Gini Dietrich

How the Economy Affects PR…and Your Job

By: Gini Dietrich | October 31, 2013 | 
49

How the Economy Affects PR...and Your JobBy Gini Dietrich

Happy Halloween!

Have you seen the video/game on the Google home page today? I made witches brew for a good three minutes this morning.

I thought it’d be kind of funny to do something today such as leadership lessons from Halloween or what Halloween has taught me about PR (just to be a smart butt), but alas. My creativity is failing me.

Instead I thought I’d write about something equally as scary…what’s been on my mind of late: The economy.

By a show of hands, how many of you think about the economy, how it affects your job, and a plan B should things go south again?

I’m just kidding. I can’t see your hands. You don’t have to raise them, but if you do, send me a picture. I think that’d be hilarious to see!

In all seriousness, I’ve been thinking a lot about this.

A Short History Lesson

In 2011, we were just coming out of the Great Recession when the first debt ceiling debate happened.

Because business leaders were still so skittish, everyone (and I mean, everyone) put on the brakes on paying their bills. Our accounts receivables went from 30 days net to 90 – and even 120 – days net.

When you are already short on cash because of the previous two years and then clients stop paying their bills, it’s a pretty painful experience.

I remember having to wait until the very last minute – and sometimes a day or two later – to approve payroll. My assistant had to hand deliver the check for health insurance – on the day it was due – so they didn’t cancel us.

That was the year I thought we were going to have to close our doors.

And then, just as suddenly as it began, the debt ceiling was raised and business went back to normal.

When it happened again last month, though, the stock market didn’t even react. The government was shut down for 16 days and cost the country an estimated $24 billion, but no one blinked an eye.

Cash is King

Earlier this week, I had lunch with our banker and I asked him his opinion on all of this.

He said something really interesting is happening – something that has never happened in his career: People aren’t borrowing money.

Most entrepreneurs, he said, are using the cash in their businesses to pay down debt and are sitting on lots of cash in their checking accounts…and not buying anything. No one is borrowing money for capital equipment or property or strategic employees.

We certainly are doing the same thing. I’m scared to death 2011 will happen again – and soon – so I’m hoarding cash.

But is that the right thing to do? We all react, based on our own experiences. Maybe it is and maybe it’s not, but what I do know is economists are talking about 2014 being another soft year and I don’t want to be in the same position we were in in 2011.

The 2014 Economy

There are three things that could affect how business is done in 2014:

  1. Interest rates will spike. Right now, many organizations are renegotiating the terms of their lines of credits and any loans they may have outstanding. The interest rates are so ridiculously low (some are getting deals at less than three percent), it makes sense to do the same with your home’s mortgage. But with a new head of The Fed coming in, we can expect things will change within the next year.
  2. Europe will crash. While it doesn’t affect us directly, it sure does hurt us when foreign countries stop spending money. Last year, an article was written about how the Apple stores in Spain are completely void of customers. Think that doesn’t affect you? If people aren’t buying consumer products sold out of the U.S., the trickle down affect could be huge.
  3. The debt ceiling won’t be resolved. This one makes my head hurt. We can’t print more money because that’s what causes inflation, but printing more money to pay our debts may be the only solution. I won’t pretend to be an economist or even have an educated decision on how to solve this issue, but I do know the longer we battle this out, the more it hurts every organization in the United States – from Wall Street to Main Street.

How the Economy Affects PR

What does this have to do with PR, you ask?

In a down economy, PR/marketing/advertising is the first to go.

As communicators, we know that’s counterintuitive because if you aren’t marketing, no one knows you exist. If no one knows you exist, they’re not going to buy from you. But most executives see PR as an expense and an easy one to get off their profit and loss sheet fairly easily.

This means PR firms are let go (or budgets are reduced) and PR professionals are laid off.

I don’t say this to scare you or set you into a stage of panic.

Rather, I want you to think about the next six months as a way to prove your worth.

We talk a lot here about how to provide the metrics that show you are an investment, instead of an expense.

In a meeting with a client yesterday, I learned a good 40 percent of their inbound leads are coming from our efforts. I nearly stood on the table and danced a jig.

If you are creating that kind of volume, the argument is made. You’re as valuable as the highly paid sales guy who isn’t going anywhere because the company can’t afford to lose his relationships.

Start talking to your executive team in terms they understand: More leads = increased revenues = better profits = more cash = less stress when the economy is bearish.

The awesome image is courtesy of Marc Johns, who drew it in 2008 and re-released it in 2011. Heck, he could have done a third release this year.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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49 Comments on "How the Economy Affects PR…and Your Job"

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belllindsay
2 years 10 months ago

And Gini breaks my brain again.

ginidietrich
2 years 10 months ago

belllindsay I like to do that at least weekly.

biggreenpen
2 years 10 months ago

Hand raised! https://twitter.com/biggreenpen/status/395931888377802753 And appreciative of the points you raised….

ginidietrich
2 years 10 months ago

biggreenpen Love, love, love! So nice to see your pretty face!

jasonkonopinski
2 years 10 months ago

To answer your question:

jasonkonopinski
2 years 10 months ago

But I won’t leave it at that. 2013 has been pretty darn good overall, but not enough for me to feel completely confident and secure about what’s next — and that scares me a lot. It’s caused some unnecessary anxiety, sure, but it’s also catalyzed some serious effort on my part to carve out a place with confidence.

RAReed
RAReed
2 years 10 months ago

jasonkonopinski Same here, Jason. Our growth plan is in place.

ginidietrich
2 years 10 months ago

RAReed jasonkonopinski Our growth plan is in place and I am very confident about next year, but I also have contingency plans in place…just in case. Hence lunch with the banker earlier this week.

JoeCardillo
2 years 10 months ago

ginidietrich RAReed jasonkonopinski + when you are really kicking some tail & good at moving rapidly, down or up includes opportunities.

ginidietrich
2 years 10 months ago

jasonkonopinski LMAO!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I love you.

jasonkonopinski
2 years 10 months ago

ginidietrich Love you back.

RAReed
RAReed
2 years 10 months ago

Why is Jason raising his hand?  
Anyway, great points, Gini. The rise in interest rates and businesses paying down debt instead of investing is a major concern. I hope this won’t be another race to the middle for bigger agencies start targeting smaller-sized fare and forcing the rest of the industry to look downmarket.

ginidietrich
2 years 10 months ago

RAReed It could be…it’s all cyclical, right? The only trouble is, history repeats itself much more quickly today. Quickly enough that we all should remember the last time and yet…

lizreusswig
2 years 10 months ago

I’ve always been struck by how P&G and the other brands who maintained or increased their PR/advertising during the Depression thrived.  Obviously, this isn’t easy in a time of reduced or slow income, but seems like it’s crucial to success.  

PS – I raised my hand, too but your really do not want that picture – trust me! 😉

LauraPetrolino
2 years 10 months ago

lizreusswig Great point. I think it would be an interesting study to look at trends in how companies react to rough or scary economies (i.e. what they cut/what they spend) and how that affects them long term

ginidietrich
2 years 10 months ago

LauraPetrolino lizreusswig One of the best examples I can think of is Kellogg’s during the Depression. I think I have the case study on Spin Sucks somewhere. I’ll find it.

ginidietrich
2 years 10 months ago
lizreusswig We worked with GE for a very long time. During the recession, they cut back on activities, but they never let us go. It’s companies like that that understand the importance of communications. It was funny. In 2010, we had a conversation with the sales team and they asked why their leads were down from our efforts. We explained the budget had been cut so we weren’t doing as much. They rallied for an increase in budget for us again.  The big companies get it, but it’s pretty scary when you have to decide between payroll and communications. So I… Read more »
Todd Lyden
2 years 10 months ago

<a href=”http://www.flickr.com/photos/toddlyden/10591079666/” title=”Untitled by toddlyden, on Flickr”><img src=”http://farm4.staticflickr.com/3670/10591079666_d6a0164023.jpg” width=”375″ height=”500″ alt=”Untitled”></a>

ginidietrich
2 years 10 months ago

Todd Lyden Um?

Todd Lyden
2 years 10 months ago

ginidietrich Todd Lyden I’d like the pass to the restroom

ginidietrich
2 years 10 months ago

Todd Lyden ginidietrich Bwahahahahahaa! LOL!!!

Todd Lyden
2 years 10 months ago

ginidietrich Todd Lyden and good job not sucking again

TaraGeissinger
2 years 10 months ago

Happy clients are like insurance policies. 🙂 The longevity of our client relationships depends on how *they* perceive our value. You hit the nail on the head — we need to not only be doing a kick ass job at meeting and exceeding the goals that we’ve set forth, but we need to be sure that through reporting or monitoring we are communicating that We are the reason they are now getting those leads, ranking that well or being asked to speak at that huge conference.

ginidietrich
2 years 10 months ago

TaraGeissinger AMEN.

littlegiantprod
littlegiantprod
2 years 10 months ago

This post speaks volumes to me.  I feel the same concern from a personal perspective. After being laid off twice in the past 2 years, it has been a rough climb.  Currently, freelancing, it has been a blood, sweat, and tears fight in finding the right job. My hope is that the economy quickly improves to help those (including myself) to find a job — the right job. As always Gini, thanks for the post.  You always make me think.  Ugh my head hurts now!

biggreenpen
2 years 10 months ago

littlegiantprod It spoke to me personally too (husband laid off twice in two years, long stretches of “not much” in between, choosing to stay in a situation I wasn’t especially thrilled with in order to have stability). Long way of saying I feel your pain. And I think although Gini’s article is specific to PR and business, it has parallels with life and personal issues.

littlegiantprod
littlegiantprod
2 years 10 months ago

Oh wow!  Sometimes I think I’m the lone ranger in this tough market.  I cross my fingers and toes for your husband to not feel this awful pain!!!

biggreenpen
2 years 10 months ago

littlegiantprod Thanks! Don’t want to jinx anything but hopefully his current situation is more stable (and I know he likes it better which is a huge PLUS.) Hope things even out for you too!

ginidietrich
2 years 10 months ago

littlegiantprod biggreenpen My husband sold his interest in his company three years ago and hasn’t had an income since then. It’s been a little stressful at times, but it’s allowed him the opportunity to find his next big idea, which he’s building now. Let’s hope it makes some money!

Gini Dietrich
Gini Dietrich
2 years 10 months ago

Ahhh. You ARE gunning for a raise.

BillDorman
BillDorman
2 years 10 months ago
If you would take care of ‘your’ president up there we wouldn’t have to worry about this.  My hand was up.  The ‘health’ of the economy has a very direct impact on my income and how much I smile in any given day.  Is there a chance we will ‘tank’ again; absolutely. However, I have a glass half full attitude and I expect things to continue to improve. What I’m seeing w/ my customers is people have the cash but they are still taking a wait and see attitude before they start making any significant financial commitments.  We work hard… Read more »
ginidietrich
2 years 10 months ago

BillDorman I saw your hand up! I guess this is the new normal, huh? Everything I’m reading says 2014 will be a little rough. I guess we’ll see.

ClayMorgan
2 years 10 months ago

In sales, there is a lot of talk about benefits of hiring a company (or sales rep), but while attending a sales management training program this year, I heard something a bit different.
The instructor said you have to make the client understand how much it is going to cost him to NOT hire you.
Your work must put you in a position where the client is scared to not have you and your team helping him, especially if the economy tanks.

lizreusswig
2 years 10 months ago

ClayMorgan Yes!  It’s all in the perspective!

JoeCardillo
2 years 10 months ago

ClayMorgan Nice point. And, might I add, humans respond best to two kinds of stories, the ones that are “How amazing is this beautiful/thoughtful thing” and the ones that are “This is so awful you won’t believe it” …..if you craft those two things and incl. supporting data, you’ll be providing value to them (and showing your own).

ginidietrich
2 years 10 months ago

ClayMorgan You know, that’s an interesting way to think about this. Hmmmm…

ClayMorgan
2 years 10 months ago

ginidietrich Indeed. This sounds blunt or harsh, but make the client more scared to lose you than he is of the economy tanking.

Howie Goldfarb
2 years 10 months ago
So there are two ways to look at this. First is economy is soft and there could be stock market bubbles and now a new housing bubble and the political unknowns. The other is going way way back using the stock market’s historical growth rate and see where the markets stand to a benchmark. For all we know after the lost 2000-2011 decade for the markets we should be much higher. No worries. My guess is it might be a lost year because of politics until the mid term election. If you want to hedge buy an index fund that… Read more »
ginidietrich
2 years 10 months ago

Howie Goldfarb I’m way too conservative to hedge. I like my money.

Howie Goldfarb
2 years 10 months ago

Oh and another thing!
As thy say above…show your value. People invest when they know it makes them money.
Caveat: If you become invaluable watch out. Businesses always freak about a their business being so dependent on a vendor that if that vendor left their biz would crash. Vendors love single source customers do not.

ginidietrich
2 years 10 months ago

Howie Goldfarb That’s a very good point. I’m kind of shocked.

DebraCaplick
2 years 10 months ago

ginidietrich
2 years 10 months ago

DebraCaplick LOL!!

DebraCaplick
2 years 10 months ago

ginidietrich DebraCaplick One of my furry office assistants – Holly gets more results when she waves her paw than I do.

ExtremelyAvg
2 years 10 months ago
I’m not in the PR game, but this article got me thinking, too. I believe your are correct, 2014 may be a rough year in many markets. I wonder how it will impact my world of books? One one hand, books are not a necessity, so readers may decided to make fewer purchases. On the other hand, being an indie, my books are less expensive than traditionally published novels, so perhaps it will shift people in my direction? Again, I’m not in the PR game, but it may behoove those who are to get creative in their pitch. In Eli… Read more »
KateFinley
2 years 10 months ago

Just now getting to comment on this. You’ve got my wheels turning. I’m going to send this link to my friend who is an economist and get his thoughts. I’ll let you know …

BillSmith3
BillSmith3
2 years 10 months ago

Interesting piece Gini, and like you I’m a firm believer we should understand the big picture beyond our profession and how it will effect us.

HonoureBlack
HonoureBlack
2 years 10 months ago
Dear Gini,  Thank you very much for your post “How the Economy Affects PR…and Your Job”. I was immediately drawn to this article because of how deeply this issue has been resonating with me over the last 2 years.  Just recently I have made the leap into exploring PR, due to the very narrow job market in my field. I graduated two years ago with a Masters degree in Art History from the University of Victoria in BC and have yet to gain employment. Currently I am working at a wine store and drinking my way through constant rejection (a joke, but also true). Entry… Read more »
nimiparker
nimiparker
1 year 4 months ago

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you for another fantastic posting. Where else could anyone get that kind of
information in such a perfect way of writing? I have a speech next week, and
I was looking for more info 😉 http://www.communityforcolleges.org

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