ambiguous statement which could be interpreted as showing turnover per employee of £121,753 per annum.

The sector, like many others, is growing too but compared to most UK sectors, the PR industry has a very small upstream economic footprint. (press clipping and rudimentary intelligence, catering services and normal office overheads). Downstream economic impact is also limited.  Press relations is an example.

Compared to the top performing sectors, PR is not a great act. Here are some examples:

The UK music industry employs more than 120,000 people and has a turnover of £3.9bn per annum showing a £355,000 annual contribution per employee.

A similar sized industry, the Space Sector is also interesting. In the 2010 a sector study showed the industry with growth rates of 10.2% in the last two years turnover of £7.5 billion. With employment of nearly 25,000, economic contribution per employee £300,000.

UK Internet economy is worth £100 billion a year and Internet companies employ an estimated 250,000 staff showing £400,000 contribution per employee.

PR, it seems has a productivity problem. It needs to up its productivity by a factor of 2.5/3 to be considered top flight.

Perhaps this is the real value of the PR Week report. It has shown that, though growing (and not as fast as most of the top performers) it is not getting the best return per employee among the better exemplars.

For most practitioner (84% of practitioners have some form of general media relations responsibility and 77% write articles and newsletters), it is worth comparing journalist and  with PR salaries. Journalists are paid:

Journalism Salary Range Magazine £11,170 - £34,459 Publishing £12,471 - £38,233 Newspapers £11,407 - £35,489 Internet and New Media £13,150 - £40,724

PR people are paid a comparable level of between 28,384 and £36, 500 average annual salary (up to Media Manager/Account Manager level). It would seem from these data that PR practice is comparable with the work of a journalist but PR work extends to 46.5 hours per week.

This would suggest that to compete with the high flying sectors of the economy, PR has to find an alternative to writing as its core activity.

What we now need from the research is some idea of where the high productivity gains can be achieved.

In addition we need some form of breakdown of the low value activities so that we can cut the cost of production of just simply cut out the activity.

Press relations as a PR practice - a diversity trap for practitioners

This week-end will be the first without the News of the World at our newsagents.

It marks another occasion when the number of editorial pages that could be influenced by the media relations sector of PR shrinks.

This post explores print media as an arena for future public relations practice.

The prospects do not look good.

The reality seems to be that there is a declining appetite for the kind of media to which we are accustomed.

This has consequences for both existing practitioners and the likes of Amanda Andrews of the Telegraph Media Group (since 2008) who announced this week that she is about to jump ship to Freud Communications in the role of head of media, focusing on technology, media and telecoms clients.

There already seems to be some reluctance to recruit from the media. A number of senior ex-News of the World journalists have enquired about PR jobs, reported PR Week. But recruitment consultants have warned that the paper's 'toxic' reputation could harm their chances of making the transition.

In a word, will there be any media for these journalists to talk to?

Yesterday (14 July 2011), Fraser Nelson the editor of The Spectator (and ex-political columnist for the News of the World) wrote about how British newspapers are haemorrhaging readers and influence. He said that on Sunday "we will see just how much this process has accelerated." Graphically, he showed that average circulation of daily newspapers is now lower than the worst days of the 1940's Blitz and for Sunday titles, we have to go back to the 1930's depression to find comparably low circulation.

Notably, the trends show steady decline from the 1960's and very rapid decline over the last decade.

In the same week Mark Sweney of the Guardian reported that "...the move to close the NoW was taken on political grounds in a bid to contain the phone-hacking scandal, it is nevertheless a hammer blow – potential relaunch notwithstanding – to a sector where publishers are trying to wrestle with high costs against a backdrop of declining revenues."

He quotes Adam Smith, director at WPP's media buying network Group M: "It is like taking Channel 4 off-air on Sundays, you are suddenly taking out 20%-plus of the market, it is really substantial with no other home [for advertisers] to really go to."

Smith makes the point that: "Taking the NoW's total 7 million readership out of the equation is massive, as there really is no substitute and the market is already not in great shape generally."

Rob Lynam, head of press and media agency MEC, is reported saying: "The Sunday model is busted," adding: "The cost base on Sunday titles is significantly higher than running a daily and publishers are looking to reduce overheads. That is why News International is moving to a seven-day model, that is why Guardian Media Group made changes to the Observer and so on."

In the same article we discover that in May 2007 the total circulation of Sunday newspapers was 12.5m; by May this year it had fallen 22% to 9.7m, according to the Audit Bureau of Circulations. Advertisers have also walked away, with display advertising revenue down by more than 25% over the same period, from £406m to £303m. By comparison the daily national newspaper market has seen a slight increase over the past four years – although it is a very mixed picture with the only major winners the Sun, Metro and Daily Star.

If the model for newspapers is bad, spare a thought for the celebrity titles.

The Mail Online reports that circulation figures for Hello! and OK! make sorry reading.

During the second half of last year the average net circulation for Hello! was 527,000 per issue and that for OK! 487,000 from previous levels as high as 800,000 and 600,000 respectively.

Dominic Ponsford reporting in Press Gazette earlier this year showed that second half of 2010 UK market for print consumer magazines was still in decline overall. Overall, the UK's top 100 purchased magazine titles had an average per-issue total circulation of 28,844,482 - which was a 4.1 per cent decline year on year. A continuing trend.

Is this just an issue for consumer magazines? It seems not.

A Mashable report seems to show that the magazine format has its own problems among consumers. While digital downloads may be down, compared to the print equivalent they “roughly correlate their performance on the newsstand.” Based on the numbers, the decline may not be a lack of interest in the iPad as a digital print platform but rather a general disinterest in magazines.

In the B2B sector life is not very different.

Recently, business publisher Centaur Media announced it was merging its business publishing group – which includes The Lawyer and Money Marketing and it confirmed disposal of titles like The Recruiter, The Logistics Manager and Process Engineering. In November 2009 Haymarket announced the closure of the print edition of Media Week with the axing of 18 out of 58 editorial jobs across the media group as monthly title Revolution went quarterly and the websites Marketing Direct and Promotions and Incentives were merged into Brand Republic. It is putting its network of media titles behind online paywalls from July including Brand Republic, PR Week, Marketing, Campaign and Media Week. We also heard that United Business Media has sold its licensed trade titles to rival William Reed. In addition, Accountancy Age and Computer Weekly both abandoning the weekly news magazine format after more than 40 years and going online only.

Ben Dowell at the Guardian reports that there were 4,733 UK B2B titles being published in October 2010, compared to 5,108 five years earlier.

This decline in support of the media from marketing budgets is part of a significant trend according to PR Week. It reported the the second quarter IPA/BDO Bellwether Report showing marketing budgets were to reduce spend by 4.2% and a decline in PR budgets as well.

This is reflected in a number of other reports. Wark reports on a study suggesting: "The year has proved harder going, particularly in print, and there is a similar narrative coming out of the other big European economies."

So we see the long term decline in print and this must have an effect at some time on the media relations sector of the PR industry.

Meantime, television is doing very well and radio listeners, who were found to be (PDF)  happier than TV watchers and Internet users, reached its highest audience level ever in Q1, 2011 and the internet goes from strength to strength.

There are, no doubt, a lot of people who would argue that print media is only going through a trough and it will bounce back. However, this has the smack of whistling in the dark. The trends are long term and few in publishing seem to have any mould breaking ideas.

Of course, no one should make assumptions about the UK media without reference to Michael Bromley, Visiting Professor in Journalism at City University London, UK Media Landscape study. An enthusiast for the press he may be, but has made the point about the future of newspapers and magazines very well.

Against this backdrop one might expect the PR industry to be on its knees.

But we hear from PR Week that PR is doing well. The International Communications Consultancy Organisation (ICCO) reported that the UK PR industry sector witnessed a 13% increase in overall fee revenue, a figure similarly reflected by PR Week's Top 150 PR Consultancies 2011 report, which showed the average growth for a PR agency in 2010 was 9.24 per cent.

Perhaps we find some of the answers in the 2011 PR Census, a joint PR Week and PRCA research project, published this week.

It is a thorough study of the British PR industry and shows UK PR industry contributes £7.5bn to the economy and employs some 61,600 people.

PR could be compared to the UK space sector which is also worth around £7.5 billion to the economy. Space directly employs almost 25,000 people - so there is a considerable - a factor of 2.5 - productivity gap.

At last we begin to see what is happening to the PR industry. It is really dying.

What I read in the statistics is that there are far too many people doing media relations in the shrinking press relations sector which is depressing incomes and opportunities.

85% of practitioners include 'General Media Relations' as part or all of their work (84% are also involved in Media relations strategy planning).

Perhaps it is not surprising that with the media in such dire straights that the part of the PR sector involved in media relations (at least 77% have a direct role) has such a poor productivity performance compared to more advanced industries. Working on average 46.5 hours per week, PR people are doing everything they can to sustain a form of practice that is on the way out.

The numbers offer us an even worse view. 70% of people employed in the PR sector are aged between 25 and 44. This is in the prime of their career, the springboard for their future and it looks bleak.

Indeed the profile looks like white, middle class, middle aged women fighting for a falling slice of shrinking media pages available for editorial content and paid very little for long hours in a dying sector.

We are fooled by the growth in the industry as it bounces back from the recession in 2008 and we see higher turnover based on sweated labour offering misleading and what can only be temporary margins.

In an industry that prides itself on significance to corporate governance, it is evident that this is not a very profitable career choice. Only 30% of the people employed in PR earn £50,000 or more or the going rate for the mass of qualified Financial Accountants. For the average PR CEO/director in a salary of £83,000 is good which compares to the 40%of financial directors in the FT 250 who earn between £300,000 and £499,000 per year.

Media relations would seem to be holding the PR industry back, depressing salaries and creating a diversity trap for practitioners.


Image: DEATH A GROWTH INDUSTRY from Scrape TV

iPad activism and the investing institutions

So much of the chatter about the end of The News of the World has been about reputation.

A lot of it centres on reputation as a commodity. Building reputation is, apparently, about advertising or PR'ing or connections.

Well, in the digital age such nonsense is patently, visibly and completely exposed.

Reputation is not owned by organisations it is proffered by constituents. That complex societal group that is bounded only by its interests in the values surrounding the organisation (as distinct from Publics, Stakeholders, Market segments and followers). This is not about the values of the organisation but its interaction with values held by the constituency.

Reputation management gets on well with marketing because so many people believe reputation, trust and regard are bought with pieces of silver.

Relationship management, which is a two way street, is much harder. In this street, values have teeth and bite.

Relationships and values management are the critical elements that distinguish PR from other disciplines. It is what makes PR different from marketing, advertising, propaganda, spin and publicity.

Without PR, corporate managers like Rupert Murdoch (Newscorp), Tony Hayward (BP), Pierre Beaudoin (Bombardier), Jamie Buchan (Southern Cross) have failed. They believed that PR was about spin and press releases and more fool them and more fool their shareholders for employing such people.

Mr Murdoch needs a PR manager and not a 'reputation' manger and that will allow him to begin to build trust, reputation and regards for his empire.

To do that, he needs savvy shareholders.

Sensible shareholders are now in short supply. Sensible shareholders will by now have worked out that lack of sincerity and ethics as part of the DNA of corporate culture will mean that they will take a haircut sooner or later on the bourses of the world.

Explaining this to shareholders is the job of the institutions like CIPR, PRCA, IAB etc.

It has to be explained among the investing institutions (remembering that institutional investors are in the same mould as the failed banking sector) in simple outcomes terms.

The argument is relatively simple. If the bloggers says the directors suck, fire the chairman at the AGM. If Facebook says service sucks, fire the executive board during interims and if Twitter says it is uncomfortable dump the stock fast.

This is not an ethical brief we have to give to the financial institutions. This is war. The normal citizen can and does become an iPad activist at the drop of a hat. In the case of NotW, as Robin Grant put it "brands were being bombarded in protest – most of whom will have been unused to such a spike in negative attention. This was not just happening on Twitter, with targeted brands’ Facebook pages becoming venues for significant protest too." Unless and until the financial sector gets its act together the pension funds will suffer at the hands of social media time after time. This is why it is in the interest of the financial institutions to be assured that they have proper Public Relations managers advising the Boards they invest in. Andy Coulson, is not and never can be a public relations practitioner. He is a journalist. He does not have what it takes to be effective in modern PR. Gaming the system was fine when Coulson was the editor of the biggest circulating newspaper in the UK. Try Gaming Google+ and the online world will crush the company and shareholders with it.

Why pick on G+? Because it is of a new breed of services with in built web 3.0. The semantic web. Semantic as in searching for and exposing secrets (automatically soon enough too).

A number of authors have been making this point for years (first time I published a book about it was in 2008). There is nothing new here.

What we now need are some PR institutions that are aware of what is happening in the fields of communication and who are prepared to make the point to corporate managers and investors and in public if need be.


Cartoon by the clever Vicky Woodward