Public Relations Pays Off for Corporate America, Report Shows; USC Annenberg Study Finds Top Management Values Role of PR in Achieving Strategic Goals, Building Reputation.

Business Editors

LOS ANGELES--(BUSINESS WIRE)--Nov. 19, 2002

According to a major new study of how America's corporations view and utilize public relations:

-- Among companies included in Fortune Magazine's "Most Admired" list there is greater support for the public relations function, both in terms of budget and organization, than those of similar size that are not on the list.

-- Despite troubled, budget-cutting economies, PR budgets have remained intact in many organizations and have actually increased among many companies where senior management believes in and supports PR.

-- There is a demonstrable connection between a company's use of public relations and its own reputation and stature.

-- In companies where public relations is seen as making a contribution to strategic planning, there is a stronger perception of the value of the PR function in general.

-- The higher the level of senior management support for public relations, the more likely that PR reports directly to the corporation's top executives.

-- The use of public relations agencies, especially on an "agency of record" basis, is nearly universal, especially among "Most Admired Companies" (MACs).

These are some of the key findings in the first Public Relations Generally Accepted Practices Study (GAP) conducted by the USC Annenberg Strategic Public Relations Center (SPRC) among senior-level corporate public relations professionals on behalf of the Council of Public Relations Firms, the public relations industry's trade association.

"The finding that there is a correlation between strong support for public relations and inclusion on Fortune magazine's Most Admired Company list is good news for our industry," said Kathy Cripps, president of the Council. She noted that companies chosen by the magazine are judged on such factors as leadership, innovation, quality of products and services, and social responsibility.

Cripps added that, while corporate reputation is one valuable measure of the effectiveness of public relations, the industry is developing techniques and methodologies to evaluate the impact of public relations on sales, profitability, market share and other measurements of success.

Ian Mitroff, director of the SPRC, said the primary goal of the research project was to identify generally accepted practices, emerging best practices in certain areas, and important gaps in knowledge, in such topics as evaluation methods, budgeting trends, use of outside agencies and perceptions of the PR function relative to other organizational disciplines.

Another finding of the study was that the more that the public relations function is designed, practiced, and evaluated in close alignment with an organization's strategic business goals, the greater its support from top management in terms of budget size, and the greater its perceived contribution to the organization's success. "A reminder," said Cripps, "that PR practiced in isolation is a disservice to the corporation and PR practitioners, alike."

"The study shows that our profession has matured to the point where we are now finding solid proof that strong, strategically oriented public relations functions are not optional, they're indispensable," said Jerry Swerling, associate director of the SPRC and co-author of the study.

Senior-level public relations practitioners at 360 publicly and privately held companies throughout the U.S. participated in the 25-question survey.

"We commissioned the study to determine how organizations perceive the value of, use and organize their in-house public relations departments, and how they work with outside agencies," explained Cripps. "In the process, we were hoping to identify some trends and identify areas where further investigation might be required. We believe this study is the first benchmark for how public relations is being practiced in the 21st Century."

Researchers analyzed the survey data using a variety of sophisticated statistical techniques, including raw frequencies, factor analysis and correlations, as well as explicit comparisons between important sub-groups (i.e., companies that appear on Fortune's "Most Admired" list versus those that do not; companies that employ outside agencies versus those that don't; public versus privately owned companies.)

Swerling noted that the PR as a percentage of gross revenues ratio -- or "PR:GR" ratio as the researchers dubbed it, could become as important a measure of, and guideline for, PR budgeting as the "A:S," or "advertising to sales" ratio, is in advertising.

In addition, among Most Admired Companies (MACs), respondents indicated that public relations has greater support from senior management and reports directly into the Executive Office.

"This study showed that there are two very contradictory, and simultaneously held views of public relations," said Mitroff. "One is that if PR is viewed as making a significant contribution to the strategic objectives of an organization, then PR is held in relatively high regard by senior management and by PR practitioners themselves. However, PR does not fully appreciate its own contribution to the success of an organization, and this perception is often shared by senior management. In short, the profession is doing commendable work but suffers from low self-esteem. Perception needs to catch up with reality."

"While the industry is striving to identify and quantify 'Best Practices,' we took a step back and reviewed the data for what we're calling Generally Accepted Practices, as well as gaps in the body of knowledge that need to be filled," Swerling said. "In the process we also identified some emerging best practices that are typically found in organizations recognized as being successful. This is an important distinction in and of itself because there is general acknowledgement that the profession's body of knowledge is sorely lacking in hard data about some fairly fundamental issues such as evaluation and reporting relationships. The overall findings of this study clearly show that while we have made great progress we still have a lot of hard work ahead of us."

The USC Annenberg Strategic Public Relations Center is part of the public relations studies program at the USC Annenberg School for Communication. The Center was established in 2001 to advance the study, practice and value of public relations. Working in partnership with other visionary organizations such as General Motors and AT&T, the Center's applied research efforts focus on three initiatives:

1) Quantifying the value of strategic public relations'

contribution to organizational success, thereby enhancing

support for the function among its key stakeholders

2) Helping to define and design strategic PR's evolving and

increasingly central role within organizations by identifying

best practices and benchmarks

3) Developing and offering cutting edge undergraduate and graduate

PR curricula that reflect the profession's future, rather than

its past.

The Council of Public Relations Firms represents 120 PR firms, including the ten largest. The mission of the Council is to strengthen the recognition and role of public relations in corporate strategy, business performance and social education; to serve as an authoritative source of information and expert comment; and to help set standards for the industry.

Note to Editors: To request an executive summary of the USC Annenberg Strategic Public Relations Centers' study of Public Relations Generally Accepted Practices, please contact SPRC associate director Jennifer Floto at [phone].