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Study Finds PR is the #1 Contributor to Organizational Success

We've all felt it and now the Council of PR Firms has confirmed it in a press release issued yesterday - 2004 was a "bounce back" year for the PR profession.  The findings outlined in the press release were the results of the third annual Public Relations Generally Accepted Practices Study (GAP III), published by the USC Annenberg Strategic Public Relations Center (SPRC) and sponsored by the Council of Public Relations Firms.  One of the most surprising findings of the study is included in a quote by Jerry Swerling, Director of Strategic PR Center and Principal Investigator for the study:

“While one year doesn't make a trend, our findings indicate that PR is not only doing very well as compared with past years, it may actually be entering a new era of vibrancy and maturity. In nearly all types of organizations surveyed, public relations budgets increased, additional staff were hired, and PR's role expanded. But the most stunning finding of GAP III is this: according to hundreds of senior-level PR people, their CEOs now believe that PR is the #1 contributor to organizational success, ahead of such functions as Marketing, Finance, Legal, Sales, and others. By comparison, PR was ranked #6 out of 8 functions in both 2003 and 2002.”

A pretty strong statement but 347 senior-level practioners from companies, government agencies, and non-profit agencies can't be wrong, right?

Among the key findings of GAP III:

  • Budgets grew. Among all types of organizations surveyed, PR budgets rose by an average of 3% in 2004 versus 2003, with much larger increases in some categories. Additionally, companies that reported increased budgets in 2004 expected another budget increase in 2005.
  • PR staffs grew. Other than the largest (Fortune 500) category of companies, every category of company remained the same or increased PR staff size from 2003 to 2004.
  • Management support for PR increased. Management support for PR increased in every revenue category in 2004 versus 2003.
  • PR's recommendations were taken more seriously. Regarding the extent to which PR's recommendations are taken seriously by senior management, the average score (on a 1-7 scale) rose significantly among all revenue categories.
  • PR contributed more to strategic planning. PR and reputational considerations are factored into strategic and operational decision making and planning in their organizations.
  • PR reported more often to the "C" Suite. More often than not, PR now typically reports to the "C-Suite" in organizations of all types.
  • The PR firms received (generally) good news. GAP III data indicates that 2004 was a stabilizing year for the agencies. While the percentage of larger organizations working with agencies either remained flat or grew slightly, it declined among smaller organizations. However, clients generally allocated greater percentages of their total PR budgets to agencies. These facts, combined with the finding that the "Agency of Record" relationship model continued to decline in popularity, suggest that increasing numbers of clients are using a model in which they distribute a larger number of dollars, among a smaller number of agencies, rather than any single agency.

    While clients continue to value, more than any other attribute, the "Extra Arms and Legs" agencies provide, there appears to be a trend toward increased reliance on their more intellectual and strategic assets. When asked to express their greatest concern about working with agencies, "Cost" continued to be the category leader.

  • PR/GR ratio continued to evolve. The Strategic Public Relations Center developed the PR/GR ratio, which gauges the number of dollars dedicated to total PR budgets (including salaries) for every million dollars in gross revenues. Among Fortune 500 GAP III respondents, the PR/GR Ratio was $643/$1 million; among the Fortune 501 - 1000 it was $544; and among the Fortune 1001 - 2000 it was $928.

  • PR evaluation made little progress, and CEOs want more. As was the case in GAPs I and II, "Influence on Corporate Reputation" remained the most commonly cited metric, despite the lack of a generally accepted methodology for measuring that concept. However, when asked about the extent to which their CEOs believed that adequate PR evaluation methods currently exist, respondents were decidedly negative.
  • Communications functions are much better integrated. Respondents indicated that the various communications-related functions within their organizations are better integrated and coordinated than before. This suggests that PR is playing a broader organizational role and the benefits of a more coordinated approach are becoming better understood.

And finally,

  • The "Most Admired are different. GAP III identified a number of characteristics that distinguish companies on Fortune Magazine's "Most Admired" list from others, but the authors emphasized that factors such as their higher frequency of public ownership, generally larger size, and the more complex communications environments must be factored into the comparison. That said, the characteristics that distinguish Fortune 2000 "Most Admired" companies from others include these:
    • Their PR budgets are bigger. The average "Most Admired" PR budget was $9.2 million, versus $3.8 million for all others.
    • They saw themselves as being more "Proactive" and "Democratic" than all others.
    • PR reported to the Executive Office 50% of the time among the "Most Admired," as opposed to 53% among all others.
    • The "Most Admired" have much larger PR staffs. For example, among Fortune 2000 companies, their average staff numbers 44.2 people, versus 22.4 for non-"Most Admired."
    • In addition to having bigger internal staffs, the "Most Admired" also make greater use of outside PR agencies. 81% of them use outside agencies, as compared with 71% for all other Fortune 2000 companies.
    • The "Most Admired" also spent more on PR measurement and evaluation (as a percentage of their total PR budgets) than did non-"Most Admireds." "Influence on Corporate Reputation" remained the most commonly cited metric.

The press release suggests looking at the final report for more details on the findings - the complete study will be available for download at no cost  (in sections), at www.annenberg.usc.edu/sprc, effective May 23.

Posted by Cymfony on May 24, 2005 at 10:36 AM | Email this post Permalink

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Tracked on May 26, 2005 2:12:40 PM

Comments

Thanks Constantin, I appreciate it! Cindy

Posted by: Cindy Sullivan | May 25, 2005 2:03:06 PM

Here's a permalink for the study:
http://ascweb.usc.edu/asc.php?pageID=493.

Posted by: Constantin Basturea | May 25, 2005 1:46:42 PM

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