Will brands ‘trade down’, financially, to PR as recession bites?

It goes without saying that the nation is somewhat strapped for cash at present – individuals and businesses alike. Reduced marketing budgets across the board are inevitable, and initially make it sound like PR professionals will soon be jumping through hoops to keep clients’ business. However, many believe otherwise.

In the competition between advertising and PR, adland is often hailed for its greater creativity, which can be attributed to the vaster possibilities that arise from better funding. These costly campaigns, with unequivocally enormous impact, are all fun and games – that is, until no one can afford them anymore. At that point, modest PR campaigns become a more enticing prospect.

“In past downturns, big advertising cuts have not been directly mirrored in comms cuts,” says Mike Morgan, chief executive of Red Consultancy. “The argument being that comms is vital in good times and bad has been proven for a while.”

So will clients once again reconsider their spending, potentially investing more money and trust in PR? Lucy Hart, MHP Mischief’s head of strategy and insight, would like to think so.

When considered alongside paid media, “earned is a nimble, empathic and relatively cost-efficient channel by comparison”, she says. “And, when it comes to more emotive subject areas like talking to customers about pressures on their day-to-day life, PR is the best marketing discipline for dealing with nuance.

“As planners we have certainly seen a shift in briefs, from prioritising paid to hero-ing earned – but that started long before words like ‘stagflation’ became everyday terms. Our agency’s prediction is this will only increase as CMOs’ budgets get squeezed, combined with other factors like inflation on ad spot costs due to big moments like the World Cup colliding with the Golden Quarter.”

Brands have a tricky winter coming up.
It starts with the energy price cap increase in October, then the World Cup in November, before a natural decline in sales for many before Christmas. Will the advertising market also be inflated Sep/ Oct and Jan/ Feb?@Kansomarketing pic.twitter.com/kztCgITOXz

— Kanso (@Kansomarketing) April 28, 2022

Dominic Pendry, a director at Citypress, displays equal confidence in an industry that has “proven itself extremely resilient throughout economic cycles”. But in the context of current struggles, he adds: “We can’t be complacent about the scale of the economic challenge ahead.

“Companies and brands will need to work harder than ever to prove their value during this period, and find ways to cut through the noise to reach customers, employees and the communities they serve.”

WPP boss Mark Read is of the same opinion, advising that clients “stay close to their customer. Stay close to the agency. Be ready to change the work when they need to”. Writing following publication of WPP's half-year results last Friday, Read also says: “Those clients that invest continuously in marketing tend to come out the other side, in the strongest position."

Though Pendry insists PR isn’t battling with advertisers, he trusts in the industry's ability to provide “the most authentic and effective route to build brand equity and reputation”, expecting “to see continued growth in the months ahead”.

Both he and Hart agree that key to delivering this are reliable and tangible measurement strategies that “prove that the upweighted investment in PR was worth it and should stay in place once the economy rebalances”, in the words of Hart.

Sam Corry, senior director at Taylor Herring, agrees: “ROI on marketing spend will be under the microscope and that’s where it’s vital that PR agencies can demonstrate the value earned media can deliver.” Nonetheless, he admits measurement is “something that the PR industry has always been playing catch-up on”.

Uncertainty

Of course, PR has other weaknesses when it comes to proving its worth. Pam Scobbie, chief creative officer and managing partner at John Doe, acknowledges that the practicality of straight advertising can be hard to match.

“Investment in solid, mainstream visibility is arguably more important than ever during a recession,” she says. “When PR feels too small or uncertain, advertising can swoop in and dazzle with guaranteed frequency and reach.

“On the surface, you can understand why some brands will see it as a safer bet – but so much of advertising is expensive, one-dimensional wallpaper.”

isn’t it kinda crazy how we’re all so used to adverts? nobody pays attention to them, but we all accept that they come in the middle of our shows. they keep making the advert breaks longer and we don’t even think anything of it because it’s so normalised now

— ✧ Ellie ✧ (@Ellie_S_04) July 14, 2022

Subverting this vain approach to brand promotion, Scobbie says earned media campaigns thoroughly consider “the role of culture and communities”, allowing for activations that cut through and capture attention.

In the spirit of his agency’s name, Alex Grier, managing director at Frank PR, candidly shares the faith he has in his team, even at such a universally difficult time. “Although recessions aren’t a good period in peoples’ lives, they do provide a decent opportunity for agencies like Frank, which thrive on delivering quick and nimble creativity that can live across social and earned media, giving brands a great return on spend when they’re looking for it most.”

Grier sees the recession as an opportunity for Frank to flex its muscles while having a positive impact on the world. He says: “We expect to see more work in the purpose/CSR space, where brands want to step in, help and inspire during tough times. There is also a role for brands to provide some light relief from a mainly depressing news cycle, for which they’ll need the sort of insights and creativity we’re known for.”

Corry refers to similar PR contributions made to the world during the pandemic, highlighting the industry’s importance when demand is high and resources are lacking.

Thank you for not riding with us right now.

When you #stayhome, we can all #movewhatmatters pic.twitter.com/4D5c4LgkcD

— Uber (@Uber) April 9, 2020

“PR and comms played a pivotal role in positioning brands as actively helping consumers through a difficult period and creating stories that cut through the news cycle,” he says. “With the cost of living, recession and inflation top of mind and high up on the news agenda, there’s a real opportunity for PR agencies to play a much bigger role for clients in shaping brand perception, messaging and delivering campaigns that resonate.”

Despite proving their worth, Corry doesn’t expect PR agencies will automatically win consumer accounts from their advertising counterparts.

“I don’t think it will necessarily be a case of clients ‘trading down’ from advertising to PR, but more of a reassessment about the marketing channels that are having real impact, and optimising future spend to deliver the biggest bang for every pound spent.”

Differing roles

A comms director at a large UK corporation interviewed by PRWeek also disagreed with the concept of ‘trading down’, albeit giving a slightly harsher prediction for PR.

“I don’t think big businesses will be trading down. I think they’ll either reduce all their budgets, or advertising may reduce while PR stays the same, but I don’t see people necessarily doing a trade-off.”

Why not? “Sophisticated marketers recognise that PR doesn’t usually do the same job as advertising.” He adds that “there are very few products or services that PR can offer to directly correlate with” the sales-driving nature of advertising; therefore, “PRs themselves should be leery of taking on that role”.

“PR people love to say that PR is brilliant, and I’d agree with that, but it’s about looking at what the advertising is doing, and seeing if your PR can really take its place.”

Our anonymous in-house source says the “enticement” of increased budgets can often compel agencies to accept offers, but believes “nuance” and careful consideration of client requirements is vital.

“I’m a massive fan of earned media – I think it’s great – but not when just seeing it as an opportunity for extra budget.

“It should be more about ‘How’s my strategy going to change? How am I going to adapt in this environment?’”

Despite this, he admits that reprioritising can be easier for some sectors than others, and that when it comes to consumer goods it is sometimes possible for PR to “do a sales job”.

The comms director also makes an important point about the entities relying on funds from paid advertisments to survive, namely print journalism publications.

From a more selfish standpoint, he says agencies should consider that “if advertising was trimmed… publications are going to be thinner, so there’ll be fewer opportunities, and more people competing for that page space. So actually, will the extra budget translate into extra coverage?”

An added pressure faced by PR is having to fit the “media agenda”, says the source. Where adverts are guaranteed their designated spot, aiming for earned media coverage involves considering: “If we’re moving into recession, what’s my business selling and what am I offering? Am I able to tailor that to engage my customers?” and, above all: “If I had extra money, am I actually going to be able to land it in the press?”

Hybrid approach

Despite such challenges, John Doe’s Scobbie sees a positive future for a PR industry that is beginning to think outside the box.

“I’d like to think that instead of clients ‘trading down’ from advertising, PR will keep making efforts to ‘trade up’.”

Looking back on recent trends, she perceives “more earned agencies leaning into the big-thinking ambition and strategic focus traditionally seen in advertising”, while many successful examples of paid work have “the added dimension of a great, sharable story to bring a little magic (and budget efficiency) to campaigns”.

Red Consultancy’s Morgan also notes the evolution of marcomms approaches, pointing out the increased importance of PR because “brands have broader purpose agendas now”, while “advertising is leaner and more agile due to digital”.

“The smartest clients will want efficiencies from both sides of the marketing equation,” he concludes – much like Scobbie, who endorses agencies taking a hybrid approach: “Traditional agencies, on both sides of the marketing divide, need to look out.”

“Paid and earned shouldn’t be working in silos,” concurs Corry. “This is an opportunity for creative PR agencies to show how ideas can be stretched and maximised in paid and go beyond earned channels.

“Ultimately, CMOs are going to be looking at the role of paid, owned and earned within the overall marketing funnel. It’s our job to show where PR can make a tangible difference on awareness, consideration and reappraisal.”