An Overview of the Modern Public Relations Industry

corporate communication departments public relations units that typically have three functions: external relations activities involve expressing the company’s perspective to a variety of entities outside the organization; internal relations involve being the voice of the company to employees, union groups, and shareholders; and media relations handle calls with journalists, provide the answers, and coordinate the interviews with executives

agency holding companies firms that own large ad agency networks, public relations firms, and a multitude of branding, market research, and marketing communication firms

the Big Four the largest agency holding companies, including Omnicom, WPP, Interpublic, and Publicis

The number of individuals involved in public relations has risen sharply over the past few decades—from about 19,000 in 1950 to hundreds of thousands today. The U.S. Census Bureau found more than 7,000 public relations firms in the United States in 2006.4 Apart from specific companies dedicated to public relations, PR practitioners can be found in many corporations, government bodies, healthcare institutions, military branches, professional services firms, associations, nonprofit organizations, and other public and private entities. The Veronis Suhler Stevenson media consul­tancy firm estimates that in 2008 companies spent about $3.6 billion on public relations.5 Public relations in the twenty-first century is an activity in which most midsized and large companies are involved. Companies' involvement takes place in two ways, through direct involvement in corporate communication and through hiring a PR agency.

Corporate Communication Departments

Many large U.S. companies have public relations units, often called corporate communication departments. These departments typically have three functions: external relations, internal relations, and media relations. Let's take a look at each.

EXTERNAL RELATIONS External relations express the company’s perspective to a variety of entities outside the organization. They include community groups, government officials, officials of various countries, and various citizen advocacy groups. Public relations employees also act as lobbyists for their company. That is, they try to convince state and federal legislators to pass certain laws that will benefit the company or to eliminate rules that may hinder the firm’s progress.

INTERNAL RELATIONS Internal relations represent the voice of the company to employees, union groups, and shareholders. Io that end, the external relations People may relate corporate newspapers, email notes, and (in really big companies) even television news shows about the company.

MEDIA RELATIONS Journalists call many companies on a daily basis looking for information or wanting to speak to a particular executive. Media relations employees handle these calls, provide the answers, and coordinate the interviews with executives. They may also teach executives the best ways to act on camera or with a journalist.

Public Relations Agencies

Although large companies may carry out day-to-day public relations agencies through in-house departments, they are also likely to hire “outside” PR companies for a variety of projects ranging from special lobbying to getting or controlling media exposure. Public relations companies often charge fees based on the number of hours that their employees work for a client. Sometimes clients make “retainer” deals with an agency, under which the company agrees to carry out a PR program at an agreed- upon rate per month.

Not all public relations companies do the same things. Large firms such as Fleishman-Hillard help their clients with virtually any area of communication, including teaching their top executives how to speak on TV and in front of large groups. Many smaller public relations firms, however, specialize in a particular part of their industry’s work. Examples of medium-size independent agencies that specialize include Healthstar, a healthcare agency; Cerrell Associates, a public affairs and envi­ronmental agency; and Integrated Corporate Relations, a company that helps firms speak to stock analysts, institutional investors, financial media, and other corporate audiences.

The biggest public relations firms are widely considered to be Fleishman-Hillard, Weber Shandwick, Hill & Knowlton (which absorbed Carl Byoir in 1986), Burson- Marsteller, Incepta, Edelman Worldwide, BSMG Worldwide, Ogilvy PR, Porter Novelli, and Ketchum. All these companies with the exception of Edelman and Incepta are owned by one of the agency holding companies known as the Big Four: Omnicom, WPP, Interpublic, and Publicis (see Table 16.1). As we saw in Chapter 15, agency holding companies are firms that own large ad agency networks, public relations firms, and a multitude of branding, market research, and marketing communication firms. In fact, from the 1960s through the 1990s, the agency holding companies bought up twenty-one of the twenty-five largest PR firms.6 The holding companies refuse to release data about the earnings, number of employees, or clients of the PR firms that they own. They say their policy is based on the promise of total confidentiality for their clients, but it also means that it is difficult for outsiders to know what is going on within the industry’s largest and most powerful firms.

This gobbling up of the largest firms should not be surprising. Consistent with what we’ve learned about other media industries, the PR business in the 1980s and 1990s went through a period of rapid conglomeration and globalization. Big public relations firms merged with other big ones; big firms bought smaller ones, especially specialty firms; and public relations firms were bought by ad agency holding companies to create cross-industry communication firms. The number of such mergers has slowed in recent years, but the consolidation remains.

Table 16.1 Major PR Firms Owned by the Largest Agency Holding Companies
WPP	Omnicom Group	Interpublic
Burson-Marsteller	Fleishman-Hillard	Weber Shandwick
Hill & Knowlton	Ketch um	Golin Harris
Cohn and Wolfe	Porter Novelli	Rogers & Cowan
Ogilvy PR	Brodeur Worldwide	PMK/HBH
Carl Byoir	Clark and Weinstock	Carmichael Lynch Spong
Dai Inchi	Cone
Dewey Square

Sources: Holding company websites.

Globalization is a key to the activities of the biggest firms. Hill & Knowlton, part of the WPP holding company, reports on its website that it has seventy-nine offices and more than fifty associated PR agencies across Europe, the Middle East, and Africa.8 It adds that it has an extensive presence throughout South America, Central America, and the Caribbean. As for the Asia Pacific, it says that, “For more than 50 years, through a network of wholly-owned offices and associates stretching from Beijing to Sydney and from Delhi to Tokyo, Hill & Knowlton has provided insights to guide clients through the opportunities and challenges of the world’s fastest growing economic region.”9 In these regions, as well as in the United States and Canada, it works for local firms as well as multinational conglomerates with the need for projecting influence with consumers and governments around the world.