For agency owners and C-suite executives for creative services firms, it’s the best of times and the worst of times (apologies to Mr. Dickens).
PR executives from both the agency and client sides are optimistic about the industry’s future and believe that within the next five years they’ll be expected to deliver more strategic communications, more media channels and sharper measurement. But questions remain about the industry’s ability to attract the right talent, adapt to new technologies and boost the level of investment required to capitalize on these opportunities.
That’s the major takeaway from the Global Communications Report, which was released earlier this year by The Holmes Report and the University of Southern California’s Center for Public Relations.
The report, which focuses on myriad changes facing the PR industry in the near future, features a survey of 460 PR pros from both the agency and client sides.
Growth Spurt
According to The Holmes Report, agency leaders predict the overall agency business will grow from its current size (roughly $14 billion) to about $19.3 billion by 2021. To accommodate that growth, agency leaders anticipate their headcount will increase during the same period by about 26 percent, the report said.
But PR firm owners are going to have to step up their efforts to attract and retain the right talent, which were cited as the most important obstacles to growth. In order to do that they’ll need to do a better job of hiring people outside of the typical PR precincts—the default hiring mode among many of not most firms.
Despite the dramatic and ongoing changes in the communications landscape, PR agencies are most likely to recruit new talent from competitive agencies (3.69 on a scale of 1 to 5), the report said.
But recruiting new talent presents a conundrum for PR firm owners, as writing and verbal communications—the bedrock of PR— are more valued than strategic planning, analytics, research and SEO.
According to the report, writing (89 percent) ranked as more critical than strategic planning (84 percent), social media expertise (76 percent) and multimedia content development (76 percent). Writing skills were far ahead of business literacy (62 percent), analytics (62 percent), research (48 percent), search engine optimization (41 percent) and behavioral science (32 percent).
Those results strongly suggest that the obituaries for traditional PR have been greatly exaggerated.
“It’s clear that finding the right talent is by far the most critical factor in the PR industry’s future growth,” said Fred Cook, CEO of Golin and director of the USC Center for Public Relations, in a statement. “The more complicated question is what skills should this talent possess. Industry leaders still value traditional communications skills but are searching for more strategy, creativity and diversity.”
Alas, Content Still King
Asked about specific services that will drive future growth, agency and client-side respondents were focused on increased demand for content creation (81 percent) and social media (75 percent), as well as traditional PR efforts such as brand reputation (70 percent), followed by measurement and evaluation (60 percent).
Almost all agency respondents expect change in their business models (98 percent) in the future and 47 percent anticipate an extreme or complete amount of change.
“PR firm owners and C-suite executives have to brace for even more dramatic change in their business models,” said Rick Gould, CPA, J.D., managing partner of Gould+Partners, which specializes in PR M&A and PR management consulting. “When you consider the pace of change in PR, owners have to infuse more of an entrepreneurial culture throughout their firms. They need to encourage their executives to be agile and, this is crucial, to think of themselves as business people who specialize in PR and communications rather than ‘PR’ executives.”
Wither the term ‘Public Relations’?
Indeed, as the PR field evolves and PR firms take on additional services, the term “public relations” may not clearly and adequately reflect the work they do. (Brace yourself for some soul-searching within the industry the next few years regarding what may be a more accurate name might be to describe the profession.)
By 2020, respondents said their jobs will become more complex (76 percent) and strategic (67 percent), according to the report. Just 27 percent thought their job would be more fun. Ouch.
Looking to 2020, agency leaders also expect to see their revenue streams shift away from earned media, but it will still be the dominant revenue driver (31 percent, down from 41 percent today). Earned media, of course, is consumer and B2B awareness generated via press releases and pitching stories, for example.
Owned media will grow to 28 percent while shared will account for 24 percent. Paid media—which social channels such as Facebook and Twitter are increasingly banking on—will grow to 15 percent.
Prospects for measurement, which for years has hampered PR executives’ ability to win bigger budgets and land a seat at the proverbial table, seem to be improving.
Measurement ranked third on a list of 18 potential growth drivers among agency respondents, compared to seventh when clients were asked where they expected to see growth, the report said.
However, current measurement models are still alarmingly focused on measures of output—such as total reach or total impressions—rather than business outcomes. What is more, 30 percent of the respondents said they used AVE (advertising value equivalency)—considered a discredited metric within the PR industry—most or all of the time.
And when it comes to social media measurement, PR agencies continue to be in thrall of so-called “vanity metrics,” such as “followers” and “likes.”
Unless PR firms make a significant shift in their measurement techniques, the ROI for paying clients will continue to be problematic and PR services questioned to the hilt.
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