Economics

Public Relations Industry Meltdown Begins

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Flackery's new era of contraction was announced with a boom today, as the celebrated Los Angeles crisis management PR outfit Sitrick and Company Inc., along with a nearby restructuring consultancy, were both aquired by a multinational professional services firm.

Sitrick, famous for a client list that included the bankrupt Orange County government, the Archdiocese of Los Angeles, and various hangers-on in the death of Michael Jackson, looms very large in the media economy of Southern California, which accounts for the attention being paid to this deal. Sitrick and Riverside, CA-based Brincko Associates were picked up by Irvine, CA-based Resources Connection, which plans to combine them into a new subsidiary. PR Week says the new firm will focus on bankruptices, which are said to be a hot thing these days.

The public relations industry hits the skids.

A more important wrinkle is what this says about stand-alone public relations companies. In a column earlier this year, I noted that the size of the flack workforce had about doubled over the last ten years, while the number of journalism jobs stayed about the same.

I did not mention my own expectation: While PR, unlike journalism, is facing only a cyclical decline, the industry is overbuilt, and has been overpaid, to the point that a massive rationalization is very probable. Many journalists view with horror the prospect of having to go into PR after the inevitable layoff, but as usual, the pessimism is too limited. In reality, there probably won't be a PR job waiting.

The deal for Sitrick and Brincko seems to make sense, and no staff reductions have been announced. But it does raise the question of whether the PR unwind has begun. In another PR Week story, third quarter results are memorably described as "less worse." Another one, suspiciously free of numbers, tries to put a good face on "weak" hiring.

I am bullish on the future of PR and believe most of what we now think of as journalistic duties will be handled just as well by flacks (er, communications professionals). In the future, everybody will hire an image management consultant for at least 15 minutes. But for now, the idea that every graduate of the newspaper business will find a cushy if less rewarding home in PR seems to be, like most of what comes out of newspapers, fiction.

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  1. One PR business model that I think will continue to thrive without risk of being absorbed by others is the “virtual business,” depending entirely or mostly on contractors to build teams custom-suited to a given client. My crisis management consultancy has operated that way for almost 16 years and business is good.

    Jonathan Bernstein
    President
    Bernstein Crisis Management, Inc.

    1. That’s about right. And the journos who are comfortable in that kind of environment tend to be freelancers, not the cubicle-dwelling carbon blobs who are getting laid off by newspapers.

  2. It’s times like this that I wish I had gotten a degree in a real field like engineering.

    1. Don’t assume it’s too late. I entered law school when I was 35.

      1. That’s a real field?

        Sincerely,

        Law Student

        1. You’re doing it wrong.

    2. I did get my degrees in engineering. It’s great. Our jobs are going to India, Taiwan, and South Korea.

  3. But for now, the idea that every graduate of the newspaper business will find a cushy if less rewarding home in PR seems to be, like most of what comes out of newspapers, fiction.

    There’s still lobbying. Someone’s gotta reinforce Nancy’s belief that rainbow-powered flying ponies will crap low-cost universal healthcare across the continent.

  4. Why did I think the blame graphic was a B/D caning?

  5. You’re not very positive about newspapers, Tim. Why is this?

    1. He has lived the life of newspaper and turned to the good side.

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  7. If people would get the bullshit purist idea, forced on them by academia, out of their head life would be a lot easier for a lot of people. This notion that you are some sort of sell out for doing what you like and getting paid is fucking retarded. This is the second woe is me post about some sort of purist artistic bullshit.

  8. Two quick things. First, PR firms have been bought by ad agencies for decades. It always seemed to me a sign of the industry’s health that people wanted to buy firms. Being bought by a professional services firm (as FD was by FTI Consulting 3 or 4 years ago) is a logical progression, since PR is more naturally a part of management consulting than a sister to an ad agency.

    Second, Sitrick was sold for an initial consideration of about $40 million. Again, I fail to see how the fact that someone is making that kind of investment translates into the death knell of the industry.

    1. Thanks Paul, for this voice of reason. Totally disagree with Tim that the new sale of Sitrick and Brincko can impact or extend to the state of PR industry as a whole. There is no question that our industry is in a state of Shift, per David Houle in his recent ShiftAge Trend Report. The PR industry is, of course, not alone in the Shift, but those agencies that recognize this shift and act upon it, will move the industry onto a whole new level and not only will PR retain its crucial function vis-a-vis corporations, but become even stronger. It will just be different. New leaders are evolving and reinventing the industry, adapting formats and platforms relevant to the ShiftAge.

      Noemi Pollack
      http://www.ppmgcorp.com

  9. If the PR business is in trouble this will be a blow to the news media business since much of what is in the news is barely rewritten press releases. It would be like an oil company finding its oil wells drying up.

    1. Hah! This is absolutely true. You especially see it now with the Internet. Newspapers need a steady stream of updates for their sites, so more and more rewritten press releases are being passed off as news. If you’re able to craft a well-written and timely press releases with quotes and pertinent information, you’ve got a good chance of getting free publicity.

      As an editor, I used to receive tons of press releases, and it startled me how badly written so many were. It was rare to receive a press release with good grammar, spelling and style. That’s telling.

  10. If the PR game is a dying one, at least they’ll be able to put a good face on it.

  11. Jeezopete, the PR bubble is about to burst. Somebody hand me a hanky, I’m drowning in tears.

  12. PR Week says the new firm will focus on bankruptcies, which are said to be a hot thing these days.

    What an interesting business model. “We’re going to specialize in working for companies that can’t pay their bills.”

    OTOH the city, the county, the state, and the country they operate in are all potential clients.

    1. Working for a company already _in_ bankruptcy can be pretty lucrative, as the bankruptcy court generally makes sure that vendors providing professional services during that process get paid. It’s all the suckers who supplied the company _before_ it filed who get screwed.

      >most of what we now think of as journalistic duties will be handled just as well by flacks…

      Most of what we now think of as journalistic duties are _already_ being done by flacks. The “journalists” just rewrite what they pull off the PR wire service.

      1. That’s right. This new company makes sense: There’s a substantial PR element in bankruptcy, with expectations management, brand messaging, and working with these court-appointed receivers. (Receiver is a fascinating full-time job you never hear about — I worked with a guy a while back who had a flourishing career as a reaper, having liquidated 50+ companies over a 20 year period.)

        Still, I don’t see this entity throwing off lots of six-figure jobs for failed journos anytime soon.

  13. Hey, Tim… practicing pr requires less certification than an electrician, plumber or, certainly, a journalist. how often do we hear when hiring young people, “I’m a people person.” The world of professional, non-fiction, storytellers is morphing, that’s for sure. yet if we find ourselves w/ more journalists, who can write, communicate, understand the value of a balanced story and building relationships, i’m all in. write on, Tim.

  14. Y’all have missed the true wave of the future. We’ve got Hope in the White House and Nancy riding her unicorn in the House.

    The world needs news don’t you know, it’s a “too important to perish” industry. Which is why the government is going to take over the whole newspaper industry and run it at a colossal loss for the next century and half (my prediction of max possible Uncle Sam lifespan before utter and complete bankruptcy — and I’m an optimist when it comes to future economic trends).

    Once you are working for Big Brother you’ll also have a big union to make sure your every need is taken care of.

  15. Well I guess it was just a matter of time before the blame game started!

    RT
    http://www.complete-privacy.at.tc

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  17. I am bullish on the future of PR (…)

    In the future, everybody will hire an image management consultant for at least 15 minutes.

    1909. “In the future, half of us will become professional drivers.”
    1959. “In the future, half of will become professional computer programmers.”
    2009. “In the future, half of us will become PR professionals.”

    Disclaimer: being provocative intended. 😛

  18. What a vacuous article, with no data to support the hed. Opinion disguised as analysis.

  19. “In the future, everybody will hire an image management consultant for at least 15 minutes”

    Huh? With the advent of social media, I believe that should read, ‘In the future, everybody will do their own PR’! Which doesn’t augur well for PR, but we do have the corporates to manage PR for.

  20. I’m one of those journalists turned PR flaks but did it by choice. I’d worked my way up into a good media management position, scored some journalism awards and decided it was time for a change. I never thought it would be cushy or easy and it hasn’t been either, but it has been a good change.
    One thing I don’t quite get however is the number of ways that ‘PR and Journalism’ or ‘flak and journalist’ seem to have become interchangable. Some of the skills are the same and there has always been an interaction between the 2, but they aren’t the same. They are distinct jobs.
    Or is there a feeling that the recent uncovering of the e-Health mismanagement in Ontario was good solid PR work or that the disclosure of Watergate was an incredible PR team effort?
    If indeed there is a PR meltdown (which doesn’t seem to be happening) they can all put on their flak vests and go into a war zone to Twitter away and write media releases.
    They are after all, intechangable …

    Mike

  21. There is no doomsday scenario here, just a “doomsday” headline. Very misleading. The PR industry is alive and well, particularly for those who are thriving by using and teaching social media.

  22. There are still plenty of “PR” jobs working as lobbyists and lobbyist assistants. This community is about 250,000 people in the D.C. area. For many years, the route to a powerful “PR” job has been interning with a politician.
    Also, PR has split into institutional (very controlled, very formal, under the thumb of legal, financial and sales) and agency (much more creative and still media-oriented). This happened to the ad industry more than 60 years ago.
    “PR” people do function more like management consultants and lawyers these days and are are totally in the camp of the client. As one agency exec told me when I asked for some information on a client that he wouldn’t give: “We work 100% for our clients and no percent for you.”

  23. Hey Tim,

    Isn’t it obvious? PR came into existence with the advent of objective journalism. As objective journalism is diminished in favor of affirmation reporting and marketers publishing a new brand of yellow “consumer-driven” media, public relations either needs to find its roots (where the real value is) or perish over the relationships they cast aside.

    If there is any irony, in a few years, content overload will likely resurrect objective journalism, leaving those who dismissed the nature of things for now without those critical connections. Swinging pendulum tends to have shorter and shorter cycles.

    All my best,
    Rich

  24. I work on the organizational side of PR which is working out quite well for me. I have friends that work on the agency side that are seeing the work in their departments increase while their ad departments keep taking hit after hit. Coming from a “flack” that is ACTUALLY working in the industry, business is doing just fine. Remember that PR is NOT just media relations but involves numerous communication roles. I am not sure what makes you an authority on the industry and it is pretty obvious that your lack of evidence and statistics unveils your agenda.

  25. PR people who can write well and connect with an audience are even more in demand now that organizations reach their target audiences directly through their own websites.

    Traffic is being driven by email marketing, social media sites and search engines. And the media remains important as gatekeeper, watchdog and agenda setter.

    These are exciting and challenging times to be in this industry. I’m bullish on PR, but it’s not for the faint of heart or anyone looking for a 9 to 5 job.

  26. Funny you feal that a PR meltdown has begun. I have read several recent studies that show the PR industry will be a growth industry in the next five. years.

  27. Tim, a company buying another is not evidence of a declining industry. But that’s not your biggest mistake. You seem to confuse media relations with public relations. Media relations is a small element of public relations, and it is evolving.

    I’m an attorney who works in healthcare public relations, and I have many clients for whom the mainstream media is not a key element of our work.

  28. This article is pure linkbait. Move along.

    1. Exactly. I came over here expecting (and hoping for) a well thought out argument. This post just a waste of time. Really lazy writing, Tim.

  29. Meanwhile, Sitrick is presiding over the death of the East Valley Tribune in Phoenix.
    http://www.eastvalleytribune.com/pdf/release.pdf

  30. Linkbait it is. LOL! Worse than a flack is a bad blogger. Enjoy your navel. A glance is all I need.

  31. Three things. Effective PR has never been just about pitching media, so the number of journalist jobs isn’t stand-alone metric. And the day of reckoning for the multinational PR agencies is long overdue. There’s a lot of waste in those systems… between 10 and 15% of one global clients’ budget was wasted by senior strategists leading regional teams squabbling over how much of the budget they should get… and charging the client for the internal bickering. The need for effective PR is skyrocketing. The discipline is healthy – the current service structure of big, bloated agencies is not.

    1. Now this is some intelligent writing. You’ve provided more insight in this one paragraph than this entire post could do in 6. Well said.

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