Escherman

Link: ANALYST EQUITY: Why has mainstream PR stopped growing?

Duncan Chapple has posted re: UK PR industry performance in 2006. His post worth repeating here:

The PR industry has stopped growing. The annual PR Consultants
Analysis, which reviews the top 1000 PR consultancies, is an annual
study whose 2006 findings
were also depressing. The 2007 report states that average sales growth
has fallen to zero. Pre-tax margins are remain around 4%.

According to
Christopher Evans, the senior analyst on the Plimsoll report, "the next
six months will be a time for tough decisions and painful measures as
their managers attempt to put them back on a firm financial footing."
PR agencies are often short on financial prudence and use discredited metrics. However, it is PR’s trivial reputationweak brand alignment that undermines it. That also partly explains why many AR managers avoid the PR label.

As regular readers will know, I’m in agreement with Duncan’s analysis. The trends that have been discussed here over the last 18 months aren’t going to go away. A vicious circle of dwindling senior expertise and lack of investment in training (which leads to the situation Charles Arthur and others encounter daily); a seeming inability of PR to be able to measure and demonstrate its business value; an almost pathological contempt for good financial management; I could go on.

So, Duncan’s point – why has mainstream PR stopped growing? Because on the whole PR companies are still offering mainstream PR services – which is now a highly commoditized market. In fact, much of the basic mechanics of PR can easily be carried out by clients themselves.  And more and more are cottoning on to this.
(Imagine: armed with a few subscriptions to some basic PR support services such as Sourcewire, virtually any company can have a basic PR operation ready to roll for a few grand. They simply want to add the relevant expertise to the process (which no  doubt explains the rise in project based PR).

I do believe that clients are very willing to pay for real expertise and experience – but that really is a scarce commodity – hence the rapid rise in senior people going freelance or starting small shops – with no desire to grow to become a 100 person agency in 2 years. Because what’s the point? If your pre-tax margin is 4pc then even with a topline in the millions that represents a paltry return – and where’s the exit?  As ever, there are exceptions, but on the whole, you aren’t going to earn your millions working for a large PR firm. However, I’d suggest that senior PR folk can earn what any normal person would describe as a very healthy living by offering their services in small, highly focussed packages. Add in the sense of control, lifestyle flexibility, closer client relationship, etc, you can see why people are doing it.

Would be good to see some kind of more detail analysis of the freelance/small shop end of the market – I suspect there may be a happier story here than the one Duncan describes….

This has been around for a few months, so apologies if this is all old hat – but I thought it worth highlighting in any case.

Peter Norvig is Google’s Director of Research (which he says is the best job in the world at the best company in the world – more here). By all accounts, he is a clever chap. He is co-author of a best-selling textbook on artificial intelligence. Apparently he once aspired to be a reporter himself but has lately been "appalled” by the shoddiness of the craft.

So appalled that he has posted a lengthy piece of vitriol here about the shortcomings of the journalistic profession today. The whole thing is well worth reading (especially the bit about parrotting and inummeracy in financial reporting). Here are his four key findings:

1. Parroting: The reporter’s job is to do research
     to find the facts.  But too often they seem to parrot back whatever is fed to them by
     press releases, politicians, or other news reports.  My friend Joe C. calls this
     the stenographic approach to reporting.

    

2. Deception: Public figures lie (Marth Stewart, Kenneth Lay), and reporters do not know who
   to trust. Reporters lie, either to advance their career
   (Jayson Blair)
   or to serve the interests of their corporate sponsors. Sometimes the deception
   is self-deception: reporters (and others) believe what they want to believe.

    

3. Innumeracy: Prof. John McCarthy has touted the
     slogan
     He who refuses to do arithmetic is doomed to talk nonsense.
     Perhaps the budding reporters with an ability for arithmetic end
     up in other fields (like me),
     but it does seem that reporters repeatedly show they are not
     capable of simple multiplication and division.

    

4. Equal Time: Perhaps influenced by the sports pages,
     reporters tend to see issues as a competition with two
     sides, which must both be covered.  Sometimes this is true, but
     sometimes one side is right and the other is objectively
     wrong.  Reporters should do enough research to determine who is
     right and say so.  They are too easily manipulated by those who have
     no facts on their side, but get equal press time anyways just by
     talking loudly.

Is Norvig himself being guilty of a less than thorough scientific approach ie is he extrapolating from too few data points to support his argument? Then again, if the CNN/Spaceshuttle example above is anything to go by, maybe he is on to something.

This story in today’s Guardian makes for fascinating reading – a real insider’s view – and the kind of feature that justifies buying a paper in the morning….

The short answer to Valleywag’s question appears to be a qualified yes.

Link here.

To keep everyone happy, they appear to suggest that SEO is not the be all and end all for PR 2.0.

"A good PR firm does a lot more than send "story idea for WIRED" emails to freelancers. A publicist can help you hone your message and train you to keep your foot out of your mouth. And despite the growing power of the Long Tail, a single mention in BusinessWeek or Forbes tops a hundred blog posts in Google results  Those articles rarely happen without a flack in the mix. If you can afford it, hire a publicist with proven business press clips on file (you want InfoWorld, not San Jose Metro) to get you started and pitch your launch."

Charles Arthur of The Guardian blogs re: latest schoolboy error from a PR exec here.

Depressing that this kind of thing persists – but it would be interesting to find out from Charles if he is getting more bonehead calls like this than a few years ago.

…now that VNU Europe has been sold to 3i for £215m (Guardian story here – reg required). Having sold The Inquirer to VNU back in January, there is speculation in some quarters that this new acquistion will translate into vested options for Mike – a "life-changing" sum.

Look forward to Mike buying us all a drink 😉