Budget cuts are an opportunity for public service communicators

Posted on: 12th June 2010 in Local government Politics

The big round of public service communications budget cuts is already taking effect, as we are seeing with several DTW clients. Interestingly, however, this is not resulting in a net fall in our overall business.

This is because organisations are taking distinctively different approaches to making savings, some taking the traditional and crude "top slicing" of departmental budgets, whilst others are using more creative and radical approaches to the problem.

The pace of change is also different. For example, many FE colleges have seen dramatic funding cuts for 2010-11, whilst most of central and local government expect the big fall in income to come from April next year. Expect the cuts to come in every public service, despite the politicians’ talk about some services being protected.

This is how I expect things to pan out:

Many organisations will cut their in-house teams but expect them to still deliver the same service level. When this proves impossible, they will contract in agencies to deliver projects which would previously have been managed internally. At DTW, we are already seeing this trend from a number of clients.

Conversely, some communications teams are attempting to enforce the use of internal resources to protect the jobs of those concerned. That’s fine as long as they have the skills and flexibility to meet the needs of the internal clients.

When commissioning work from external agencies, clients will be looking for better value. This will hit the big city agencies, with their inflated fees and mark-ups, very hard – but will provide additional opportunities for smaller outfits operating on a tight cost base.

Incidentally, as the wider private sector recovers, expect those agencies which when the credit crunch happened suddenly reinvented themselves as public sector specialists to go back to what they do best – consumer and B2B work – leaving the field clear for the real public service agencies like DTW.

Project funding, which has in recent years driven campaign spending, will be choked off at central government level. This will mean less spending, at all levels, especially on social marketing work.

However, the need to reorganise services and make cuts will mean an increased demand for internal communications, reputation management and public consultation. This will put real pressure on already-stretched teams and may, again, mean that agency support is necessary.

At the same time, communicators will be driven to make difficult choices, perhaps making radical cuts to traditional marketing approaches – especially press, broadcast and outdoor advertising.

This is a strategy we have already recommended to several clients, who need to make savings of 15-25% but who need to protect the core PR, internal communications and www functions.

In truth, this approach just accelerates the long-term trend towards digital replacing print-based media.

Overall then, it’s a pretty volatile picture – and one that’s going to need a high level of flexibility and innovation from Heads of Communications.

Pete Whelan
Chairman