The PR Value Argument

13 years, 1 month ago

(Comments)


Convincing clients to spend more on PR can be an uphill struggle. Melanie King believes agencies need to stop backing themselves into a corner and stand up for the results they can achieve.



How do we put a value on PR? It’s the hardest part of the business, I believe. If I own a shop and sell a dress, its value is a combination of specific factors: the cost of the fabric, the thread, the design, the work putting it together and possibly a little more for the cachet of it coming from a well-known designer. Add transportation and the retailer’s mark-up and it’s fairly simple to determine what it costs.

How do we value what we do? Basically, for most of us in agencies, it’s hours. If we plan to spend so many hours working on something, the cost to the client is x hours @ (say) $250 per hour. Add a strategic planning fee or concept fee, and the mathematics is simple and easy to understand.

But back to that dress. If a customer doesn’t like it, she can bring it back and the retailer can sell it again. If one of our clients decides not to pay an invoice or decides the project can’t move forward, we cannot resell those hours. They’re gone. We’re left out-of-pocket – in hours and revenue.

I work in a PR consultancy that’s part of an integrated agency, which includes an advertising agency, online company, direct marketing consultancy and healthcare specialist, as well as us, a PR company. In discussions with our CEO, as I lament the unprofitability of some clients, he’ll often say: “Well, if this client isn’t profitable, go back and demonstrate how much money you’re losing and he’ll just give you more.” Which apparently happens in the ad world. But it doesn’t in PR. Why not?

Well, most marketing managers and directors are schooled in the value of advertising and its direct link to sales. If an ad costs more, the agency can go back and demonstrate the rationale for the added costs – higher fees for a photographer, talent, cold weather meant an extra day’s shooting, etc. At the end, once the campaign is on air or in print, sales should go up, thus justifying any added costs.

Rigid PR Budgets

But this doesn’t work in PR. Nine times out of ten, PR budgets are determined at the beginning of the financial year and there they sit. Do with it what you will, but don’t colour outside the lines. So, if we go back to a client, demonstrate why something took more time than expected, despite the great results, the answer is almost always “Oh, well. That’s a shame. That’s all the money we have.” Or, “your fault, you budgeted badly.” There is little or no understanding of the value of the time and effort it has taken to deliver great results.

I’ll admit, many mistakes belong to the PR agency. We misjudge budgeting, we assume something will take less time than it does, often we say anything to win the pitch. We back ourselves into a corner. But let’s move out of that corner. Time to stand up and be recognised for the value PR brings to a client. And clients need to understand this.

What does PR deliver? Aside from the obvious brand and product awareness, let’s look at brand or company reputation. The reputation of the CEO, the company’s activities, their share of market – that’s all managed through PR, not advertising.

How about the launch of a product when there’s no above-the-line spend? Again, PR to the rescue, using either media relations, on street or ambient activity, or stunts. We get the product and its attributes into the hands of consumers, reaching target audiences at appropriate touch points.

What about crisis and issues management? There aren’t very many crises managed by advertising, although I will say there is a place for advertising in managing a product recall. But PR is essential in managing an issue before it becomes a crisis. Clients are happy to pay for that if a crisis is recognised to have been averted – but they baulk when it seems as though “nothing happened, so why did we pay for it?”

Slow Burning Clarity

I could go on about the value of PR, but there are few other marketing disciplines as transparent and attributable as PR, although it is a slow burn. It takes time to get those great results. What we do is clear, how we do it is clear, the materials we use are all signed off by the client so there is no hidden agenda or activity – it’s all out in the open.

Does it sound like I’m whinging? I’m not really, but I do get frustrated when clients and even colleagues don’t understand and can’t appreciate the parameters of small budgets, tight costings and the incredible effort within which we work.

The first steps, and let’s start with the PR agency, are:

Learn how to budget better. Think about building into the budget the time it takes for reviews, changes, client change of mind and issues. We usually consider the number of hours it takes to work up the strategy and implement the activity only.

No bargaining. Sometimes I feel like I’m at the Iranian carpet bazaar – can you take off an extra $5,000? What if I only paid you X or wanted fewer journalists to get the release? No. I think when we recommend a program, we should stick to it as much a possible because we’re making recommendations based on achieving results. Shaving off dollars here and there seems minor, but in effect, it does affect results.

Turn down unprofitable business. The hardest part of PR, especially when you’re building up a division or a business is turning down business. But we have to be strong – if we know it will be unprofitable, why do it? We know clients work within tight budgets, but if we really can’t deliver for the budget, move on. We then can’t blame anyone when our value isn’t appreciated.

PR ourselves. Demonstrate on a regular basis to the client – and to his/her internal stakeholders – how much you’ve achieved, how the program is working, what results have come in (lots of numbers and figures are required for this), how the client’s share of voice has increased and so on. If you’re a PR person within an organisation, this is one of the best things you can do. It’s not an activity to justify your job or raise your profile, but it demonstrates exactly what you do every day, how intricately involved you are in the positioning of the brand and the marketing of the company for which you work.

After we’ve accomplished all these things, we can move on.


author"s portrait

The Author

Melanie King

Melanie King is managing director of Mango Communications Australia, overseeing offices in Sydney and Melbourne. She is a member of the PRIA and is a judge for the PRIA’s Golden Target Awards

mail the author
visit the author's website



Forward, Post, Comment | #IpraITL

We are keen for our IPRA Thought Leadership essays to stimulate debate. With that objective in mind, we encourage readers to participate in and facilitate discussion. Please forward essay links to your industry contacts, post them to blogs, websites and social networking sites and above all give us your feedback via forums such as IPRA’s LinkedIn group. A new ITL essay is published on the IPRA website every week. Prospective ITL essay contributors should send a short synopsis to IPRA head of editorial content Rob Gray email



Comments

Welcome to IPRA


Authors

Archive

July (4)
June (5)
May (4)
July (5)
June (4)
May (4)
July (5)
June (4)
May (4)
July (5)
June (4)
May (5)
July (3)
June (4)
May (5)
July (4)
June (5)
May (5)
July (5)
June (4)
May (4)
July (4)
June (3)
May (3)
June (8)
June (17)
March (15)
June (14)
April (20)
June (16)
April (17)
June (16)
April (14)
July (9)
April (15)
Follow IPRA: