While 2009 was hardly a banner year for the public relations and communication industries, it does not appear to have been nearly as calamitous as some have suggested, and certainly not as bad as may have been the case in prior recessions. 2010 will be better, but organizations remain very cautious about their public relations spending.

These are among the findings of the sixth Public Relations Generally Accepted Practices (GAP) Study, which is published on a biennial basis by the Strategic Communication and Public Relations Center (SCPRC) at the USC Annenberg School for Communication & Journalism. A total of 382 communication decision makers in corporations, not-for-profits and government agencies participated in GAP VI, for which most data was collected in the last quarter of 2009.

In 2009, 20.9 percent of GAP VI respondents experienced budget increases, 36.6 percent saw little or no change, and 42.5 percent saw decreases. When averaging all the responses, organizations reduced their 2009 budgets by a fairly moderate 5.3 percent. The average change among corporate respondents was -4.68 percent.

2010 looks like a better, but still very cautious, year. 28.8 percent expected budget increases over 2009, 49.7 percent expected no change, and 21.5 percent expected budget decreases. When averaging all the responses, organizations expect to increase their budgets by just 1.56 percent. Corporate respondents expect an increase of 1.94 percent.

"It appears that, despite much pessimism, we came out of 2009 in pretty good shape," noted Jerry Swerling (pictured), director of USC Annenberg's SCPRC. "2010 is certainly looking better, as evidenced by the recently announced first quarter earnings of the major agency holding companies, but an anticipated average budget increase of just 1.56 percent among clients clearly points to widely held caution. Still, we should be heartened by two factors. First, an increasing number of organizations are increasing their budgets. Second, from a historical perspective, it appears that we have weathered this recession far better than was the case in prior recessions, as many industry veterans will attest."

Public companies'"PR:GR Ratios" -- i.e., the amounts they spend on public relations or communication relative to their gross revenues -- remained relatively stable from 2007 (GAP V) to 2009 (GAP VI). For example, the average PR:GR Ratio for all public companies larger than $5 billion that responded to GAP VI was 0.07 percent, as compared with 0.08 percent for similar GAP V respondents. This suggests that budgets remained somewhat stable as a proportion of total organizational resources dedicated to communications.

Among all GAP VI corporate respondents, internal staff salaries and related costs accounted for 41 percent of the total PR/communication budget on average, as compared with 44 percent in 2007. Nearly 20 percent was paid to external PR agencies, as compared with 30.37 percent in 2007. Only 4.5 percent was allocated to evaluation and measurement, as compared with 5.8 percent in 2007.

"While much is being said and written about the importance of evaluation, there is little bottom line evidence to indicate that it is more of a priority today than it has been in the past, at least in terms of the financial resources invested in it," Swerling commented.

GAP VI reveals some surprising data regarding staffing. In 2009, 61.6 percent of all 382 respondents actually increased the size of their internal staffs, 15.1 percent saw little or no change, and 23.2 percent decreased the size of their organizations.

Interestingly, companies that do business only in the United States increased staffing in 2009 by 1.5 percent, while international/global companies decreased staffing by 1.9 percent. This is consistent with budget data suggesting that U.S.-only companies had more positive budgetary experiences in 2009 than did international/global companies. However, the budget data also suggest that the staffing situation will reverse in 2010, with hiring at international/global companies outpacing U.S.-only companies.

Only 23.2 percent of responding organizations reduced their staffs in 2009, with those reductions generally falling in the modest 1 percent to 5.5 percent range. However, in 2009, GAP VI respondents spent a much smaller percentage of their total budget -- 15.4 percent -- on compensation for outside agencies, than the 26.6 percent GAP V participants spent in 2007. While this decrease is totally consistent with data gathered by the SCPRC in February 2009, some of it may be attributable to the relatively larger size of many GAP VI respondents. Also relevant are findings in all six GAP studies showing that the most common reason for working with outside agencies is "extra arms and legs."

All of this may explain why internal budget cuts were generally modest (i.e., 5.3 percent on average), while substantial anecdotal evidence suggests that outside agencies experienced significantly larger reductions in revenue. The greater scalability of external agency relationships and the greater commitment to internal staffs were major factors in how organizations responded strategically to the recession. Instead of making wholesale internal cuts they froze or reduced salaries, reduced agency compensation, reduced programming, or a combination of the three.

By means of statistically valid correlations among respondents' answers to multiple questions, SCPRC researchers were able to identify some fascinating patterns that reliably reflect true best practices. For example, respondents who reported both an increase in budget in 2009 and a reporting line to the C-Suite (chairman, chief executive officer, chief operating officer) grew by a far-better-than average 8 percent in 2009. They also were far more likely to indicate that they expected their budgets to grow by a healthy 5.9 percent in 2010. In contrast, those reporting to marketing expected budget increases of just 2.5 percent.

Likewise, GAP VI respondents who reported an increase in 2009 budgets were more likely to describe their organizations as being "long-term/strategic" rather than "short-term/tactical"; "proactive" rather than "reactive"; "flexible" rather than "rigid"; "innovative" rather than "non-innovative"; "democratic" rather than "autocratic"; and "people-first" rather than "profits-first."