In a new survey of chief marketing officers, the CMOs revealed that while they were fairly pessimistic about the current state of the economy, they were more optimistic with their organization’s ability to generate revenue (see graphic below).
If you think about the makeup of a CMO, optimism is a key trait, says Sandra Fathi, president of Affect Strategies, a New York City-based PR and marketing agency. “Marketing is always about looking forward,” she says.
Given the still-tenuous economy, PR News set out to gauge the “state” of another forward-looking space, communications agencies, by quizzing three agency leaders on the economy’s effect on their business, and how they and clients cope.
Fathi is one leader who has reason to be optimistic. Business went dead for Affect in August 2008, but in the first part of 2009, accounts picked up, thanks to a growing focus on social media campaigns, says Fathi. 
This year, Fathi feels that things are “back to normal.” But clients are definitely more cautious. “They are worried about auto-renewal clauses and long-term retainers,” she says. “But they are putting money back into PR.”
The CMO Survey, fielded by the American Marketing Association and Duke’s Fuqua School of Business, mirrors Fathi’s observations. CMOs expect their marketing budgets to rise significantly into 2011, but traditional advertising spend will be flat—giving PR ripe opportunities.
Grace Leong, managing partner at Hunter PR, also says business in 2009 was good, up 5% in revenue, and this year is on a similar track. Why? First, Leong says a diversified client portfolio in consumer products helps. “We don’t have really sexy brands, but we have ones that are slow and steady, like Kraft and Campbell Soup,” she says. Second, as with Affect, social media is squeezing more money out of clients’ budgets.
While clients may be looking more closely at social media, they are also looking very closely at costs, says Ned Barnett, president of Brand Ltd., a Las Vegas-based PR agency. Specifically, says Barnett, clients are:
• Questioning the small hard costs—like the price of a press release placement.
• Hiring vendors with services like SEO on the basis of the lowest price, not on a combination of price and quality.
• Insisting on commission sales vs. retainer, or some “skin in the game” on the agency’s part.
Still, Barnett is optimistic about the rest of the year and into 2011. “We are being more flexible,” he says. “The bottom line is, if we do things the client’s way, we have a chance of keeping them, if we score early with PR success.” PRN
[Editor’s Note: For similar data and analysis, visit PR News’ Subscriber Resource Center at www.prnewsonline.com/subscriber_resources.html.]
CONTACT:
Sandra Fathi, [email protected]; Grace Leong, [email protected]; Ned Barnett, [email protected].