As an industry PR is challenged: it struggles with who we are, what we do and how to measure our work. It should be no surprise then that there’s a great deal of discrepancy to be found in the methods and results of sizing up the PR industry.
Case in point? The latest VSS Communications Industry Forecast:
“The only Traditional Marketing segment to outperform the economy, Public Relations & Word-of-Mouth Marketing, will see CAGR of 14.0% in the forecast period to $10.96 billion in 2015, as the role of PR in integrated marketing campaigns expands and social media fuels gains in WoMM spending.”
If you can get past the verb “outperform” as applied to categorization of “traditional marketing,” you’ll see the data was part of a report that will cost you a mere $4,000 to read, produced by PQ Media, which sells research services, and commissioned by private equity Veronhis Suhler Stevenson, which funds debt for leveraged buyouts.
Thankfully, snipits of it including the part I cited were published in a press release on September 8, 2011 and others were rebroadcast everywhere on the Web – in news, blogs and social media. As a result, these numbers are being bantered around the social web as if they were handed down on stone carved in heaven, but as I’ll explain in a bit, $10.96 billion really isn’t big enough for heavenly engraving.
PRSA, in citing numbers from the same report on its website, breaks out spending in 2010, the base year for the market forecast, like this: Word of Mouth totaled $2 billion in spending in 2010, while traditional PR services accounted for $3.7 for a combined total of $5.7 billion at the end of last year.
So what’s wrong with that? The Holmes Report’s annual survey of about 300 mostly public PR firms, says these firms alone earned revenue of $8.8 billion in 2010. This means Holmes looked at a partial segment of the PR industry and determined a number anywhere from 35 percent to nearly 60 percent larger than that of the VSS report, depending on whether or not word of mouth marketing is included or excluded.
While Holmes’ market sizing is significantly larger than VSS, it’s important to underscore that it’s a mere fraction of the PR industry. This is because it openly excludes revenue from private PR firms – the hundreds, or even thousands of solo, small- and mid-sized PR firms – but also corporate spending on PR. I’d venture to say that corporate spending on PR easily rivals, and perhaps outweighs, the revenue figures Holmes reviewed – my last two gigs have been in-house.
Just think of how much Facebook, Microsoft and GE spend on PR – and then consider we’ve got other sectors of spending in associations, non-profits and government. In addition, put on your international hat to include Europe, or growing PR markets like China or India – and it becomes easy to see how VSS’ forecast looks extremely conservative. As Paul Holmes wrote of his own report, “it is clear that the PR agency business generates at least $8.8 billion in worldwide revenues – and probably considerably more.”
The good news is that the PR industry is probably larger today than VSS estimates and is likely to be growing at a pretty good clip – but also making up lost ground over the last couple years. For example, two years ago I (very unscientifically) estimated the market was about $10 billion, but any way you look at it, PR is still in a larger context, a relatively small market.
PR accounts for less than one percent of $1.120 trillion (yes, with a T) of the all-inclusive communications industry VSS analyzed. Or to put it another way, it’s about 1/16th the size of spending in direct marketing which comes in at about $160 billion.
Maybe if PR were better defined, we’d have an easier time measuring the market size and forecasting the opportunity. For now, it’s mostly guess work, published in reports and debated in blogs.
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