Dorothy Crenshaw September 6, 2022 | 06:15:52

5 Reasons Not To Cut PR In A Recession

As any ad or PR agency knows, our budgets are vulnerable when the economy turns soft. We’re seeing it now. Facebook parent company Meta has warned of an advertising slowdown. Broadcast outlets and publishers also report headwinds, though the views are mixed.

On the bright side, a Muck Rack study shows PR expenditures may rise in some sectors, including travel and energy. And in the UK, some speculate that businesses will “trade down” to PR by cutting more expensive marketing programs. In PR’s favor, we’ve seen the power of brand visibility during a crisis; I’d argue that many PR winners of the early Covid years – like Apple and Amazon – are well positioned to weather a coming storm.

But let’s face it, recession worries are often a self-fulfilling prophecy. Businesses anxious about the economy may opt to “pause” their PR program, to use my least favorite euphemism. They can always resume when the storm has passed, the reasoning goes.

But when it comes to the typical public relations investment, it’s a bad idea to hit the pause button at the first sign of trouble. PR has unique advantages and challenges, and a suspension can cost more in brand trust and reputation than it saves on paper.

Yet why should anyone take a PR person’s view on this?

What the data shows about marketing in a recession

Research data offers a more objective view. In response to an absence of rigorous research on the topic, Harvard Business School’s Ranjay Gulati and Nitin Nohria ran an ambitious study of recessionary periods. Over a full year they analyzed the strategy and performance of 4700 public companies during three global downturns, from 1980 to the 2000 dot-com bubble collapse. In the fascinating piece “Roaring Out of Recession,” published in 2010, the authors call their findings “stark and startling.”

Defensive strategies don’t pay

The HBR co-authors divided corporate behavior in an economic downturn into four groups, from most reactive (“preventive-focused”) to those using an “optimal combination” of offensive and defensive strategies. What stands out is how poorly the “preventive-focused” companies fared in comparison to others. They averaged 6% in sales growth and 4% in profit growth, compared with 13% and 12% for companies deploying more offensive strategies. The most successful businesses? Measured by sales and EBITDA growth post-recession, those who did best cut costs by improving operational efficiency while investing in R&D and marketing as well as assets like plants and machinery.

Where does PR fit in?

The HBS study looked at the big picture. But, when it comes to proactive public relations in particular, why should businesses continue to invest when a downturn looms? Here are the most compelling reasons in my view.

Gain an edge over competitors

It stands to reason that some businesses will cut back on marketing, advertising and PR when a downturn approaches. A company that invests, by contrast, is poised to pull ahead of quieter competitors. It’s an exceptional opportunity to gain share of voice. And public relations in particular simply doesn’t lend itself to sudden starts and stops. Media relations results can lag activity by three months or more. Unlike digital advertising, turning the “PR spigot” back on after a hiatus won’t instantly increase sales. A business can easily lose a year of momentum and share of voice by suspending PR efforts.

The opportunity cost

And that lost momentum isn’t just due to the price of inactivity. Falling behind is costly, and there are practical concerns around a resumption of efforts that make a PR pause particularly counterproductive. Pulling an entire team off a PR program, whether through an outside agency or internal layoffs, means that team may not be available once PR resumes. We’re not talking about a highly automated practice, like digital advertising. The institutional experience,  knowledge, and relationships that make PR work well are lost or at least disrupted. In a fast recovery, this is a disadvantage.

Brand trust isn’t discretionary

In uncertain times, intangibles like brand trust are even more valuable.  No amount of paid advertising can buy trust. And I’d argue that no marketing function confers the credibility and SEO impact of earned media. In comparison to advertising, PR is both more cost-effective and more flexible. Dropping proactive media relations can also pose a reputation risk. “PR cannot fix an economic slump. What it can do is insulate a company, to a meaningful degree, from the reputational impacts of one,” explains former PRSA president Andrew Graham.

All recessions aren’t alike

The downturn we face is an unusual one – a blazing-hot employment market tempered by slowing GDP growth and inflation. But consumer spending has continued to grow. It’s a puzzle that has stymied the forecasters and defied historical trends. If economists can’t even predict what the future brings I know the rest of us can’t, but the unique combination of indicators poses a red flag to reflexive budget-cutters.

PR powers a strong recovery

Most importantly, an ongoing PR program can power a leap forward once the economy recovers. Companies who invest in media and influencer relations will be well positioned to build upon the customer engagement that ongoing PR helps drive. Every component that shores up relations with media, stakeholders, customers and employees lays the groundwork for the future.

Rather than turn off the PR switch, most organizations are better served by making surgical cuts or thoughtful budget reallocations over wholesale eliminations of key programs and tactics. By maintaining a proactive PR engagement, companies can project strength and financial stability in the face of uncertainty and be poised to win where others falter.

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