Disintermediation gives flacks advantage over hacks

My first editor told reporters not to write about public relations professionals because, in the eyes of our readers, they were "not real people".

It was an argument most journalists were happy to go along with. "Hacks and flacks" have long had a love-hate relationship, mixing mutual utility with mutual suspicion. But the argument is becoming harder to sustain.

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PR has become a big business, growing faster than general marketing spending for many years. Global revenues now amount to $10bn a year, according to the Holmes Report, which ranks PR firms.

In the US alone, PR spending will increase by 8.3 per cent this year to $4.22bn, according to Veronis Suhler Stevenson, a media investment group. That is double the growth VSS expects for US marketing as a whole.

When you consider how newsrooms have shrunk, the growth is even more remarkable. Robert McChesney, a University of Illinois professor, and John Nichols, a journalist, estimate that the ratio of US PR professionals to journalists grew from 1.2 to one to almost four to one between 1980 and 2010.

Just as media is having to reinvent itself, so is media relations. Top PR firms now see themselves in the same tier of corporate advisers as investment banks or management consultancies. But, even at the level of the lowly press release, technology is changing the business in ways that have lessons for both the targets and the users of PR.

PR Newswire, a tool for issuing announcements since 1954, had a reputation as a rather dull - if profitable - utility (Warren Buffett bought its rival BusinessWire, in 2006). Its releases now reach 200,000 media outlets from India to Indiana, but Ninan Chacko, its chief executive, sees its future being driven by digital syndication, social media and search engine optimisation.

He likens PR Newswire to his former industry, travel data. "We provided information to trained intermediaries, who interpreted it for the public," he notes. He does not quite say that journalists are going the way of travel agents, but news is undergoing similar disintermediation.

"The lines between paid media, owned media and earned media are blurring," he says: "Content drives them all."

Owned by UBM, PR Newswire has started to rethink press releases as multimedia content that - partly because many news businesses are struggling - can feed hungry blogs, news outlets and social media sites.

Mr Chacko cites the example of State Farm, the US insurer, which wanted to cut claims from turkey-fryer fires with a Thanksgiving information campaign. Instead of issuing a release, PR Newswire sent out an entertaining video of William Shatner, the Star Trek actor who had had his own misadventure with hot oil.

Publications from Esquire to The Daily News picked up the story; the footage has been seen almost 500,000 times on YouTube; and television stations aired it to 35m viewers. That was worth $4.7m in publicity, PR Newswire estimates, and turkey fryer claims fell 64 per cent, saving State Farm $3m.

Guided by editors, clients are now using text, video, audio, infographics and dedicated web pages - some featuring "buy now" buttons - to reach consumers more directly, without a media filter.

In search, Mr Chacko is using PRNewswire's scale to place announcements high up the first page of Google results. On social media, its databases now advise PRs which 'influencers' might retweet an announcement. The repositioning fits with broader marketing shifts to more engaging, measurable models.

But it also raises questions about the type of content that can compete online. "This process doesn't work unless it's high-quality content," Mr Chacko says.

For now, much corporate content is poorly produced, poorly targeted advertorial. Mr Chacko admits: "There are a lot of people who still think quantity beats quality". Like spam, some of it works. The term "churnalism" stems from Cardiff University researchers' estimate in 2006 that 41 per cent of UK press articles were driven by PR. As brands write their own stories, professional media outlets must work harder to set themselves apart.

Producing readable, watchable corporate content will not be easy. It will also require much closer integration of advertising, digital marketing, PR and investor relations. But search and social media trends suggest corporate content will only grow. Whether media outlets like it or not, every company will have to become a content company.

Andrew Edgecliffe-Johnson is the Financial Times' media editor