Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Disruption in mainstream media but where is the disruption in the mainstream PR industry?

Posted by Tom Foremski - January 12, 2006

. . .it's coming

By Tom Foremski, for Silicon Valley Watcher

With all the disruption that is going on in the mainstream media industry, where is the disruption in the mainstream public relations industry? PR companies and corporate communications teams are still going about their business in the same way, and seem to be thriving.

You would think that there would be a corresponding shakeup in both industries. After all, one is dependent on the other. The PR teams work with the journalists to find stories, and help them research whatever information is needed for their articles.

There has always been a close correspondence between the fortunes of both sectors in the past. This could be seen in the dotcom dotbomb fallout.

PR companies suffered large losses when thousands of internet related companies went bust. Job losses in both media and PR were directly related to the fact that there were now far fewer customers.

Fewer dotcom-related firms meant less demand for advertising services and thus less demand for PR services. But now there is a growing disconnect; the mainstream PR sector is booming while the mainstream media sector is fading fast.

The PR boom paradox

Over the past two years the PR sector has been growing quite nicely. The PR firms serving Silicon Valley companies have been been hiring people steadily as the local startup companies seek to raise their visibility.

Every PR firm I know has many vacancies, and there is a very short supply of experienced PR practitioners in the 5 to 8 year experience range. And the demand for PR services continues to grow as new startups come onto the scene and want to raise themselves above the noise level of their competitors.

Yet the number of media outlets continues to shrink. There are fewer mainstream media outlets, there are fewer journalists to pitch stories to; and there are fewer pages to carry stories because there are fewer ads.

This is an interesting situation: Companies want media visibility so that they can make more money from increased sales. That is why they spend money on public relations--to make more money.

But the companies are increasingly advertising their products with the search engines, rather than in the mainstream media.

The companies are able to reach many of their customers through search engine marketing--and that drives revenues. Yet those same companies want to be visible in the media, in news stories, features, radio and TV shows--because they believe this will drive revenues.

If the companies know that mainstream media is inefficient at advertising and therefore of less value in helping to drive revenues. . . why do they believe there is great value in being mentioned in the mainstream media?

Mashup metaphors: The Cows are coming home to roost

What this means is that the realities of this situation have not yet hit home. The realities are these:

-Companies can sell their products and services with a far lower cost of sales these days, because it is easier than ever to reach their customers directly through search engine marketing and blogs.

-This means there that there is far less value offered by mainstream media and mainstream public relations in the product and services sales process.

-Companies know search engine marketing works better than advertising in mainstream media.

-Yet companies still think that being mentioned in the mainstream media is going to help them sell more products and services.

There is a serious disconnect here.

(My apologies for spelling it all out again, but I do want to belabor my points :-)

On the one hand, companies recognize that the mainstream media is not an efficient advertising vehicle to help increase revenues; yet on the other hand they believe that being mentioned in the mainstream media, via PR spending, is an efficient vehicle to help them increase their revenues.

At some point companies will realize that the ROI on being mentioned in a story in the Wall Street Journal or New York Times, or in trade publications, makes little difference to their bottom line. Press coverage might boost the egos of company senior executives but it doesn't do much for overall sales.

Fiduciary duties

Company executives have a fiduciary duty to operate in a manner that will maximize profits for their shareholders, public or private. Spending large sums of money on mainstream public relations is the equivalent to spending large sums of money on advertising in mainstream media: it is inefficient in driving revenues.

Therefore why do it? Why waste all that money? That is why there will be widespread disruption in the mainstream PR industry.

And that is why the mainstream PR industry will give way to a new communications industry in the same way that the mainstream media industry will give way to a new media communications industry.

I think I know what both types of industry will look like, and the successive, progressive, evolutionary forms they will take along the road to the future. Call me and I'll tell you.

Or you can wait until I write about it, sometime later this year, or next :-)

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