Pay-For-Performance Agencies Give You More Bang for yourBuck

Companieswanting to make the most of their PR budgets these days are discovering one ofthe industry's best kept secrets that is effective, mitigates risk and beatsthe traditional retainer-based agency in every way.

It?scalled Pay-For-Performance PR.  There areonly a handful of agencies that operate on this fee basis amongst the tens ofthousands of PR firms throughout the entire U.S.  Most of them offer the same service, if notbetter, than the big retainer-based agencies, but at a fraction of thecost.  They're driven to perform becausethey only get paid for what they deliver while retainer-based agencies chargefor their time and their overhead, but are not accountable for results. If theyget media placements, that's great, but if they don't, you're still leftholding the tab.

Here?show it works.  When a company engages aretainer-based agency, they are charged a flat monthly fee based on the numberof hours they estimate they need to work in order to get the job done. $10,000a month is an average fee, but it can go as high as $20,000 or even $30,000 amonth. 

Oncethe retainer is established, the money is divvied up amongst the team in billablehours, much the same way a law firm or accounting firm handles its business.The executive who brought in the business bills for ?managing? the account,which is usually about 10 hours per month, costing the client as much as $350per hour, or $3,500 of a $10,000 retainer. The executive sets assignments,approves press releases and written materials as well as handles communicationwith the client but never pitches the press. In these large retainer based agencies, the executives are used as salespeople and compensated for the amount of business they generate for thecompany.  But, unbeknownst to the client,that executive who closed the deal is the person with the most PR experience,yet does the least amount of work on their campaign.

Therest of the retainer is split up among a few junior associates who do thewriting, the pitching, the calling and the tracking. The staff assistants getinto the action by billing $75 per hour for activities such as phoning, faxingand organizing documents. They may even charge to create the client's bill atthe end of the month, compiling out of pocket expenses like shipping togetherwith the hourly billing as tracked by the team members. The top executivemassages the numbers so they fit the retainer, and it then takes the assistantas long as two hours to compile the bill. A retainer-based agency may charge clients as much as $125 per monthjust to assemble their bill.

Thisis a huge difference with how Pay-for-performance PR works.  Most firms that operate in this manner set asimple fee for each media placement the firm obtains and the client signs upfor a campaign with a specific budget in place. Then, one by one, the placements are made, confirmed and executed and theclient is billed weekly or monthly against their agreed-upon budget. Thecampaign never goes over budget, and every client dollar is counted against areal media placement rather than for ?best efforts.?

Asmarketing budgets are shrinking, companies are pinching pennies and seeking amore quantifiable return on their PR investment.  Pay-for-Performance PR not only reduces riskand costs the client less, but more importantly, these firms bring home the PRbacon for clients, or they don't get paid.