American Firms Slash PR Budgets by 39%

26 February 2003

The woes of corporate America have taken a heavy toll on public relations expenditure, according to the PRWeek/Biz360 Corporate Survey 2003.

According to the study, PR budgets among the 1,273 responding firms slumped 39% last year, with average spend per firm falling to $2.3 million (€2.1m; £1.5m). In addition, PR outlay as a percentage of overall revenue slipped from 0.14% to 0.08%.

One of the problems, explained Biz360 chief You Mon Tsang, is that few firms are using measurement techniques to gauge the effectiveness of their PR – only 53% have a budget for such assessment.

“[Corporate communicators] can't really prove their effect on the organisation,” declared Tsang. “If you talk to a sales person, he can come right back and say, ‘If you cut five heads out of my department, this is what's going to happen,’ and show you figures and proof right there.”

Unsurprisingly, tech firms made the most severe cuts, slashing 61% from their PR budgets. There were also big falls in the healthcare (–35%) and consumer (–46%) sectors. The only increase came in the non-profit industry, up 100%.

There was some silver lining, with the percentage of firms using external PR firms rising from 54% to 58%, though many are turning away from long-term accounts and now hire for individual projects.

Data sourced from: BrandRepublic (UK); additional content by WARC staff