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20 January 2003updated 24 Sep 2015 12:16pm

The death of PR

The public relations industry is in crisis, and wondering if it should tell something like the truth

By Stefan Stern

Who says there’s only bad news around at the moment? Investment bankers, even if they still have jobs, won’t be getting their multi-million-pound bonuses this year. McDonald’s is closing down branches in prestigious central London sites. And now the PR industry is facing its comeuppance. The days of booze-fuelled lunches, outrageous press releases and even more outrageous fees are gone.

Recessions administer a kind of colonic irrigation to the economic system. A lot of gunk, froth and, frankly, turds, get cleared out. In a flat and almost moribund market, public relations staff have been forced to smarten up their act.

With fewer corporate clients ready to pay for big PR campaigns, jobs have gone – 150 alone at Chime Communications, Lord (Tim) Bell’s agency, in the run-up to Christmas. Bell is closing a deal with Sir Martin Sorrell, head of the giant WPP media firm, to sell a controlling stake in one of Chime’s advertising subsidiaries, HHCL, raising around £5m of urgently needed cash. But Bell is not alone. Everywhere you look in the industry, the fizz seems to have gone out of PR.

PR Week magazine reports that City PR firms saw the value of their deals fall by 37 per cent in 2002. With dramatically fewer flotations and mega-mergers to deal with, there has not been the work around.

Chime’s difficulties have been perhaps the most dramatic. In September last year, Bell declared that the fall in business activity had “bottomed out”, and that he hoped for better things in the second half of 2002. But in November, he was forced to issue a profits warning, which was commendably free of PR spin. “This forecast has proved to be wrong,” the statement ran. “Trading conditions have deteriorated further.” Chime’s share price has fallen from £2 to 14p in two years.

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No immediate upturn for the PR industry is in sight. The flurry over Safeway is a rare example of an old-style takeover battle. More typical of the state of play is the move by Cazenove, the City’s most distinguished stockbroker, to put its share flotation on hold. If Cazenove doesn’t think it is a good time to try your luck in the market, who else will?

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PR gurus used to walk hand in hand with captains of industry and the masters of the financial universe, along Wall Street or through the Square Mile, picking up plaudits and bonuses in equal measure. Their high point was reached in the 1980s, when the influence of City PR was such that its stars caught the eyes of political leaders. As George Pitcher writes in his new book, The Death of Spin: “There can be little doubt that the slick sales techniques of privatisation shop Dewe Rogerson [a PR firm now part of the Citigate stable] and the patch-up ministrations of Tim Bell kept the exchequer receipts coming, to subsidise the income tax cuts on which much of Thatcher’s tenure depended.”

But it wasn’t just privatisation that kept the PR cash flowing. The long boom of the late 1990s saw lavish PR spending as deal after deal had to be explained, advocated, sold. PR firms were compared with businesses such as McKinsey or Goldman Sachs. Their staff were likened to sophisticated management consultants or capital market geniuses. Their fees rose accordingly. And while today an elite core of PR experts continues to provide important and valuable communications advice to their clients – the business world hasn’t stopped breathing altogether – for many fellow-travelling PR men and women, the bubble has burst.

It’s not just the market that’s gone wrong. “The mystique has gone,” says one PR executive. “Companies do not need to farm out the writing of press releases, briefing of journalists and monitoring of the press in the way that they did in the 1980s and 1990s. A lot of this work goes on in-house. The fees PR firms charged for some of this basic work were amazing.” Technological change has had a big impact, too. Consider the websites of major companies and organisations. There is far more information instantly available at the click of a mouse than any PR operative could hope to distribute.

In the business world, newspapers are no longer the almighty, market-moving forces they once were. “People are just not tearing open the first editions to find out what’s going on any more,” says Pitcher, who, as well as writing books, runs Luther Pendragon, an “issues management” consultancy (no mere PR man he). “The sources of information are much more diverse. There’s a 24-hour news market, and the game has changed.”

So no more liquid lunches, no more nods and winks to friendly hacks? “That image of PR is several years out of date,” says Will Lewis, the new business editor of the Sunday Times. “The City has been through a terrible year, and 2003 won’t be very different. Thousands of jobs have gone, the whole cost structure has changed, and that has had an inevitable effect on the PR business. It is very competitive out there, and the survivors are working very, very hard. The dross has already been cleared out.”

Not all PR is about winning headlines. If businesses are stagnating, much of the PR effort, as Lewis points out, is essentially defensive, aimed at keeping bad news out of the papers rather than getting good news in. Mark Bolland, until recently PR adviser to the Prince of Wales, has also been working for Camelot, which runs the National Lottery, and trying to halt the slide in the company’s public image.

In financial journalism, the frank remarks of Dame Marjorie Scardino, chief executive of Pearson, last autumn (to your correspondent, as it happens) – that business hacks hadn’t dug deep enough to spot frauds such as Enron or WorldCom – touched the rawest of nerves. Reporters are more on their guard, for the time being anyway, against the overexuberance of dotcom hype and flummery. But optimists see an opportunity for the PR industry here, too. “There’s a distinct lack of trust after the scandals of recent years,” says Kate Nicholas, editor of PR Week. “That relationship between business and media now needs more careful managing than ever before.” Indeed, it would be a hypocritical journalist who denied ever calling on PR people to help in the writing of stories. Papers and magazines would be much thinner without PR.

Even Tim Bell, at 61 and with Chime’s problems to think about, may not be finished. “People said he wouldn’t survive Thatcher’s departure, and that he wouldn’t survive the end of the Tories, but he’s still there,” says one PR executive.

In The Death of Spin, Pitcher argues that conventional, old-fashioned PR has had its day. Superficial schmoozing, worrying about the appearance of things rather than their underlying reality, has been found out. In the business world, attempts to pretend that “business cares” by slapping on a corporate social responsibility tag has not fooled many people. “Why not just pay the business taxes?” Pitcher suggests.

We have all had it up to here with spin. The Speaker of the House of Commons, Michael Martin, says an old Glaswegian sentiment has it right on the subject of spin-doctors: “Speak to the engineer, not the sweat-rag.” Pitcher calls the current time a “cultural watershed” and says: “There is a yearning for a return to substance and dialectic, where what you actually believe in is what matters, not what position you take on an underlying issue. I hesitate to say that ‘honesty is the new spin’ because it sounds Pollyanna-ish. That’s just not good enough. But posturing and position-taking isn’t good enough, either, if you’re about to go to war. The task now is to tackle issues as they really are.”

The spin cycle, as it were, started in the City and in advertising, spilled over into politics and now, discredited, is forcing all PR people to question how they work. Bell’s difficulties are highly symbolic and, to ungenerous spirits on the left, profoundly satisfying. Clear the poster sites for the new “PR isn’t working” campaign.