08:39 AM

PR Watch: The Disruption Of The PR Industry And Why Everyone Has Become A Consultant

Silicon Valley companies of all sizes are cutting staff and things are getting worse and this is trend is also hitting the PR community. It almost seems as if everyone has suddenly become a "consultant" at the same time.

In some cases, the "consultants" have been rehired by the companies they used to work for, at a higher hourly rate but with fewer hours per week.

Not everyone is happy with this prospect but it has some benefits. "I was pissed off about it at first, but now I'm coming around to it. It makes it possible for me to make more money and work fewer hours if I can get additional clients," said a former manager at a local PR company.

The PR industry in Silicon Valley appears to be converting to "consultants" en masse. The benefits to PR firms are that they save on payroll and other costs. However, the risk is that PR firms could lose their remaining clients to an army of very competent PR consultants offering services at sharply lower costs compared with PR firms and their higher costs of doing business.

The bad economy is not the only issue affecting the PR industry, there is another trend at work, one that is not a cyclical business cycle.

"No PR firm will be able to justify a monthly retainer of $30,000 just to do media relations and put out a few press releases. The old way of doing PR just doesn't cut it anymore. Even when the economy comes back, the old way of doing PR won't," said a senior person at a large West Coast PR firm.

Foremski's Take:

Wily E CoyoteFor the past several years I've been warning the PR industry that they days of old school PR are numbered, that there has been a fundamental change in the industry. The same technologies and trends that have disrupted the media industry will disrupt the PR industry.

But this fundamental change in the industry was hidden in large part by a good economy -- clients were willing to pay for the old school PR such as the $30K a month retainers, and also pay extra for the new rules PR based on the new media services and technologies available through social media and a plethora of communications channels.

Many people in the PR industry disagreed with me and said that PR companies will be able to transition to the new models without much trouble because they can see the change and would be able to incorporate it into their business model.

I disagreed with that view because of the disruptive nature of media/communications technologies now available. And the chief characteristic of a disruptive technology is that it disrupts. Even if you can clearly see the changes in your industry you won't be able to change fast enough. For example, newspapers see the changes in their industry but can't change fast enough. Same was true for computer companies reacting to the PC. The same is now true for the PR industry.

I always said that the PR industry will only change when it feels the pain of the loss of its old way of making money. No pain no change. These days there is a lot of pain.

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Please see:

October 2007 Wily E Coyote: Traditional PR is Running on Thin Air

March 2006  Microsoft's ROI on Robert Scoble - the disruption of PR by blogging

January 2006 Disruption in mainstream media but where is the disruption in the mainstream PR industry?