Public Relations Services

SIC 8743

Companies in this industry

Industry report:

This category covers establishments primarily engaged in the preparation of materials, written or spoken, that are designed to influence the general public or other groups in promoting the interests of their clients.

Industry Snapshot

The primary focus of the public relations industry is to project a favorable impression of a person, product, company, or organization and to win public confidence and approval. As a result, public relations involves communication with a variety of individuals and organizations, as well as the general public. Independent professionals, specialized companies, or in-house public relations departments carry out public relations services.

During the late 2000s, the industry was adversely affected by an economic recession that led many organizations to slash their public relations and marketing budgets. By the fall of 2009, a turnaround in the economy was anticipated and was reflected in lower levels of losses being posted on many firms' quarterly returns. Nonetheless, the industry was not expected to make a full recovery until into the 2010s. The public relations industry also tends to be somewhat cyclical, with peaks coming during presidential and senatorial election years and other major press-dominated events, such as the Olympic Games.

According to industry statistics, there were 18,669 public relations firms in 2009 staffed by 115,522 people. The industry reported over $8.8 billion in revenues (which does not include unreported revenues from the industry's four largest firms). Although the top four firms employ an average of 3,500 employees, most public relations firms are small; 75 percent of the industry employs fewer than five workers.

Organization and Structure

About 98 percent of public relations firms were set up as tax-based entities, with the remainder organized under the not-for-profit distinction. Giant advertising agencies, which have incorporated public relations functions into their consumer services, owned many of the larger public relations (PR) firms. To achieve an international presence, these multiple firms formed a network of independent companies, creating a trend within the public relations industry.

The majority of public relations firms made their headquarters in or around major metropolitan areas. International operations expanded more rapidly than domestic, with new markets in Eastern Europe and the Commonwealth of Independent States (former Soviet Union) proving to be very promising.

Certain basic activities common to all public relations efforts included the development of sound policies in the public interest, the implementation of a public relations campaign recognizing the importance of public goodwill, and the establishment and maintenance of the organization's integrity.

With the current trends toward global marketing and frequent changes in communication technology, the accreditation of public relations experts took on greater importance. Universities offering post-graduate degrees in public relations provided courses on topics including the nature of human communication and the role of the media in public relations. Programs like those offered through Boston University and the University of Miami also provided areas of specialization in the fields of corporate, government, and non-profit sectors.

Background and Development

The public relations industry was once synonymous with publicity, and for many years that was its chief mission. Many analysts claimed that the profession grew directly out of the boom-and-bust periods of the 1920s and 1930s. Indeed, during the Great Depression, the public began to regard private industry as a failure and turned to big government for salvation. Due to these pressures, major business interests turned to public communication. The first public relations people were top newspaper journalists, practiced in the art of reporting and writing.

Due to the increased government regulation of business during the New Deal, the public relations industry grew following World War II. Additional factors affecting its growth included the growth of organized labor, the generally higher level of public education, and the recognition by all institutions of their dependence upon public approval. Until the 1950s, public relations was a business of generalists. The range of problems handled generally related to publicity, crisis management, financial public relations, speech writing, and community relations.

The Washington-based Public Affairs Council, established in 1954, focused its original mission to stimulate and train business executives to become active and effective in politics. At roughly the same time, companies such as Ford, General Electric, and Johnson and Johnson established political education and good citizen programs to get their own executives involved. The Public Affairs Council eventually became the professional association for corporate public officers.

By the end of the 1950s, a handful of companies had established public affairs departments. Their major priorities were to formalize the firms' federal government relations and to encourage executives to participate in political activities. The 1960s were experimental years of growth for public affairs. The Public Affairs Council estimated that during that decade, upwards of 500,000 business managers and executives attended formalized political education courses.

Toward the end of the 1960s, an outbreak of riots in some large cities triggered the development of urban affairs and social responsibility units in many firms. A concerned business community undertook new philanthropic and community initiatives organized under the directive of the corporate public affairs department. By the 1970s, these programs expanded to include job training for the disadvantaged, housing, transportation, law and order, health, education, and economic development initiatives. The Public Affairs Council doubled its membership during this time, and it was estimated that between 800 and 1,000 national companies had organized public relations departments.

Some critics regarded business responses to these social ills as cosmetic. For example, a large number of programs were undertaken to educate the public about how the economic system worked and its contribution to social well-being. Some companies undertook expensive advocacy-advertising programs to carry the business story to the public. Still others hoped that sponsorship of high-quality television programs, increased charitable contributions, and similar good works could replenish goodwill. Many of these efforts continue to the present day, but they are not regarded as a quick fix for perceptions of the citizens or the elected officials.

The growth of public affairs departments reflected business' recognition that managing business-society relations was a permanent task. Companies recognized that public relations strategy had to go beyond image building, political action, or social responsibility to be effective. A new term, "issues management," grew out of these needs and began to describe the public relations efforts of corporate entities in the late 1970s.

The election of Ronald Reagan in 1980 molded public relations programs for the next decade. Aspects of the political environment under Reagan included a reduced role of government in public life, substantial cutbacks in federal funding of social programs at the local level, and reform and relaxation of business regulation. Cutbacks in spending and reduced regulatory activity at the federal level required companies to pay more attention to state government relations activities. Even more challenging to companies was the growing pressure for business to assume the financial burden for the cost of social programs once paid for by the federal government.

By the early 1990s, workers in public relations specialized in many areas, such as labor relations, financial relations, health care, and product publicity. Although the scope of its function broadened, the field of public relations became more specialized to accommodate the complex issues involved in an effective public relations campaign. The profession evolved from a "fire fighting" to a "fire prevention" role in the conduct of everyday corporate business.

The public relations industry sustained a dramatic impact with the introduction of the Internet. In 1993, ProfNet, a collaboration of public information officers providing journalists with access to expert sources, was launched. Its members included colleges, corporations, nonprofit organizations, and law firms. ProfNet also included an online catalog of 2,000 leading experts across all disciplines.

As the use of the Internet continued to grow, the transition to interactive communications required a change in thinking and created new opportunities for building relationships between organizations and their public. The Internet could deliver messages combining various methods of communication: text, audio, graphics, still pictures, animation, and full-motion video. The challenge for the public relations professional was to use this tool to the organization's advantage, allowing for more one-to-one communication while maintaining the credibility and trust essential for the organization's well-being.

The Internet also drove the increasing globalization of the marketplace. In 1999, the United States held an overwhelming lead in Internet users, with more than 110 million, which was nearly 43 percent of the total 259 million worldwide Internet users. By 2002 the United States was projected to have one-third of worldwide Internet users, declining to 27 percent by the end of 2005. The most notable impact on the public relations industry by the growth of the Internet was in the re-evaluating of the traditional marketplace. Conventional boundaries defining not only economic but geographic roles were being redefined with the increasingly expanding global market.

Public relations programs could constantly monitor the Internet in order to identify ways to communicate with targeted audiences through this new medium. Companies using the Internet could take advantage of the one-to-one marketing opportunities presented by the Internet to reach opinion leaders in industry. Extending the organizations' presence to the World Wide Web and commercial online services transcended traditional public relations. These communications efforts could combine the best of traditional PR--strategic consulting, marketing support, media relations, public affairs, crisis management, investor relations, even special events--with the vast reach of the Internet.

In the 1980s, public relations agencies averaged 20 employees per $1 million in business, but that figure fell to 12 employees per million in the 1990s. The downsizing that occurred in the public relations industry required firms to outsource many tasks to independent public relations professionals. Firms realized savings on overhead, payroll taxes, and benefits under this arrangement.

The recession of the early 1990s had a negative effect on public relations firms and corporate communication professionals. The industry experienced a 26 percent jump in employment between 1980 and 1990, but this subsequently declined. For example, Hill and Knowlton Inc., one of the larger public relations firms, cut its workforce by 25 percent in 1991, based on an 11.8 percent decline in billings.

A survey conducted by the Public Relations Society of America showed no growth in jobs in 1991 for the public relations industry as a whole, but many professionals in the field expected future industry growth. Specifically, 39 percent of public relations professionals surveyed expected their firms to expand in the next several years, while 45 percent predicted no change in employment, and only 5 percent anticipated additional downsizing. These numbers looked even better for the nonprofit sector, where expectations for staff expansion were 17 percent, compared to expectations of downsizing of 12 percent. Corporate public relations departments expected to experience downsizing as the reengineering process continued for American corporations. Sectors such as legal, health care, and environmental public relations were expected to achieve strong growth during the late 1990s. By 1998, with the recession a distant memory and the economy booming, public relations services thrived. All the top 10 agencies experienced growth.

The 1990s proved to be a lucrative decade for the public relations industry, which experienced a notable 250 percent growth in revenues between 1990 and 2000. In 2000 alone, sales grew 32.9 percent, an industry record for annual growth, in the United States. This surge was fueled in large part by the rise of the technology sector, which grew to account for 41.0 percent of industry revenues in 2000. The U.S. public relations industry was valued at $4.2 billion in 2000.

When the technology industry crashed in 2001, and the U.S. economy weakened, businesses in nearly every sector began to tighten public relations budgets. As a result, industry revenues fell 2.65 percent in 2001. To offset the impact of this downturn, many public relations firms began to lay off employees. Eager to find new sources of revenue, some larger firms began to compete for smaller accounts. In addition, some companies reduced their rates, which increased competitiveness but also undercut profitability.

After experiencing record revenue growth of 32.9 percent in 2000, the $4.2 billion public relations industry saw its revenues decline 2.7 percent in 2001. The reason for such an abrupt decline was multifaceted. The industry's significant growth in the latter half of the 1990s had been fueled in large part by the technology industry's meteoric rise. In fact, by 2000, more than 40 percent of the industry's revenues were attributable to the technology industry; as a result, when the technology industry crashed, the public relations industry was particularly vulnerable to the downturn. At the same time, the general economic weakness in the United States was also prompting firms in other industries to tighten their belts, a process that quite often involved reducing their public relations budgets. According to Impulse Research, PR budgets dropped an average of 21 percent in 2001, from $4.8 million to $3.8 million.

According to an April 2002 article by the Council of Public Relations Firms, the economic downturn had a profound effect on public relations firms. "The biggest firms are laying off employees, slashing their prices for the first time in five years and chasing small accounts that they wouldn't have bothered with in the late 1990s boom." One industry giant, Burson-Marsteller, laid off 15 percent of its workforce in 2001. Another large public relations firm, Edelman, trimmed its ranks by 10 percent after sales dropped 5 percent that year. Porter/Novelli saw its revenues dip 13 percent and initiated its first staff reduction program in nearly a decade.

During 2004, the public relations services industry began to come out of a period of stagnation brought about by the weakened economy. Compared to 2003, 89 percent of companies surveyed by the Council of Public Relations Firms reported an increase in business activity in 2004.

Promotion services was represented by 4,137 firms with a workforce of an estimated 21,833 employees. Those within the promotion services arena reported nearly $2.9 billion in annual receipts. The sales promotion sector had 2,669 firms with 15,570 employees generating nearly $2.6 billion in revenues. Public relations and publicity firms numbered 2,512 companies with $2.1 billion in revenues. Last, there were 1,165 lobbyist firms in 2005 employing 6,295 lobbyists with revenues of $754.4 billion.

According to the Council of Public Relations Firms survey, the positive industry results carried over from 2005 into 2006. The strongest areas included consumer products and services as the leader, followed by technology and health care. Of the 82 firms queried, 54 percent reported annual receipts were the direct result of marketing communications, with corporate communications and public affairs following. The worldwide media and information private investment firm Veronis Suhler Stevenson forecast a 9 percent compound annual rate for the public relations industry through 2009. In fact, the specialty media and marketing services sector, including public relations, was expected to reach $355.15 billion by 2009.

Current Conditions

The overall communications industry suffered a setback during the late 2000s as the U.S. economy settled into a deep recession. "We led into the downturn, we'll lag the upturn. Overall, it's very tough," Martin Sorrell, of advertising group WPP, told The Economist (US), in August 2009. Sorrell referenced U.S. companies' tendency to cut their marketing budgets first in times of financial strain and supplement them last when the economy rebounds. Yet, prospects marketing/communications firms were beginning to brighten--or at least look slightly less gloomy--by the end of 2009. In December 2009, WPP reported an earnings decline of 8.5 percent for the third quarter, but referred to the drop as "less worse" than the second quarter.

According to private equity firm Veronis Suhler Stevenson's industry forecast, released in August 2009, certain portions of the marketing and advertising industry had taken significant hits during the downturn in the economy: newspapers (18.7 percent), consumer magazines (14.8 percent), radio (11.7 percent), and broadcast television (10.1 percent). However, despite the lackluster performance during 2008 and 2009, Veronis Suhler anticipated that public relation firms would lead growth in the overall marketing industry, along with branded entertainment and Internet and mobile devices. Within the industry, 62 percent insiders surveyed by the Council on Public Relations Firms in 2009 reported that they believed that the industry had bottomed out.

While the public relations market incurred losses with the overall marketing industry, the losses were not as severe as many companies--particularly in the financial, energy, and transportation sectors--turned to public relations firms to renew their image following the Wall Street credit crisis in 2008. Although short-sighted, money-strapped firms dropped their public relations budgets, others shored up their budgets to weather the tough economy times as best as possible. As a result, for example, both Burson-Marsteller and Hill & Knowlton, two of the top public relations firms in the United States, increased revenues during 2008.

Digital media continued to change the face of the public relations industry in the late 2000s. According to survey data collected by the Council on Public Relations during 2009, over 70 percent of surveyed insiders believed that digital media was here to stay, and 83 percent called their social media capabilities either extremely or moderately important. For example, Burson-Marsteller quadrupled the size of its digital business between 2006 and 2008. Approximately 9 out of every 10 public relations firms offered blog monitoring in the late 2000s. Other important services included blog development and management (70 percent), strategic digital program development (68 percent), and Web design (65 percent). Also becoming increasing popular was the trend for companies to link to social networking, such as Facebook and Twitter.

Industry Leaders

Advertising giant WPP owns two of the industry's largest public relations firms, Burson-Marsteller and Hill & Knowlton. In all, WPP holds 20 public relations and publicity firms in its business portfolio. It posted revenues of $13.6 billion in 2008. Approximately 40 percent of its revenue is generated in North America, and 10 percent of all revenue is attributed to public relations and publicity activities. Porter Novelli, another big player in the industry, is a business segment of Omnicom, another advertising and media giant. In 2008, Omnicom posted revenues of $13.3 billion. Of that total, 9.5 percent was generated by public relations, or approximately $1.3 billion.


The majority of occupations in the public relations field fall into the support category. General managers and top executives account for less than 10 percent. Office and administrative support occupations account for approximately one-fourth of the industry's workforce. According to the Bureau of Labor Statistics, in 2008, the average annual salary for public relations specialist was $67,960. Public relations managers earned a mean annual salary of $126,500 in 2008.

According to the U.S. Department of Labor, the employment outlook for all occupations related to public relations services will grow faster than average through 2016. Candidates seeking the most competitive hiring grounds should look to San Francisco/Silicon Valley, New York City, or Washington D.C.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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