Seventy-seven percent of member shops offer paid complementary public relations services to clients, according to a survey by the American Association of Advertising Agencies. Fielded in December and released yesterday, the study said 64 percent of those AAAA agencies that do not offer paid complementary PR services outsource the task for their clients.
Of those who don't, there are several reasons why they do not directly offer PR services to clients. Top among them are because these ad agencies do not want to invest in a new practice area, lack the PR experts on staff or prefer not to expand focus.
“The survey results may not necessarily represent PR practices within advertising agencies across the whole country,” said Kipp Cheng, vice president and director of public affairs at AAAA, New York. “However, the findings point to some interesting indicators about integration.”
Of equal interest were the other findings from the survey, which queried 264 agencies and garnered 168 responses. Forty-four percent of those who responded said advertising is the more stable revenue for the agency when compared with PR. The same number also said it is the about even between advertising and PR.
“Anecdotally, many agencies are either offering [PR] as an accommodation to clients or have just started the practice and are seeing its benefits,” the study said. “They agree in principle that it evens out the unpredictability of the advertising revenue flow.”
PR stands out for other reasons, too. Sixty-eight percent of the respondents said, on average, PR has higher profit margins, while 21 percent said it is about the same as advertising. The reasons cited for the higher margins are payment on a fee basis, time billed for hours is profitable, less support staff and no overhead.
Sixty-one percent of the respondents claimed their average per client total budget for PR accounts is less than $100,000. For 29 percent of the respondents, it was between $100,000 and $250,000.
Regarding cross-selling PR, 23 percent of the responding AAAA members said they sell PR to their advertising clients “very well,” 35 percent said “well” and 29 percent claimed they do it “adequately.”
The feedback on integration was interesting. Fifty-two percent of the responding agencies said their PR group was “very well” integrated into the rest of the agency, with 86 percent saying their PR is culturally integrated and does not have a separate identity.
As expected, the AAAA agencies' PR practices continued to face challenges despite the discipline's charm.
Acquiring new business for themselves was the top challenge cited by at 31 percent of the respondents, followed by measurement of return on investments by 23 percent. Perceptual status versus advertising was cited by 13 percent. Consider this anecdotal comment: “We don't love PR as much as we love advertising — don't have the passion for it, so it's a stepchild.”
Another 13 percent of the respondents said the biggest issue was convincing account directors to include PR in their initial stages of planning.
“That's this whole idea of having a place at the table,” Cheng said, “which, I think, is probably true for a lot of the disciplines across the whole marketing communications spectrum.”