How bad is it, really? An informal look at the state of the PR and advertising industries

David and I sometimes visit the offices of public relations and advertising agencies.  No two agencies are the same, but we did notice evidence of the economic downturn.  Most agencies seemed to be affected somewhat, many worse than others.  One unforgettable example was walking into what had once been a prosperous advertising agency and seeing a sea of empty desks.  It appeared that the business was locked into a lease but was really struggling to keep the doors open.  It was both sad and funny that they had put a mannequin at the reception desk, which had obviously once been staffed by a real person.  We saw that “empty desk” syndrome at more than a few agencies.  And they’re not alone in this.  I don’t know anyone who isn’t hurting right now, Fletcher Prince included.

So, how bad is it really?

According to Rosanna Fiske, CEO of the Public Relations Society, while the advertising industry is on the decline, the public relations industry is actually on the upswing.  And why is that?

Well, take a look at all these “Occupy Wall Street” demonstrations.  I’m not saying the demonstrations are a laser-accurate barometer of popular sentiment.  However, they are a symptom: it is true that Americans are losing what faith they had in institutions and corporations — which is where PR steps in.  The Edelman Trust Barometer has measured this decline in trust, and the results are compelling.

On a scale from 1 to 9, respondents are asked to rate how much they trust institutions.  In the latest (2011) survey, the percentage of U.S. respondents who rated their degree of trust from 6 to 9

  • Only 27% for the media, declining from 38% in 2010.  In other words, 63% of Americans distrust the media as an institution of deserving of credibility.
  • 40% trust the government, 60% don’t.  This is a decline from 46% in 2010.
  • 46% of Americans still have faith in business, as an institution, down from 54% in 2010.  So now, more than half of Americans are wary of businesses.
  • 55% of Americans trust NGOs (nonprofits), which represents a decline from 63% in 2010.

The decline in the economy is partially responsible.  We all know that the innovations associated with the Internet in less than a decade have had a profound and even detrimental impact on the advertising industry, which relied heavily on revenues from newspaper and magazine display advertising. Newspaper circulation has been declining with a sharp drop in the recession of 2009.  Even USA Today saw a drop in circulation with the impact of the economy — business travel decreased, and business travelers were going online for news in increasing numbers, so hotels purchased fewer subscriptions.  The nearly empty offices we saw in some agencies were explained by the fact that advertising revenues have decreased by nearly half since 2005.  Looking just at print advertising revenues in newspapers,  revenues from retail advertising declined 42% and classified advertising decreased 67% (Pew Research Center’s Project for Excellence in Journalism, 2011 State of the News Media).

The decline has been so rapid and innovations have come to the fore so quickly that it has been difficult for all but the most nimble advertising agencies to keep up.  However, and I am really kind of sad to say this, the decrease in trust and the woeful economy does represent an opportunity for public relations firms, whose bread and butter comes from managing and enhancing the reputations of firms, nonprofits, and government agencies.  With trust in institutions at an all time low, firms are stepping up to meet that challenge for their clients.  The ones that are succeeding are the ones that understand and can navigate the online space, which is most influential on public opinion.  According to the Edelman Trust Barometer, more people turn to search engine results to find information about a company than any other way, nearly twice as many as those who look to newspapers or magazines.

Personally, I believe creating and maintaining trust today is a function both of public relations (including social media) and advertising (but the right kind of advertising).  Both industries add strengths — but today, neither can stand alone.  The hybrid agencies are the ones that will succeed.

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About Mary Fletcher Jones

Mary Fletcher Jones is a public relations and marketing consultant, and owns Fletcher Prince (www.FletcherPrince.com). Follow Mary on Twitter @FletcherPrince.

Posted on October 18, 2011, in Marketing Tips and tagged , , , , , . Bookmark the permalink. Leave a comment.

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