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Economic Hardship: In-house PR vs. Outside Agencies

Posted At: February 17, 2010 2:58 PM
by Scott Young

Economic turmoil causes organizations of all sizes to seek immediate relief from economic burdens that threaten their very existence. Executives find themselves wondering what is essential for their organizations to survive. They may be faced with tough decisions about whether or not to lay off employees. They may be tempted to ignore social responsibilities or pretend issues regarding reputation management involving community relationships between the organization and its stakeholders are nonexistent. Unable to see tangible connections between public relations and the financial stability of their organizations, some executives choose to downsize their PR staff.

Organizations interested in improving their reputations and relationships understand the importance of utilizing public relations in their everyday operations. By following ethical guidelines, building lasting relationships through community stewardship and listening to stakeholder needs, organizations are able to accomplish reputation management. Even though concerned organizations feel public relations is important, does economic hardship affect the importance of organizational public relations in the minds of executive decision makers?

In an early 2009 article published by the Boston Business Journal, Lisa van der Pool noted how PR professionals in the Boston area have experienced job cuts in recent years. “Nationally, public relations spending has been growing in recent years, although that growth slowed in 2008,” said van der Pool. “PR spending grew an estimated 10 percent in 2008 to $4.7 billion, compared with a 12 percent growth rate in 2007.” According to the article, in-house PR professionals as well as those working for outside agencies have experienced job cuts; however, it is possible to attribute increased PR spending to the trend of organizations using outside agencies more than in-house PR departments. In a recent Journalist blog post, Jeremy Porter noted how PR spending has continually increased in 2008 and 2009 through services like word-of-mouth marketing and social networking. While these trends support a growth in PR, it is limited mostly to agency-related PR.

Reductions in PR staff and resources force PR professionals to seek cost-efficient alternatives to promote their client or organization. Rapid development in social media has affected the way organizations interact with their publics, opening up two-way communication that can foster long-term brand loyalty. However, many PR agencies report requests by client organizations for nothing but social media marketing. While social media marketing is important to organizations, reputation management still depends on more traditional facets of PR, like media relations, community relations and crisis management. While social media can enhance these efforts, certain situations still require organizations to provide a face with the message.

A successful organization incorporates public relations initiatives into its daily operations at all levels, including the executive level. By implementing solid communication plans tied to the organization’s long-term business goals, the executives and their PR staff are able to keep a finger on the pulse of the organization and the reputation management issues it faces.

Outside agency vs. In-house

For those organizations that understand the importance of ongoing reputation management, the choice is not whether to eliminate PR from their daily operations but whether to use in-house PR departments or outside agencies. Julie Bonn Heath, founder of Julie Bonn Heath Marketing & PR, believes organizations and their public relations personnel have been greatly affected by economic hardships. Named one of the “Top 60 PR Peeps to Follow on Twitter” by Social Media Today, Heath explained in a recent interview the difficulties executives face when low budgets force cuts in personnel. She said many executive staff members prefer in-house PR because it is usually cheaper for the organization.

While in-house PR is often cheaper, Heath said in-house PR professionals often lack experience in working with the media. Outside agencies tend to have better media relationships. Heath said, “Outside firms can allow the company to benefit from the relationships of the agency, including relationships that involve other PR agencies. The level of experience the organization can gain by using an outside firm can be unlimited.”

Heath believes that public relations, whether the organization uses in-house PR or an outside agency, is now more important than ever. “In a recession, companies seem to cut their marketing budgets first,” said Heath. “In fact, companies should increase their budget. It is even more important to brand a name and become the choice of the consumer in today’s market.”

Consumers today have to budget their shrinking expendable incomes more because of a struggling economy. This makes today’s consumers very picky purchasers. Heath believes companies who budget more money for PR will stand out from their competition. With so many choices, where will your company be?

Combine your efforts for maximum potential

For some organizations, a combination of both in-house and outside agencies to handle the PR efforts of the organization works best. This allows internal PR professionals to handle marketing through social networking and events while the outside agency works closely with the media. Using a combination of PR efforts can save organizations money by reducing the number of PR staff employed. Companies can employ one person to handle daily public relations and utilize the endless benefits from using an outside agency only when necessary.

Ronn Torossian, CEO of 5WPR, recently posted a blog about some differences between in-house PR and agency PR. He believes students and recent graduates need to know how each type of PR functions. It is equally important for top executives to know the differences. PR is very broad and can offer a variety of choices. Depending on whether the focus of the organization involves in-house PR or services from an outside agency, top executives must decide how the organization will communicate with stakeholders. Executives who arm themselves with this knowledge have a better chance of surviving in a struggling economy. While one effort may work best for an organization at one particular time, situations can change very rapidly in the business world. Now more than ever, it is important to know your publics. Companies can’t rely on family traditions in the marketplace anymore. Consumers seek the best anticipated value.

Good news for PR

According to the Bureau of Labor Statistics, public relations employment is expected to grow more than 24 percent from 2008 to 2018. The site also predicts many organizations will choose to utilize outside firms instead of in-house PR professionals. The cost of an in-house staff may or may not be comparable to the cost of hiring an outside PR agency; every situation is different. Whether your organization chooses to use an in-house PR department, an outside agency or a combination, the important thing to remember is reputation is everything. Good news travels fast but bad news travels faster. Have a plan in place to handle all of your PR needs by incorporating communication into top management and utilizing PR professionals who are most beneficial to your organization’s survival.

What type of PR practice do you think is more important — in-house PR or outside agency PR?

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