Do clouds really have silver linings? Some PR thoughts as we stutter out of recession
Hmmm. There’s an odd smell in the streets of Hong Kong. And no, it’s not stinky tofu. It is the smell of optimism and I’m cautiously inhaling. After what seems like an eternity of dark headlines, budget cuts, market “re-prioritization” and other tales of woe, we appear to be bouncing back from the recession or, if you prefer, financial tsunami.
Whether it is W, L, U, V (or pear) shaped, a recovery is inevitable. While I’m not an economist, indicators such as new business demand, increasing client spend and calls from recruiters tell me that change is afoot.
While this certainly sends my financial team into raptures of accountant joy, from a consulting perspective, I wonder what clients and agencies have really learned from the recent unpleasantness? Have we changed behaviours for the good of companies’ communications programs? Has the mantra of doing more with (even) less created positive change and delivered genuine return on investment? Or are we back where we started with lower budgets and higher expectations? Hong Kong is, after all, the land of best service, lowest price.
A straw poll of twitter followers provided some clues. One told me: “What we learned from the recession? Nothing is the same - PR is changing, and the challenge is to heard above all the noise.”
A second optimist summed it up nicely: “Recessions just speed up trends. Clients have been wanting more for less for more than 20 years. Now they want EVEN more for EVEN less. So clients need to understand how to get better value from agencies, and agencies need to work out how to deliver that value and remain profitable.”
From my POV, the recession has brought us both positives and negatives. Let’s look at this from client and agency perspectives. Firstly, the client. I’ve seen some of my clients positively change their business models in response to tougher times. In one company’s case, this meant creating teams that cross over marketing, communications and sales lines. What’s especially encouraging is that they now assess every communications activity on its ability to generate business leads. The term “demand generation” is certainly now a part of every good PR consultant’s vocabulary. Those smarter companies have also looked at refocusing their marketing programs to include social media outreach.
I’ve also seen many companies that were forced to dramatically cut their PR spend. In many cases, their agency partners shared the pain through reduced retainers, fewer projects, and an expectation that even more could be done with a smaller PR investment. I also found that in China in particular, these requests were sometimes accompanied by a similar expectation that pre-recession service levels could continue “...in the interests of the relationship.”
From an agency point of view, the pressure of the past 12 months has been enormous. Many agencies have reduced headcount, cut salaries and made other significant compromises across their businesses. We’ve had to find efficiencies where none existed before, especially challenging given the very tight margins within which most PR agencies work. Tactics have included refining business processes, empowering junior staff to take on senior responsibilities at an earlier stage in their careers, offering services for well under industry rates to acquire business, and conceding to sometimes unrealistic client demands.
The smarter agencies, though, will realize that in making these concessions they’ve become more efficient businesses. Similarly, clients will realize that agencies are, in some cases, able to provide greater service than budgeted for. I’m hoping now that things are picking up again, there will be meeting of the minds on these points. Yes, agencies can be squeezed, but agencies are businesses and need to generate profits. They also depend largely on the well-being of their staff and the siege mentality of last year is unsustainable.
As my twitter friend pointed out, doing more with less is not a new thing – it is business as usual. So from an agency side, we’ve had to tighten belts that were already very tight. Given this, is it fair for us to expect a return to the heady pre-1987 days of three martini lunch PR as we bounce out of recession? Clearly not. But I am confident of a couple of points. Firstly, that agencies coming through the other side of the recession are fundamentally better at what they do. Secondly, that those savvy clients that have reprioritized their communications programs to focus on demand generation are going to reap the returns. For those that find a balance between these two complementary realizations, perhaps that odd smell is the sweet smell of success...
Whether it is W, L, U, V (or pear) shaped, a recovery is inevitable. While I’m not an economist, indicators such as new business demand, increasing client spend and calls from recruiters tell me that change is afoot.
While this certainly sends my financial team into raptures of accountant joy, from a consulting perspective, I wonder what clients and agencies have really learned from the recent unpleasantness? Have we changed behaviours for the good of companies’ communications programs? Has the mantra of doing more with (even) less created positive change and delivered genuine return on investment? Or are we back where we started with lower budgets and higher expectations? Hong Kong is, after all, the land of best service, lowest price.
A straw poll of twitter followers provided some clues. One told me: “What we learned from the recession? Nothing is the same - PR is changing, and the challenge is to heard above all the noise.”
A second optimist summed it up nicely: “Recessions just speed up trends. Clients have been wanting more for less for more than 20 years. Now they want EVEN more for EVEN less. So clients need to understand how to get better value from agencies, and agencies need to work out how to deliver that value and remain profitable.”
From my POV, the recession has brought us both positives and negatives. Let’s look at this from client and agency perspectives. Firstly, the client. I’ve seen some of my clients positively change their business models in response to tougher times. In one company’s case, this meant creating teams that cross over marketing, communications and sales lines. What’s especially encouraging is that they now assess every communications activity on its ability to generate business leads. The term “demand generation” is certainly now a part of every good PR consultant’s vocabulary. Those smarter companies have also looked at refocusing their marketing programs to include social media outreach.
I’ve also seen many companies that were forced to dramatically cut their PR spend. In many cases, their agency partners shared the pain through reduced retainers, fewer projects, and an expectation that even more could be done with a smaller PR investment. I also found that in China in particular, these requests were sometimes accompanied by a similar expectation that pre-recession service levels could continue “...in the interests of the relationship.”
From an agency point of view, the pressure of the past 12 months has been enormous. Many agencies have reduced headcount, cut salaries and made other significant compromises across their businesses. We’ve had to find efficiencies where none existed before, especially challenging given the very tight margins within which most PR agencies work. Tactics have included refining business processes, empowering junior staff to take on senior responsibilities at an earlier stage in their careers, offering services for well under industry rates to acquire business, and conceding to sometimes unrealistic client demands.
The smarter agencies, though, will realize that in making these concessions they’ve become more efficient businesses. Similarly, clients will realize that agencies are, in some cases, able to provide greater service than budgeted for. I’m hoping now that things are picking up again, there will be meeting of the minds on these points. Yes, agencies can be squeezed, but agencies are businesses and need to generate profits. They also depend largely on the well-being of their staff and the siege mentality of last year is unsustainable.
As my twitter friend pointed out, doing more with less is not a new thing – it is business as usual. So from an agency side, we’ve had to tighten belts that were already very tight. Given this, is it fair for us to expect a return to the heady pre-1987 days of three martini lunch PR as we bounce out of recession? Clearly not. But I am confident of a couple of points. Firstly, that agencies coming through the other side of the recession are fundamentally better at what they do. Secondly, that those savvy clients that have reprioritized their communications programs to focus on demand generation are going to reap the returns. For those that find a balance between these two complementary realizations, perhaps that odd smell is the sweet smell of success...
- Jeremy
This article first appeared in Marketing-Interactive