Why Pay-for-Performance PR Agencies Can Hurt PR

Recently a marketing executive from Israel posted the following update on the “Technology PR, AR and Social Media” group on LinkedIn.  Question: Looking to hire a PR firm in the U.S. but not able to go crazy with retainers. Does anyone have good experience with working on a pay-per-performance model with a PR firm?

The request garnered only three public responses from the group’s membership of more than 800 public relations professionals.  You can interpret whatever you’d like from the dearth of responses.  Whatever the reasons may be, there are still hundreds (perhaps thousands) of U.S.-based PR agencies that bill themselves as “pay-for-performance” firms.  Essentially, this means that they measure success, and how much they should be paid, on their ability to generate media coverage for clients.

Pay for placement agencies charge clients only for articles that actually make it into print,” says Alexander Konanykhin, president of Publicity Guaranteed, a pay-for-performance PR firm.

A competitor, INK inc PR, says on its website:  “Our job is to get you positive media coverage in the outlets that help you the most. When we get you lots of great media coverage, you pay more. When we don’t, you pay less. … You pay for results.  No tricks. No gimmicks. Just real accountability for real results.

The pay-for-performance PR agency model works for some. But the vast majority of agencies work on a fee-for-service, or hourly billing basis, based on approved annual or semi-annual programs — much like lawyers, accountants and other service professionals do. With this approach, clients pay for actual time spent on their accounts and allows the agency and client to easily track billing against activities.  Typically, account team members are held accountable for the time they bill against the PR program and are measured against their performance.

My recollection is that many pay-for-performance agencies launched en masse in the aftermath of the dot.com bubble and subsequent tech meltdown of 2000-2001.  New agencies were formed from the ashes of big agency layoffs. The pay-for-performance business model was viewed as a means to differentiate in an era when marketing and PR budgets were getting hammered.

The problem with the model, from my perspective, is that it serves to further commoditize our profession and shift our reputation to that of tacticians vs. strategic, hands-on communications counselors.

I’m always a little leery of customers who are singularly focused on media coverage.  I remember a client from the not-too-distant past who’s bonus was based on the agency’s ability to generate national business coverage on a quarterly basis. Nothing else mattered to our daily client contact.  National media coverage put money in his pocket in some fiscal quarters, and not so much in some other periods of the year.  His compensation model made for a few interesting weekly update calls.

While media coverage and media relations certainly play a significant role in most communications campaigns, they are still only pieces of what agencies should be providing for clients.  And it’s a complete misnomer that a fee-for-service agency/client relationship means that clients are primarily paying for effort, are chained to boated budgets and account teams who lack accountability.

I wouldn’t want to work with or for an agency like that either.

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