It’s The End Of The Year As We Know It, And The Industry Feels Fine


By all counts, 2006 was a year of momentous transitions. Financially speaking, the long-stagnant economy experienced a turnaround, marked by the Dow's first leap over the 12,000 hurdle, not to mention the rush of hedge funds and private equities buying up publicly traded companies (case in point: Equity Properties, Hertz and Healthcare America). Companies, in turn, have an increased interest in going private because of all the regulatory scrutiny of late (think Sarbanes-Oxley and its call for more transparent corporate governance), and PR practitioners actively handled the fallout. Digital platforms skyrocketed to the forefront of everyone's mind, from CEOs and agency heads on down the chain of command. Online communities like Myspace.com and Facebook.com developed out of insular networks of friends and into one of the most lucrative audiences for communicators and marketers (See PR News, September 17, 2006). YouTube took on near-supernatural powers for its ability to transcend demographics, but its slippery slope of message dissemination took control from practitioners and mandated new, revolutionary coping mechanisms. On the crisis front, the trend of corporate malfeasance in 2005 continued to put pressure on communicators to manage scandals, help recover floundering corporate reputations and bolster trust among constituents. Even some of the most highly regarded organizations stumbled -- Hewlett-Packard, Fannie Mae, United Healthcare -- and the media and consumers were relentless in their criticisms. "GM's well-publicized business pressures raised questions from our commercial customers," says Robert Minton, communications manager for General Motors. "We implemented a communications strategy that reassured customers that 'continuing to do business with GM is good for your business.' It is important to communicate proactively when events can impact customer confidence in your company or products. If you take a 'bunker mentality,' then you have to live with having others tell your story for you, and you may not like their version." Such business challenges, both company-specific and industry-wide, allowed PR and communications professionals to rise to the occasion, thus marking a key point along the continuum of the function's maturation. Communicators are increasingly becoming business people -- that is to say, through measurement's advancement and the fusion of business, management and communication in education, they have learned to speak the language of other C-suite executives: numbers. However, this fusion -- and its resulting numerical linguistic skills -- is still underdeveloped, and many practitioners cite it as a necessary key focus as we look to 2007. "I am concerned that our profession is still composed of too many practitioners who do not have business acumen," says Debra Miller, senior director of marketing and communications for Clark Atlanta University. "We have to know how money is made and spent in the world. Telling a good story is always critical to influencing and even changing behavior, but we have to know where the company is going, how the products are made and priced, what the P&L means and in what context our story should be told." That said, communicators are, for the most part, well aware of business's general trajectory, and they realize the challenges such momentum presents. "The pace of business (and the ensuing communication needs) continues to increase," Minton says. "The challenge will be to stay focused on the key PR activities that drive business results while still being able to 'move fast' and deal with the unexpected opportunities and crises that invariably arise throughout the year." Crises, yes, as PR professionals are studied in the mechanisms for preventing and managing them. But, when looking to the future, what are the biggest challenges and opportunities to be harnessed in 2007? Go Digital Or Bust Blogs, blogs, blogs. The word was uttered so relentlessly in 2006 that it could easily be mistaken for "blah, blah, blah," but that in no way undermines its importance to the development of the communications industry. Innumerable studies underscore the importance of such digital communications platforms, but, more significant, the same studies show PR executives balking at getting their feet wet in the medium (see page 3). "I confess to being a little bit of an ostrich, hoping some of the hoopla would blow over," says Angie Jeffrey, vice president editorial research, VMS, with reference to new media and how to measure its results. However, after committing time and resources to research, she acknowledges the tremendous potential the digitalization trend holds for 2007. After all, no matter the tricks of the blogosphere, there are countless treats to be had, and the profession is quickly accepting them. For example, a year ago, blogs were a slippery concept that many couldn't grasp; now, they frequently appear in communications discussions of all sorts, and attention has shifted to measuring their impact. "My biggest concerns last year were convincing more people to measure results -- from blogs to MSN," says Katie Paine, CEO of KDPaine & Partners. "Today, I'm more concerned that they measure accurately instead of using 'black boxes' and other bad research data methodologies." So, how does one broach the subject of measuring digital media accurately? Developments in measurement dashboard technology are one avenue (see PR News, August 27, 2006), as is what Mark Weiner, president of Delahaye, calls the "democratization of public relations research and measurement." Just as blogging takes a democratic approach to communications, embracing "citizen journalists," he notes that there is "accessibility of PR research and evaluation to everyone in PR, from the smallest nonprofits to the largest multinational corporations." These methods can, in turn, be applied to new media as well. Then, of course, there is another buzzword of 2006 -- integration -- and its potential impact on the industry in 2007. "As technology allows us to do so much more so much faster, it puts pressure on our people," Jeffrey says. "There has never been a greater need for people who can explain and integrate all of these capabilities -- people who are cross-trained across paid media, unpaid media, measurement and analysis. Integrated communications requires people who think like generalists but can implement like specialists." The Great Divide? The concept of integration isn't relegated to just one aspect of communications; on the contrary, it has implications for the grander scale. Specifically, there has been a long-standing debate on the relationship (or lack thereof) between marketing and PR, but that separation of powers -- and competition for budgets -- is slowly dissolving, leaving a trail of integration-focused commentary in its wake. "PR and marketing are truly converging, in part out of necessity because of the Internet and the need for both visual and verbal branding to be integrated," says Sabrina Horn, president and CEO of Horn Group. "Over half of our business now is in some way an integrated communications effort, where we in some cases function as the marketing department for a company." Beyond that integration-out-of-necessity theory, there is the essential boilerplate concept of PR: what the customer wants. And, as Jeffrey puts it, "Customers don't differentiate where they heard our message, so why should we?" That said, there is the matter of both functions' longstanding resistance to one another, as Miller characterizes by a timeless metaphor: "Public relations and marketing remind me of a marriage of convenience. We attend all family functions together on specific holidays, sleep in separate rooms and have separate checking accounts. Depending on the people involved, there could be a lot of respect, but not much love. The key ingredient is working well together and developing a partnership where the organization benefits from the arrangement." Just as the "marriage of convenience" remains unsolved, so might the ideal relationship between marketing and PR, but 2007 will surely bring new theories to the table. For now, though, it just might be an issue of that checking account ... Planning And Budgeting, 2K7 A recent study conducted by PR News, in conjunction with Vocus, polled PR executives on their planning and budgeting challenges for the coming year (see sidebar, page 8). Of the 531 respondents, 49% said they still found it difficult to justify PR expenditures to senior management. While a hopeful 37% claimed this justification to be easy, it still reflects an ongoing challenge. Horn also points to another monetary trend that will keep many communications executives up at night this coming year. "Salaries continue to rise, but retainers are not at the same pace," Horn says. "So, our margins are a bit tighter, and the margin for error is smaller. It raises the question: Should we be running an effective agency or an efficient one? How can you combine the two? Being effective is more expensive and strategic. Being efficient is the tactics, and a different model. Therein lies the magic of running a successful business that balances out the two." Perhaps in this day and age, running an effective and efficient business means taking advantage of new technologies, but not everyone is jumping on that bandwagon. The largest percentage (35%) of PR News/Vocus survey respondents said that only 0-10% of their PR organization/department's tasks are automated/technology-driven (e.g., list management, analysis/ reporting). That said, 2007 may bring about change in this area: 23% are looking to spend money on PR software, 47% on a newswire service and 50% on digital services (other responses included "upping technology to better manage accounts," "online press room management" and "technology redundancies for distributing messages.") But, to balance out the technology-or-bust mentality, Weiner puts tech trends into proper perspective. "Technology has a place in expediting the pace of business, creating efficiencies and enabling us all to do more with less," he says. "But when all accounts are tallied, it is our professional ability to interact with one another and to create and foster interpersonal relations that is PR's distinction." Onward And Upward Standing on the cusp of 2007, one might wonder what is in store. After all, 2006 witnessed juicy crises, financial turnabouts, explosive digitalization, and planning and budgeting challenges. But communications as a function demonstrated adaptability that any Darwinist would celebrate, allowing the profession to cease looking to its turbulent past and instead anticipate the future. "I lie awake thinking about the type of public relations practitioner needed to lead the profession in 2010, and how he/she must be prepared to chance the unconventional; to be as comfortable with uncertainty as we are with change; to master the art of good storytelling; and, to be trustworthy, passionate, forward-thinking visionaries," Miller says. "To be successful, they have to challenge the status quo, take calculated risks and be outspoken, but with a message and personality that makes people listen." Contacts: Sabrina Horn, shorn@horngroup.com; Robert Minton, robert.minton@gm.com; Debra Miller, dmiller@cau.edu; Katie Paine, kdpaine@kdpaine.com; Mark Weiner, mweiner@delahaye.com; Angie Jeffrey, ajeffrey@vmsinfo.com Corporate Reputation: The Delahaye Index Q3 Findings The Delahaye Index's third quarter results go far in identifying this year's key drivers for corporate reputation and volatility in the media, especially when compared with the Q3 results from 2005. The Q3 2006 results suggest that financial performance was the most significant driver this go-round, with Microsoft experiencing its most positive effects in the top spot. That company reported a strong financial performance, and media coverage reflected that accordingly. Likewise, Time Warner made it into the top 10 this quarter, thanks in part to the news that its AOL division would change its pricing plan from paid subscriptions to free access. Alternately, Wal-Mart's reign as numero uno in 2005's Q3 was put to rest after a run of negative news coverage; however, the massive quantity of coverage it receives - as well as its perennially strong back-to-school sales in Q3 - helped dispell the negativity and allowed it to remain in the top 10. Delahaye Director Matt Merlin recommends that corporate communicators keep the following things in mind when considering their organization's corporate reputation, especially when it comes to scrutiny in the media: Consistent messaging, as inconsistencies almost always lead to negative news coverage; plus, they have adverse effects on sales. Transparency, the importance of which was seen in Hewlett-Packard's tumble from a strong standing (though outside the top 10 in Q3) in 2005 to the very bottom of the list (#100) in 2006, due to its corporate spying scandal. Focus on strong earnings and product news, as both are consistently key drivers in sturdy corporate reputation standings. Q3 2005 1. Wal-Mart 2. Microsoft 3. Walt Disney 4. GM 5. Boeing 6. Goldman Sachs 7. IBM 8. GE 9. Exxon Mobil 10. Verizon Q3 2006 1. Microsoft 2. Walt Disney 3. IBM 4. Time Warner 5. Wal-Mart 6. The Boeing Company 7. Citigroup 8. Motorola Inc. 9. Intel Corporation 10. Verizon 2007 PR Planning Survey Results 1. During the budget process, do you find it difficult to justify public relations expenditures to senior management? Yes, it's difficult to justify 49% No, it's easily justified 37% Other 14% 2. What area of PR do you plan to invest MORE budgetary ?funds in 2007 vs. 2006? Branding 42% Corporate Social Responsibility 14% Crisis management 10% Events 24% Financial communications 7% Measurement 23% Media relations 47% We plan to allocate the same as this year 14% 3. Approximately what percentage of your PR organization/department's tasks are automated/technology-driven (e.g., list management, analysis/reporting)? 0-10% 35% 11-20% 30% 21-30% 14% 31-50% 10% over 50% 9% 100% 1% No Response 1% 4. How are you currently distributing your news and announcements? PR management software 25% Faxing 16% E-mail blast 75% Other 31% 5. On what types of PR services are you planning to spend money on in 2007 (check all that apply): PR agency 30% PR software 23% Clipping service 45% Newswire service 47% Digital services (i.e. Web design, Web/videocasts, etc) 50% Other 10% Source: PR News and Vocus Number of Respondents - 531

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