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Strong relations underpin weak market

THE local advertising industry might be having a tough time in light of the Government’s drastic cut to public spending on advertising, but the public relations market is putting a positive spin on the future.

Ward Holt principle Jim Ward claims there are still rich pickings out there for strong professional public relations businesses, unlike the advertising market where there is little room for growth.

The failure of a number of in-house public relations operations in advertising agencies is evidence of the strong loyalties clients have to their marketing provider.

“The two situations could not be more opposite with PR and advertising,” Mr Ward said.

“There are lots of people out there not doing PR who should be, so it’s easy for us to go out and find new clients.”

When the Government first signaled its intention to cut almost one third of total marketing budget, the local advertising industry went into a tailspin.

The local arm of the Advertising Federation of Australia undertook comprehensive research to illustrate to the Government the fundamental value of the public advertising spend, much of which is invested in social marketing.

The research suggested the local advertising industry was worth around $985 million in 2000 and employed 5,500 people.

When the advertising industry lost one third of the public marketing spend it lost one third of what amounts to the biggest spending client in town.

New business in the advertising sector can be tricky to find, with a large number of clients choosing to centralise their business in Sydney or Melbourne, closer to the bigger populations.

The result of the Government cuts has been staff lay offs and, in the end, has prompted the deal that led to The Shorter Group falling under the Marketforce banner.

The public relations industry also has undergone consolidation, however the controversial deal between Chrome Global and PPR suggests it is a tough market.

Mr Ward claims the Government’s tendering process discourages many of the more serious operators from even throwing their hat into the ring.

“Even the small Government agencies still go through the same laborious tendering process and they don’t really seem to understand what they’re getting, so they always go for price,” he said.

This approach has opened doors for a lot of smaller, independent operators, who are able to keep costs down. But this doesn’t necessarily deliver the best PR strategy for Government departments.

“We are now looking at tenders with a very careful and rather jaundiced eye,” Mr Ward said

“And sadly, I think a lot of Government agencies are isolated from the better PR thinking in town.

“I believe if the Government is not using the public relations sector then they are the loser, because we can go and find other clients.”

“The Government, by and large, are incapable of asking what the public reaction is to an issue”

Despite this upbeat attitude, in-house public relations operations have struggled to survive within advertising agencies, but this is the result of a totally different set of conditions, according to Mr Ward.

The advertising agencies perceived the PR arm as just another service fee that they could harvest from existing clients, and possibly a new independent revenue stream.

However, advertising clients are often loyal to their advertising agency and feel uncomfortable about seeking PR services from within another agency.

“Most advertising agencies have tried and failed because all they’ve set out to do is graft advertising and promotional services onto advertising clients,” Mr Ward said.

“It is cyclical and I’ve seen it happen at least half a dozen times, people just get mesmerised by the one-stop shop.”

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