Budgeting for PR is one of the toughest parts of allocating marketing spend. We are often asked this question when speaking to prospective clients and over the years we have been given many different opinions on how to approach it. In this article, we have consolidated the thinking and answers we have been privy to over the years.
What is PR?
Anyone investing in PR needs to be clear what it is that they are buying. 20 years ago, the purpose of PR was media relations – getting media coverage or managing negative media coverage for clients. Over the past two decades, and with the growing influence of the Internet, the industry has evolved.
The CIPR states that PR is“…about reputation – the result of what you do, what you say and what others say about you”. Public relations now encompasses the offline and online world including social media, content and blog creation, websites, chatrooms and review sites, as well as traditional media relations, events and stunts.
Perhaps the simplest way to differentiate PR from the rest of the marketing mix is its ability to leverage platforms that do not require payment to build awareness and alter perceptions. In addition, when you buy PR services, you are buying time and results, not media/ad space.
How much of the pie should PR get?
According to the February 2018 CMO Survey, the average percentage of revenue spent on marketing is 6.9%. So if you have annual revenues of £10 million, in theory, you should be spending £690,000 on marketing.
According to this survey of over 400 senior marketers, the average spend varies considerably by industry:
- Consumer services – 18.9%
- Consulting (professional) services – 9.4%
- Tech/software/Biotech – 8.5%
- Communications/media – 6.6%
- Banking/Finance/Insurance – 3.9%
What is clear is that the wider your audience, such as those for consumer services, the more you need to spend on marketing. For the sake of this article, we are going to focus on the 8.5 percent figure relating to Technology, Software and Biotech.
Once you have your overall marketing spend, you then need to divide it up.
Over the years, one of the most insightful models we have seen on how to break down your budget was produced by IDC way back in 2013.
Of course, marketing trends have evolved over the last five years. For example, IDC says that only 1.3 percent of the marketing budget is allocated to social marketing whereas this year’s CMO Survey has this up to 12 percent. In addition, The Holmes Report which is more up to date, suggests that marketers now spend on average 6.5 percent of their budget on public relations.
What do I get for my money?
As we’ve seen, if you have annual revenues of £10 million you should be spending £850,000 on marketing. Using the Holmes Report’s recommended breakdown, you should, therefore, consider an annual PR Budget of £55,250 per year. Use the same formula to work out your own budget: 6.5% of (8.5% of annual revenues).
The next consideration is what bang you ought to get for your buck. According to the Bench Press, hourly rates are dependent on the size of the agency you work with, with an average day rate of a little under £700.
Any PR activity should be allocated to the team member best placed to deliver it. That means it is likely to be shared between executives who are charged to you at a variety of day-rates. Though you may be tempted to ask for more junior staff to cut costs, it’s always worth having some senior (and more expensive) support on hand to ensure quality matches your expectations.
Has PR changed with the times?
Traditionally, PR involved getting coverage in the media for clients. As the industry evolved amid the rise of social media and the Internet, PR expanded its area of influence and clients’ expectations grew accordingly.
Now PR agencies are offering content marketing, design and web services as well as social media and events. The Content Marketing Institute estimated that 28 percent of marketing budget was being spent on Content Marketing in 2015 and this had increased to 36 percent by 2017. Therefore there is an opportunity to combine PR budget with content marketing budget for strategic reasons and economy of scale.
But the truth is, all these budgeting guidelines are subjective based on how much confidence you have in the value of PR. If your agency gets you the results you require and they positively impact your bottom line, then there is always an argument to spend more money!
If you would like a free and objective evaluation of your current PR and marketing spend, then please email us at email@example.com.