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Thursday, March 05, 2009
Why bother with a PR agency if you have an in-house staff?
Most organizations—and particularly those funded by taxpayers (whether an essential government agency or a bank that received bailout money)—are under increasing pressure to cut unnecessary expenses. With most people feeling the effects of the recession, ire rises when they see what appears to be profligate spending.
In an increasing number of cases, public relations—notably services provided by outside agencies—is viewed as one of those expenses that ought to be trimmed from the budget.
The latest example comes from Chicago, where the Daley administration earlier this week dropped 11 PR contracts worth $55 million. The contracts were canceled, according to an article in the Chicago Sun-Times, to drive home the point that taxpers can’t afford to supplement the “highly controlled message” coming out of City Hall. Here’s what Mayor Daley’s press secretary, Jacquelyn Heard, said:
We get it. We absolutely get it. We understand that it would seem absurd at a time like this to be using taxpayer funds for this kind of non-essential service. It’s been made abundantly clear to every department that they are not to use these contracts…The door is locked shut on the use of these kinds of firms at this time.
The Sun-Times had earlier reported that City Hall signed its 11th contract for $5 million just this week—for translation services designed to get content distributed to neighborhoods into the non-English language spoken in those communities. That contract set off alarm bells, since Heard has promised just last fall to spend nomore money on outside PR until the city dug itself out of its current budget crisis. The attack was led by people like Alderman Scott Waguespack, who called the use of outside PR “wrong-headed.”
None of the 11 agencies involved are big international names. You’ve got Jasculca/Terman Associates, MK Communications, Carolyn Grisko & Associates, Landrum & Brown, Valerie Denney Communications, American Marketing Services, Better World Advertising, Interpro Translation Solutions, Metropolitan Group, Jim Mudd Advertising Agency, and Cultural Communications.
The line in the Sun-Times article that struck me was this one:
Aldermen found the contracts particularly galling because every city department has at least one public information officer. That’s in addition to the mayor’s press office, with a staff of 15 and an annual budget of $1.2 million.
In another Sun-Times article, Waguespack questioned the need for “outside spin doctors,” even during the best of financial times, adding, “I don’t think they provide any more service than the dozens of other PR people we already have in the city.”
My favorite part of Alderman Waguespack’s quote is “I don’t think.” Evidently not. It wouldn’t have taken too much of the alderman’s time to know instead of guess. And I’m certain the people in those 11 firms working hard on the accounts would take exception to the portrayal of their efforts as valueless. In fact, the notion that outside PR isn’t necessary when you have internal staff makes about as much sense as berating an internal legal team for hiring outside counsel. The internal team sets the company’s agenda but is generally not large enough to handle actual litigation duties. This is well understood. Similarly, internal PR staff guides the organization’s communication, but doesn’t have the time to spend days on end on the phone pitching media. That is often what internal PR staffs outsource to external agencies.
Todd Defren wrote a wonderful piece, by the way, extolling the virtues of external agencies. It would make for illuminating reading for Alderman Waguespack.
Be that as it may, the attacks on organizations paying for PR efforts isn’t limited to government. AIG—American International Group, AIG, the company that has taken billions of dollars in federal bailout money—has already been caught engaging in some spendthrift behaviors. But now the company has been caught spending money on PR—what Fortune Magazine has characterized as a “dizzying PR binge.” That’s based on the revelation that AIG has four PR groups on the payroll. And again, the source of angst seems to be the fact that AIG also has an in-house communications team.
In AIG’s case, the outside teams are fairly well-known global brands, including Hill & Knowlton and Burson Marstellar, which are involved in government communication efforts. The Fortune article argues that, despite the money spent on PR, “the company has given little clarity on taxpayer losses to date or indeed much communication directed toward taxpayers at all.”
This could be the fault of the PR staff. It could also be based on counsel from outside PR agencies. Most likely, though, it’s a final decision from company executives who are opting to ignore the advice of its communication advisers to be more transparent and forthcoming. Whoever’s responsible, the situation—like the one in Chicago—is fueling the growing belief that external PR is unnecessary if you have an internal team. And while some external engagements may not be the best use of budget dollars, most inside PR staffs know exactly what they’re doing when they budget for external resources.
It’s worth noting that the recent Annenberg report on the impact of the recession of PR confirms that agencies are being hit much harder than internal staffs.
If the PR profession ever decides to undertake a genuine campaign to address these inaccurate perceptions, the roles of internal and external teams needs to be added to the mix. Otherwise, uninformed pundits like Alderman Waguespack, who have no interest in determining the real value PR agencies provide in exchange for their fees, will be telling our story for us.
And it wouldn’t hurt if agencies as a matter of course produced some kind of ROI metric, even if the client isn’t paying for it, just to have evidence in hand that these pandering attacks just plain have it wrong.
