To PR Agencies, 2004 Looks A Little Brighter

The public relations industry is feeling far more optimistic than it did at the midway point last year: About 9 of 10 agencies surveyed by the Council of Public Relations Firms say they expect revenue to rise in 2004; in 2003, only half the respondents predicted their fortunes would improve over the prior year.

According to the CPRF’s 2004 Business Benchmark Survey, to be released next month, 89 percent of 81 respondents said revenue is likely to be higher than last year; 5 percent think revenue will decrease, and 6 percent expect it to be about the same. Last year, 53 percent of firms thought revenue would go up, and 47 percent forecast it would decrease.

Lou Capozzi, 2004 chairman of the CPRF, cautioned that the upbeat response is hardly an indication of a boom. “It’s better, but compared to what?” noted the chairman and CEO of Publicis’ Manning, Selvage & Lee in New York. “2002 was a train wreck, and 2003 was somewhat better.”

Clients are still “very cautious” about releasing budgets they have committed to and push for project relationships rather than hiring agencies on a retainer basis, added Capozzi. “It’s still tough out there,” he said.

The fifth annual study, conducted in April and May, surveyed 71 of CPRF’s 95 member firms—which include independent Edelman, Omnicom Group’s Brodeur Worldwide, and WPP Group’s Hill & Knowlton and OgilvyPR, all among the largest U.S. shops—and, for the first time, 10 non-member firms.

Respondents to the study said that in the first quarter, their shops saw a 13 percent rise over the prior-year period (an average increase of $303,341 per firm). Revenue per staffer and operating profit margins also increased over 2003, by 6 percent and 22 percent, respectively.

“What I’m sensing in discussions with my peers and colleagues is that, definitely, 2004 is a rebounding year for PR,” said Tom Martin, svp of corporate relations at ITT Industries in White Plains, N.Y. “The economy in general is picking up, and there’s a greater willingness to invest in communications.”

Another factor, Martin said, is that with the fragmentation of media, “I sense some shift in spending from traditional ad vehicles to more targeted PR activities.”

“The industry essentially bottomed out in 2003,” said Los Angeles-based PR consultant Jerry Swerling, director of the USC Annenberg Strategic Public Relations Center, which released a study in April showing that 2003 PR budgets among companies on Fortune’s “Most Admired” list were down 5.5 percent from 2002.

“What we’re seeing here,” said Swerling, “is that agencies got about as efficient as they could get in 2003. They took advantage of the downturn to get operations in shape and do all the things they could to get well positioned for healthier times.”

Swerling echoed Capozzi’s caution. “What these data show is that we’re beginning to see a light at the end of the tunnel,” he said. “But I can’t emphasize enough how gradual this appears to be —it’s not time to get out the champagne yet.”

CPRF president Kathy Cripps said that while the Council doesn’t expect to see “tremendous growth” over last year, “I think we’re moving in the right direction.”