During the PR boom of 1999 and early 2000, corporate clients - many of them in the technology sector - were paying retainer fees upwards of $75,000 a month and not asking for
much in return. PR agencies planned wild parties for clients. Food and drink abounded. Everyone got tipsy on the new economy.
Now, with the painful downturn that began in spring of 2000 and continues today, slashed staffs and micro budgets have replaced the parties. But from the ashes of the crash has
risen a new, better way of handling the client-agency relationship. It's streamlined, yes, but it's also more professional.
The most far-reaching shift is a new focus on the concept of "measurement," says Andrew Sobel, longtime strategist and co-author of the book Clients for Life: How Great
Professionals Develop Breakthrough Relationships.
"Now, agencies have to make a much tighter connection between what they're doing and how that will increase revenue (for the client)," Sobel says. "They have to get smarter
about tracking the impact of their work."
Specifically, nowadays clients want to see a correlation between PR campaigns and weekly or monthly changes in sales, says the Santa Fe, N.M.-based Sobel. This is not something
that PR agencies have traditionally done. But ad agencies always have. Sobel says that in order to carry this out, agencies have to begin working more closely with their clients,
frequently rolling up their sleeves and digging into the numbers side-by-side.
"Clients are getting much more analytical - as opposed to just asking themselves, 'Are we feeling good about our brand because an article was written?'" Sobel says.
Corporate clients agree. "Before, our work with the agency focused on just raising the level of overall buzz about the company," says Donna Hemmert, CEO of Northern Virginia
tech start-up OptiView. "But now, over the last nine to 12 months, what we expect from our agency is something we can measure. We expect them to deliver a return on investment."
Others are curbing their dependence on PR and demanding more for the price of that monthly retainer. Bud Grebey, VP of PR at Siemens USA in Manhattan, puts it bluntly. These
days he wants PR firms to deliver "high quality output with less resources." Siemens has reduced the number of PR firms the company's various divisions are using. Also, Grebey
says department heads are thinking about their PR-oriented needs differently. When the need arises, now their first reaction is not to send it out to an agency, but to try to
accomplish it in-house if possible.
Would You Like That a la Carte?
To get clients to avoid Grebey's way of thinking, many agencies are offering more flexible pricing structures now.
"The key word this past year was flexibility," says Kristi Hedges, co-owner and principal of McLean, Va.-based technology PR firm The SheaHedges Group. "Agencies have needed to
make it less prohibitive for clients to sign on."
For the clients still on retainer, Hedges says the smarter agencies are throwing in extra services just to keep them happy and on-board. And many agencies, including
SheaHedges, have started to offer services on a project-by-project basis in order to avoid demanding hefty retainers from new clients.
"We've realized you have to work with their budget," she says. "You can't just tell them, 'We need more money.'"
Some agencies are even establishing whole divisions focused on the a la carte concept.
Shelton Communications Group, a Dallas-based PR and investor relations firm, recently launched "Shelton Capital." The division lets clients - more often than not fledgling
start-ups - pay on a project basis for PR work, design and even help accessing funding.
The concept aids companies in need, but it's also an investment in Shelton's future, says Stacey Gaswirth, the firm's VP of PR. The goal, she says, is to help the companies get
started, and hopefully when they're turning a profit, they'll call on Shelton for higher-paying work.
Sterling Hager Inc., in Watertown, Mass., is soon to launch a similar venture called PRESS CO (Public Relations Essentials for Small and Start Up Companies). Jim Joyal,
president of Sterling Hager, predicts PRESS CO clients will end up working with the company for 60 to 90 days on tactically based campaigns for things like product launches.
New York-based PR firm Middleberg Euro RSCG has also initiated an "a la carte" division, dubbed Middleberg Strategic Services. According to Don Middleberg, the agency's
chairman and CEO, large Fortune 1,000 companies had increasingly begun approaching the agency asking for work on specific assignments only. Thus, the new division was born.
Know Your Client
In addition to break-out services, today's corporate communicators are now demanding that PR people come to the table with vast knowledge about their client's industry, as well
as their specific place in the market.
"PR people need to have a deep, comprehensive understanding of your position," says Patricia Bridges, VP of global PR for Factiva, the Web-based joint venture between Dow Jones
Interactive and Reuters.
Bridges says she's already seen agency practitioners working a lot harder at getting up to speed on a company and its competition. In these times, she says, they'd better, as
expectations are a lot higher.
"It's a buyer's market out there," says Bridges.
Indeed. Kathleen Buczko, a partner with the Long Beach, Calif.-based PR firm NMC Partners LLC, remembers that during the boom, many agency pros got away with using a one-size-
fits-all approach to handling their clients. She says the broad brush tact has, by necessity, been replaced with strong counseling, much market research and serious knowledge of
the business environment the client faces.
Some of the changes of the last 18 months have been harsh for PR firms, but those in the thick of it say that overall, they have been for the better - for agency and client
alike.
Buczko concludes, "The downturn has forced us to return to the best aspects of PR."
(Contacts: Andrew Sobel, 505/982-0211, [email protected]; Donna Hemmert, 703/450-8809, [email protected]; Kristi Hedges, 703/287-7800, [email protected]; Bud Grebey,
212/258-4335, [email protected]; Stacey Gaswirth, 972/239-5119, [email protected]; Jim Joyal, 617/926-6665 ext. 210, [email protected];
Patricia Bridges, 646/742-3405, [email protected]; Kathleen Buczko, 562/436-4787, [email protected]; Don Middleberg, 212/699-2500, [email protected])
Seven Principles for Keeping Clients During Uncertain Times
Andrew Sobel is co-author of the book Clients for Life: How Great Profession-als Develop Breakthrough Relationships, coming out in paperback this March.
If you're shopping for an agency, look for one that adheres to the following seven principles, drawn from Sobel's monthly e-newsletter, Client Loyalty: Strategies for Building
Inner Circle Relationships.
- Get out into the marketplace--actively seek out your clients and try to help them with whatever issues they're facing. Be prepared to invest extra time.
- Don't cut prices, but if necessary be willing to propose flexible, creative and even unorthodox ways of structuring your work and invoicing for it (e.g., break a large project
or order into small pieces, postpone invoicing, etc.). - Small- and medium-size companies often have greater flexibility to retain and pay a PR professional who can really add value.
- A recession is a good time to increase your market share through enhanced marketing efforts and more "feet on the street."
- In a crisis, insight, judgment, wisdom and level-headedness are often more important than expertise.
- Accepting any and all business looks good now, but it will eventually drag you down and put you in a potentially worse position when things rebound later on.
- A client in need is a client indeed.