Getting ready for ’09

Queen Elizabeth described 1992 as her “annus horribilis”. Put politely it had been a miserable year for the royals. For many in the financial world 2008 has been their annus horribilis. The collapse of major banks and the credit crunch have driven the world into a recession that is likely to last through most if not all of 2009. This leaves the PR industry with a challenge as it prepares for 2009. At this point most agencies I’ve talked to have seen little real impact on their current budgets. What is less clear is what will happen in ’09. In the next few weeks, clients with calendar financial years will be setting new budgets. Some will inevitably cut their spend, while others will look at ways of consolidating what they do spend with fewer agencies in a bid to gain some economies of scale. Indeed I think this will be a tough period for the small independent agency that derives more than 30% of its revenues from larger companies. In tough times there is a flight to the apparent safety of a larger agency and ironically a belief that the large agency can save them money by offering a more holistic set of services. I say ironically because smaller agencies typically have lower cost structures and big agencies don’t typically do a good job of integrating, so these savings are often mythical.

What I would urge agencies to do, if they haven’t already, is to provide their clients with reasons why PR budgets should be protected during a downturn. If you simply scour the web you will find work such as that done by P&G to measure PR against other disciplines. This work clearly shows the value of PR and why there is a strong link between the sales and brand value of a business AND the PR the company does. I guess my point here is that if we don’t proactively arm our clients with data that really does show why PR should continue to be a priority for businesses facing a downturn then we shouldn’t complain when the budget gets axed.

Why doing PR in a recession is more difficult and what you can do to help

Here are some quick observations and recommendations. If people have others please comment and I’ll update the entry.

1. Clients are more careful with their marketing spend, which means they are both more cautious in the risks they are prepared to take and less willing to spend on potentially expensive ideas even if the long term returns are worth it. Recommendations: Think carefully about the ideas you are giving to your clients and about the way these ideas are presented. In difficult times clients want to feel that approaches are going to work and are therefore less worried about ideas being new or innovative.

2. Clients become even more focused on the current quarter and results that will impact their bottom line. This is understandable but all the best practice studies show that the brands that remain committees to long term goals tend to do the better than those who simply worry about the current market. Recommendations: Understand the sales process and sales cycle of your client’s business and marry programs to that cycle. This is a god discipline in any environment but in a downturn it becomes vital.

3. Competitors typically have more opportunities to highlight a client’s deficiencies as typically companies in a recession are struggling to be successful and are therefore losing customers, letting staff go etc. Recommendations: When competitors highlight your client’s short comings talk about the strategies that your client is using and the success it is having. However, don’t overstate the situation and don’t keep repeating the bad news that is at the heart of the issue as this will only reinforce the point your competitor has highlighted.

4. During tough times it is tempting to say as little as possible on the basis that the media are likely to make a bad story out of anything your client does. Indeed it is all too common for companies to try and hide during recessions and then reappear when they finally have good news to tell. Recommendations: Don’t let your clients go completely silent. They must maintain an active dialog with the media to ensure a trusted relationship continues. The same goes for the blogosphere. When companies hide they make themselves an even bigger target.

5. In a downturn PR departments can sometimes see PR agencies as the competition. By that I mean that they fear that with budgets likely to be reduced they either need to cut the agency fees or risk losing their jobs. This is understandable but clearly unhealthy. Recommendations: Instead of spending hours trying to justify your existence, talk openly with your clients about the roles each party is going to play and the metrics upon which you will be measured. Ultimately you may still be a victim but professionalism goes a long way and will serve you well once a downturn has ended.