A New World for Public Relations: Are Retainers On the Way Out?

In a world of economic uncertainty and shrinking budgets, public relations (PR) firms and internal PR departments are being required to demonstrate and prove the value of PR investments. The way PR effectiveness is measured in a retainer relationship is murky at best. It can be inadequate, misguided or ineffective and does not hold the agency accountable. The traditional retainer-based public relations model is being called into question more and more. It has often leads to dishonesty, unethical behavior and over charges. This is not the case with every firm, but recent events in the media provide evidence that some public relations agencies have been caught with less than ethical conduct. So what is causing this?

Supporting Cases

Why do some agency executives think it is legal to forecast a client’s billings and then secretly adjust those bills upward to meet the forecast when less work was performed than predicted? Two recent cases dramatically demonstrate the problems inherent in a retainer model. The city of Los Angeles and the White House both took issue with over billing problems with their PR agency. In both cases, the respective individuals were indicted for their part in fraudulent bills leading to over-billing the clients for media campaigns. These cases provide evidence of what could happen as the result of poor tracking and a lack of ability to show documentation supporting the billing figures. So why do it this way?

Public relations have evolved from a discretionary part of the marketing mix to a critical component of most company communications programs. This evolution has been driven by several factors, including the opinion that PR is an effective complement to advertising, direct marketing and other marketing tactics. The payment model is shifting to meet changing market expectations, which is giving hope to companies that want to employ an agency and a business model that is fair. This is evidenced by the performance-based model that is common in other areas of business today. Consumers pay per hour for the use of computing time, virtual office space is now available on a pay-per-use model, and many people’s compensation is based on performance. So why not use this model for the public relations industry?

Accountability is the key issue facing the public relations industry today. Measurement of public relations value has never been more important. For public relations departments, the ability to prove value and return on PR investment may be the difference between getting budget approval or not. For agencies, the ability to attract, retain and grow clients may depend on the ability to prove the value of their work. The challenge and opportunity exists to evolve beyond the traditional retainer based model to a new model that offers accountability and results.

Who Pays For Non-Performance?

Traditional public relations agencies have historically relied on a ‘leap of faith’ somewhere along the way to prove the worth of their efforts. In the retainer model, the agency is paid whether results were produced or not. This payment structure leaves the client company to bear the burden of non-performance. Furthermore, the model lends itself to errors, inconsistencies and the temptation to milk an account for every billable hour. For example, some agencies will bill you a full hour for 15 minutes of work, similar to the mobile phone services where they bill a client a full minute for a 15 second call. In addition, management often places undue pressure on agency staffers to maintain a very aggressive level of billable hours. This type of practice opens up the risk for fraud and errors, and ultimately over-billing.

A performance-based pay structure is seen in many industries and individuals compensation packages. For example, only about 20 percent of a CEO’s pay is base salary the rest is made up of incentives based on the company’s performance. The rationale is that if the company is performing well and the shareholders are making money, then the CEO should share in that success. In the same spirit, with the pay-for-performance PR model, the agency is paid for results, not activity.

Case in Point

When CenterStone Technologies, a Denver based software firm, wanted to launch their new sales order management application, they knew exactly what they wanted from a public relations agency – national trade media exposure. But PR firms only quoted monthly retainer fees of up to $10,000 for a broad package of services — and none would guarantee results. That’s when Peter O’Neil, executive vice president of sales and marketing found Matrix Marketing Group. “Matrix Marketing Group’s Pay-for-Performance program is a great tool for us right now. Their unbundled services offer us more flexibility and provide us the highly qualified expertise we are looking for, said O’Neil. Plus, we are a results-oriented company and with this program we only pay when Matrix Marketing Group delivers results.”

Is There Another Way?

Buyers want to pay for only what they want and need and nothing more. It’s a “have it your way” society. Google and Yahoo’s Overture changed the Internet advertising model with unbundled, results-based pricing, called pay-per-click advertising. Now it’s moving into the PR industry. The pay-for-performance public relations programs offer companies a much better way to quantify and demonstrate the outcomes of their PR investment because they only pay for the results.

The pay-for-performance model is worth careful consideration. Clients only pay for the results after they are achieved. The retainer-based and pay-for-performance models are on opposite end of the spectrum. While there is room for a hybrid model that offers both fixed-fee and performance-based fees, PR professionals not already comfortable with the concept of a performance-based model should get comfortable soon.

The Role Of Public Relations In Branding

Because PR can be difficult to control, it is often discredited. According to Dick
Lyles, president and chief operating officer of The Ken Blanchard Companies, a
full-service consulting and performance improvement company, “People tend
to migrate to things they can control. Even now, when an executive looks at an
advertising message that’s exactly what they want to create, with exactly the
right positioning and so forth, they say, ‘That’s the message I want to send.’
That’s great, even though people may not read it, or people may give it less
value and discount it, because it’s advertising…. [On the other hand], if you get
a well-placed article in a trade journal or you get some ink, people give it more
credibility. The impact is greater, but because it may not come out exactly the
way it was intended to come out, [businesspeople frequently] discount it.”

The concepts of Branding and public relations are closely intertwined. The job
of public relations is to encourage the public to have positive thoughts about a
particular company, product, service, or individual. Branding is the idea that a
particular set of attributes will encourage the public to have positive thoughts
about a particular company, product, service, or individual. It’s a subtle
distinction, but an essential one.

In order to best understand Branding and how it is done, it is necessary to
examine and explain public relations. Many experts on Branding espouse the
opinion that public relations are a vital part-if not the most vital part-of the
Branding process. Public relations practitioners are particularly well suited to
the Branding concept, since they are well versed in the techniques and
practices that create a public identity very close to the central idea of a brand.

Unlike marketing or advertising, which are essential activities and
indispensable to the creation of a brand, public relations is not devoted to a
tangible object. Advertising executives create television, print, and radio ads;
these are concrete, identifiable things. Marketing creates a product-be it a
physical product or a service-and presents it to the public. That is an obvious,
noticeable thing; it is not hard to understand.

Public relations does not do either of those things. When properly conceived
and executed, a public relations campaign is next to invisible; the public does
not know it’s there. More to the point, public relations does not create a
physical manifestation of its effort: When PR is done right, it doesn’t leave the
trace of a newspaper or magazine ad, a videotape, or an audiocassette that will
win awards-and that can sometimes overwhelm the message being delivered.

What public relations does is to encourage third parties to deliver the
message. Why? Because the third parties are news organizations, print
journalists, and television and radio news programs and talk shows, which by
definition have more credibility for the general public than an advertisement or
the word of a company spokesperson.

In other words, public relations is meant to generate news coverage. It does so
through planned events and through news stories (true news stories, it should
be emphasized) suggested to reporters and their editors. When a newspaper
runs an article about the unusual new promotion being done by a local
business, that’s public relations. But to the reader of that newspaper, it appears
to be an article generated by the editorial staff of the publication itself.- There
is no advertisement disclaimer that runs over a PR-suggested news article.
That makes sense, because the news editor always has the option of ignoring
the suggestions made by public relations people. Editors and producers will
rely on public relations for news leads, but will not simply act as a conduit,
presenting the message from the public relations company’s client unedited
and unconfirmed. Public relations can suggest, but not control, the message
being sent. It is a very difficult tightrope to walk.

For example, in 2000, when the Beatles song compilation 1 was being
released by Capitol Records, it presented (believe it or not) a public relations
dilemma: how to promote an album full of songs that the entire target
audience almost certainly owned in another form already.

The problem was solved in a number of ways. First of all, it was emphasized
that these were the 27 number one songs the band had produced during its
legendary career. Press releases noted over and over again that these songs
had never been compiled on one album before. It was intimated that many in
the group’s core audience might not have heard these songs on CD before,
having bought them on vinyl records when they were originally released.

But more than anything, the public relations executives managed to generate
publicity for the album with something that no other project could possible
offer: access to the (at the time) three surviving Beatles for interview. News
programs, interview shows, publications, and talk programs were all given
opportunities (albeit brief ones) to interview at least one Beatle, and therefore
the album was mentioned on countless air-waves and in publications for weeks
before its release, and given very prominent placement.

The album went on to become a smash hit, reaching number one almost 40
years after the initial release of some of the recordings. It was yet another
triumph for a legendary recording group, but it was also something of a coup
for the public relations personnel involved. Yes, they had the luxury of three of
the most famous faces on the planet, and the ability to use them. But the PR
people who worked on that project also knew that they had to make something
that wasn’t necessarily new seem vital and important, and they knew where the
news story in the project was kept. Making sure the news got out was their job,
and they did it admirably.

The best part: The public was never aware there were PR people involved at all.
What average fans saw on TV was Paul McCartney, George Harrison, and/or
Ringo Starr. They heard snippets of the songs they had loved for decades. And
they were told that this was different; it was new; it was unique. That’s all the
public needed to know. The fact that this message had been carefully
constructed and the interviews painstakingly arranged was irrelevant to
consumers; all they needed to know was that the Beatles were, more or less,
back.

Public relations works behind the scenes, but its impact on Branding is
enormous. Because PR generates interest, and precisely because it is working
offstage, it is as valuable a part of the Branding process as can be imagined.
And best of all, it’s often the, least expensive component in a sophisticated
Branding machine.

As Adam Christing, president and founder of Clean Comedians, a company
that provides meeting planners with G-rated comedians, says, “Public relations
takes the brand and makes it mobile, makes it more visible. It’s like taking a
band that’s been successful in a local neighborhood and taking it out on the
road so more people can experience it.”

Of course, when the message is not delivered in the form that was initially
intended, that means the public relations professional has not done the job
properly. The mistake can be in the design of the message itself-in particular,
if the message that has been designed is a false or misleading one-or in the
method of its delivery. It’s a fine thing to have a vital, exciting news story to
tell, but if the presentation is ineffective, that story win not be told, or win be
told in such a way that its original intention is lost.

Public relations is about messages and their delivery, but that isn’t all PR is. In
correlation with Branding, the goal of public relations must always be to create
a feeling in the mind of the target audience for which the message is being
tailored. If Branding is about creating an identity for a product, service, or
entity (company or individual), public relations’ contribution to Branding is
about making that identity friendly and likable for the public–specifically, the
public for which the message is intended.

Obviously, the feeling most PR aspires to create is a positive one. But the
intention is vastly more complex than that: In truth, public relations seeks to
create and maintain a consistent feeling of familiarity, trust, reliability, and
confidence with the targeted public. If advertising is about getting the public’s
attention, public relations is about delivering the message once the attention
has been commanded. When people express an opinion about a product or a
company, initially they’ll say they like or don’t like it, without offering further
explanation. But when they’re given specific questions about their opinions, the
effects of public relations become clear. When products are assigned
personality traits or attributes by the public-“friendly,” “environmentally aware
… .. concerned with quality … .. accessible”-it means that public relations, in
conjunction with advertising and marketing, has done its job. But because the
public is naturally wary of advertising and marketing, and because those
disciplines are considerably more visible than public relations, it is possible
that PR makes the most honest, and deepest, impact on the public’s psyche.

How is the feeling created? Unlike advertising or marketing, public relations
alms to influence public opinion without being noticed. So efforts made by
companies to create goodwill through advertising and marketing are effective,
but will be met with a higher amount of resistance from the public than a
public relations campaign.

5 Personality Traits You Need to Succeed in Public Relations

A colleague new to my agency once regaled us with a conversation he had with an older cousin of his at a family wedding. My colleague, then new at the job, excitedly told his cousin about his new job as a public relations (PR) executive in a boutique PR agency. Unexpectedly, instead of complimenting him on his new career path, the cousin smiled sadly and clapped him on the back.

“I used to do public relations at my old company,” she said. “Good luck. You’re going to need all of it.”

If you think the life of a PR officer is a glitzy, glamorous one of wining, dining, and ‘networking’ with clients, you have another think coming. Ranked by Forbes as one of the 10 most stressful jobs in the world, it is no secret to anyone in the industry that public relations is a highly challenging career path for anyone to take up.

On the flipside, this challenge is what also makes public relations one of the most satisfying careers in the world. There is almost nothing more satisfying than having the press release you have painstakingly amended time and time again getting snapped up for coverage by the media, or having your client congratulate you for overwhelmingly successful results of the PR campaign you and your team had spent hours brainstorming months before.

It is tiring work, but when it pays off, the satisfaction is sublime – mostly because good PR ideas, like all creative outputs, are very personal, and also because of how increasingly necessary it is for a company to practice good public relations.

In an era where instant communication is readily available to the masses, public relations has become vastly more relevant than ever before. The industry has also transformed with the growing need for Online PR, Blogger PR and Social Media Marketing, especially in such a time where communications technology is so widely available and seamless. With the relentless spread of information about everyone and everything, at anytime, it has become more important than ever for businesses to 1) focus on managing the perceptions of their consumers, and 2) gain their attention in a world where attention is becoming an increasingly scarce resource – exactly the roles PR practitioners were made to play.

Do you have what it takes to excel in public relations? Here are 5 personality traits that you will need.

1) Time-Management

Having excellent time-management skills will always be a significant aid to you in any career. However, time-management is especially important in PR, especially in an agency environment where one has to juggle multiple accounts at once. Your email inbox will never stop buzzing, your office phone will never stop ringing, and the ‘URGENT’, ‘IMPORTANT’ tasks on your to-do-list will never stop coming. It is important to be able to prioritise all of these tasks, and to manage your time effectively enough to respond swiftly and efficiently to every one of your client’s enquiries.

In short, if you want to succeed in this industry, dust off that planner you got for Christmas – it will quickly become full in no time at all.

2) Communication

This may seem like a no-brainer, seeing as public relations is, first and foremost, a communications industry. But it is impossible to overstate the importance of being able to communicate clearly and concisely in public relations. It is not just about being able to charm your clients and sweet-talk to the media – we live in a world where the attention span of the average consumer is becoming shorter and shorter, and subsequently, the word-limits for communication too.

Having good communication skills is not all about having an extensive vocabulary, impeccable grammar, and speaking with confidence any longer. You need to be able to grab your audience’s attention by its shirt lapels and keep it there in the simplest way possible.

3) Familiarity with Technology

Technophobia is simply not an option if you want to enter the communications industry. While traditional media and press releases are still the bread and butter of public relations, consumer attention is becoming increasingly focused on the web these days. Take a good look at any recent publicity campaign. More often than not they are centered on smartphone apps, social media movements, or viral videos. To produce these things, a good public relations officer will need to comfortably wield an arsenal of social media, software, and hardware.

4) Creativity

A memorable quote from Thank You For Smoking, a film about a smooth-talking tobacco lobbyist: “That’s the beauty of argument. If you argue correctly, you’re never wrong.”

While the film is not specifically about the public relations industry, this line is extremely applicable. Clients are not always going to provide things that are immediately appealing to the public. If they did, they would not require public relations at all. However, every account you are assigned to will have something interesting to publicize – it is only a question of angling it in the right way, which is the job of everyone in public relations.

Be creative. Find the appealing angle.

5) Responsibility

This is the last item on our list, but it certainly isn’t the least. From having an astute eye for small details in the content your produce for clients, being quick to respond to client and media inquiries, having a fervor to learn new things to better serve your clients, to being able to promise clients results and actually deliver them, having a strong sense of responsibility is intrinsic in all aspects of public relations.