Paul Holmes 19 Mar 2010 // 12:00AM GMT
The first decade of the 21st century did not end on a particularly high note for business in general or for the public relations industry in particular: while PR firms mostly outperformed their peers in other communications disciplines, they were far from immune from the downturn that hit the global economy in 2009.
But there are reasons to be optimistic about the prospects for public relations over the next 10 years. Increased transparency, demands from consumers and other stakeholders for greater authenticity, an emphasis on dialogue and conversation—all these trends play to the strengths of public relations and present an opportunity for the discipline to take on a wider role in corporations and other institutions, to finally contribute to something like the maximum of its ability. These are 10 trends we believe will help define the next 10 years for the public relations profession.
1. Public relations will play the central role in brand-building
As marketers come to realize—and many of them already have—that brand-building in the 21st century means building relationships with consumers, rather than simply bombarding them with messages, public relations will begin to drive brand strategy. Reach and frequency, the two things that advertising has traditionally delivered more effectively than PR, will be increasingly irrelevant; savvy marketers will be much more interested in engagement, and engagement will rely on all the things PR is good at: informing consumers rather than promoting products; earning trust rather than buying time; developing conversations rather than delivering messages. That’s not to say public relations people won’t have to learn some new skills (or for those with long memories, re-learn some old skills, dating back to the early days of the profession). They will need to be better listeners, because the ability to tell management what its key stakeholders expect and demand will be just as critical as the ability to tell stakeholders what management wants them to hear—perhaps more critical. They will need to develop tools that deliver unique and important consumer insights, and use research more effectively to inform strategy and planning. They will need to develop superior metrics, and more. But if ever there was a time for public relations professionals—both in-house and on the agency side of the business—to take the lead rather than merely providing support to the marketing function, this is it.
2. Digital agencies will disappear
There was probably a time, immediately after the invention of the television, when some people thought there was an opportunity to create a PR firm that would focus entirely on television. After all, the medium was new: clients were unfamiliar with the technology and its rules, and many established PR firms did not yet know what would and wouldn’t work. But it wasn’t long before both clients and agencies familiarized themselves with the new medium and it became obvious that the most successful campaigns delivered an integrated approach, with a single cohesive strategy executed across multiple platforms. Soon the only firms specializing in television were production and distribution houses, not agencies. The same thing will happen—is already happening—with digital and social media. Some clients may still come to agencies looking for a “digital” campaign, but that approach already seems quaint and old-fashioned, indicative of a fascination with (and ignorance of) the shiny new toys available to communicators rather than a grasp of how they can be used as part of a comprehensive, multi-media campaign. Two things are happening. First, clients are coming to realize that integrated campaigns that leverage the power of new and traditional channels are more effective than campaigns that rely on one or the other. And second, mainstream public relations firms have learned pretty quickly that their process (telling a story to someone with influence and credibility, relying on that person to re-tell the story to a wider audience) and their skill set (building relationships based on dialogue) are just as applicable—indeed, even more applicable—to the new media as they are to the old. At the very least, mainstream PR firms are learning digital faster than specialist digital agencies are learning how to deal with traditional media. Digital agencies will either evolve into creative studios—useful for developing widgets and viral videos—but strategy will be developed by agencies with a broader understanding of all media, not just a single medium.
3. At least one giant PR agency will buy back its independence
The past decade has demonstrated conclusively that independence is not the competitive disadvantage many observers—this author among them—once assumed it was, and that in some circumstances it can be a significant advantage. When the last of the giant independents to sell, Fleishman-Hillard, became part of Omnicom toward the end of the last decade, we and many others asked how Edelman could continue to compete without a deep-pocketed parent to fund an acquisition strategy. The answer, now obvious, is very well. Edelman outperformed its peer group considerably over the past decade, not despite but because of its independence. Many of its competitors now complain that Edelman’s willingness to settle for lower profit margins in difficult times gives it an unfair advantage. There’s no doubt that Edelman—answerable to its managers, with no Wall Street investors to satisfy—has greater flexibility than its holding company owned peers to make investment hires, for example, and that it has the freedom to make an aggressive case for PR (at the expense of advertising) that those affiliated with ad agencies either can’t or don’t. And life for PR firms affiliated with ad agencies is going to get even more difficult over the next decade, as the decline of the ad business continues. At some point, one of the giant holding company owned firms is going to recognize the value of independence and put together some sort of MBO—and given that PR remains first and foremost a people business, it’s hard to see how any holding company could resist such an effort.
4. Most top PR firms will have advertising units
This might sound counterintuitive, given my predictions about the fate of advertising agencies and the ad business generally, but smart PR people will recognize that there is still a role for advertising in its place, as a product or tool at the disposal of the public relations process, and will recognize that as PR becomes more central in brand strategy it needs to have as many tools as its disposal as possible. Just as important, the existence of new channels that allow companies to communicate more directly with consumers and other stakeholders means that good public relations people have an opportunity to become content creators, and there’s no doubt that many advertising people have strong content creation skills (as well as impressive storytelling abilities). But because the new communications landscape prizes credibility as much as creativity, those skills will be most effective when harnessed to public relations thinking, serving broader strategic objectives.
5. The walls between public affairs, corporate reputation management and marketing communications will be demolished.
Up to this point, we’ve been focusing primarily on those changes that impact the public relations agency business, but on the client-side there are going to be some equally significant changes. Many corporations continue to divide responsibility for stakeholder engagement between separate functions, many of them with distinct reporting lines. So public affairs people report into the legal department, employee communications people report to HR, investor relations people report to the CFO, consumer PR people report into marketing, and corporate communicators report almost anywhere. Those distinctions have never made sense from a brand a reputation management perspective, but in the social media age that are counterproductive to the point of absurdity. In the modern world, employees are ambassadors, influencing corporate and brand reputation for better or worse. New product launches need to be considered from the crisis and issues management and public affairs perspectives as well as from the traditional marketing viewpoint. Corporate social responsibility is integral to both product success and corporate reputation. Someone needs to be responsible for centrally managing all stakeholder relationships: regulators and legislators, investors, communities, employees, consumers, the media and more. I’d make the case that PR people—used to dealing with multiple stakeholders and complex multidimensional issues—are best equipped to step into this role, but in many companies smart marketers will learn stakeholder engagement skills and take the lead.
6. The “corporate communications” function will disappear
As the function grows in scope and importance, “corporate communications” will come to be seen as an increasingly inadequate terms to describe the function responsible for building relationships between institutions and their stakeholders. For one thing, most companies define communication as a one-way process, with the communications department responsible for delivering whatever information that company wants it stakeholders to receive. That approach has always limited to ability of public relations people to contribute to their organization’s success; in the modern world it’s simply counterproductive: it ignores the fact that stakeholders, not management, decide what information they require and it ignores the fact that in a social media environment listening adds more value than talking. More significantly, it ignores the fact that behavior is more important in defining reputation and building relationships than communication, that deeds speak more loudly than words. Anyone responsible for reputation and relationships needs to be involved in shaping policy, not just communicating it. For that reason, corporate communication sells the function way too short. I personally don’t see anything wrong with the term public relations—as long as it does what the words say—but public engagement, stakeholder relations or any variation on that theme might make an acceptable replacement for the current nomenclature.
7. Customer service will become part of the public relations department
The social media age has demonstrated just how much an organization’s brand and reputation can be influenced—positively or negatively—by the service it delivers to consumers. There was a time when a dissatisfied customer would go home and tell half a dozen of his closest friends; today he can blog, Tweet or post a YouTube video (as companies from Dell to United Airlines) and tell thousands, many of whom will go on to tell thousands more, creating a community of critics capable of seriously damaging the brand. In this environment, anyone responsible for managing an organization’s reputation and its relationships with key stakeholders must of necessity be in control of the customer service effort. No amount of positive mainstream media articles can undo the damage that poor customer service, and the groundswell of antipathy it creates, can do, which means that all the good work to build reputation undertaken by the PR department can be undone by a few instances of poor customer service. If someone is going to be responsible for an organization’s reputation, he or she has to also be responsible for customer service.
8. Competition from management consultancies
I first made this prediction more than 20 years ago, and this decade will provide a definitive answer to the question of whether I was 20 years ahead of my time or just plain wrong. But as corporate reputation and the relationships on which it is built come to be seen as critical assets, there is going to be more interest than ever from mainstream management consulting firms in offering advice on how to manage them. Whether they can mount a significant challenge to existing PR firms remains to be seen, but there are several causes for concern. The first is that they will likely target the most rewarding (financially and intellectually) segment of the business, offering high-end strategic consulting rather than on-the ground execution. The second is their ability to attract talent, especially when a senior counselor can charge much more for his advice if his business card says McKinsey than if it carries the name of even the best PR agency. And the third is their status as already-trusted advisor in the C-suite. Some management consulting firms may even target high-end PR firms for acquisition: it is not difficult to imagine more deals like the one that saw FD become part of global consulting giant FTI. PR agencies will need to raise their game to prepare for this threat. (And the good news is, anything PR firms do to prepare for this eventuality will benefit their businesses, even if I turn out to be wrong.)
9. De-consolidation, or fewer global accounts
As public relations becomes more mission critical, smart companies will want to work with the best firms available to them in every market rather than selecting a single global agency to handle their business around the world—an approach that inevitably involves compromising on quality in order to gain greater convenience. The whole “consolidation” trend has been overblown anyway: the big multi-country, multi-million dollar assignments generate more media attention and industry buzz, but are almost inevitably followed by disintegration, as country managers—who are accountable for results in their local markets—prefer to work with their own firms rather than one imposed by headquarters and as companies realize that their most important communications challenges (M&A, crisis, public affairs, and often more) requires the best specialist help available, often unavailable from generalist firms. The reality is that even the best of the large multinational agencies is not an A-plus firm in every market in which it operates (most are not A-plus in even half of the top 10 markets) and so the decision to go with a single global agency involves accepting mediocrity in some key markets. That’s a trade-off clients will be increasingly unwilling to make if they put public relations on a par with, for example, legal counsel when it comes to contributing to corporate success.
10. Success will be measured in relationships
Metrics that emphasize reach and frequency—everything from impressions to opportunities-to-see to advertising equivalency—will seem antiquated and absurd by the end of this decade, as clients come to realize that the real objective of pubic relations, the real contribution it can make to their success, is measured in the strength of relationships it creates. Some are already taking steps in this direction: Procter & Gamble has talked about measuring the effectiveness of its social media efforts in terms of engagement (an approach that could and should be adopted to all communications, from advertising to traditional PR), while many companies are using the Net Promoter Score approach developed by Bain & Company’s Fred Reichheld, which identifies brand advocates and detractors. Some variation on that approach will become standard within the public relations industry, giving the industry a standardized approach to measurement that focuses on outcomes rather than outputs.