Times are tough. Many clients are demanding more work for less (or the same amount) of money. PR is a creative industry, so tackling the financial side of the business can seem a chore rather than a pleasure.
Chris Klopper, CEO of agency Mulberry Marketing Communications, says that PR can struggle when it comes to balancing the books “Overall, I believe that the majority of agencies still find financial planning and management something of a dark science – look at the way that many in the sector still struggle hopelessly with something as simple as culling, or at least, reducing over-servicing.”
Klopper says that one of the fears of agencies is that by focusing on finances, this will somehow diminish creativity, but this isn’t the case: “A sound financial basis is actually the foundation for a successful creative agency future rather than being diametrically opposed to it.”
PR firms are improving. Lis Lewis-Jones, CEO of communications consultancy Liquid, says that one of the upsides of the recent downturn has been that agencies are becoming better at finances: “We now have to make budgets work harder and provide greater value for money. This has also led people to keep a cap on costs and reduce overheads. Monitoring cash-flow is always important and with banks lending less, even more so. A consultancy not on top of its finances will not survive.”
Despite pressure to reduce fees, Lewis-Jones says agencies shouldn’t be afraid to charge what they are worth: “Charging is all about supply and demand. As an agency you have to have an idea of what the market will pay for a service and as an industry we shouldn't be afraid to charge a fair and proper price. Many consultancies in certain areas, in the economic downturn have been reducing their prices considerably which not only hinders the industry, it also makes servicing such clients unviable.”
To justify fees, it is important to be clear on what you are charging for. Lewis-Jones offers guidelines: “In order to work out the right charging structure it's crucial for a consultancy to have a full and proper brief from a client or a prospective client. As an agency we need to understand the client’s budget, their requirements including end goals, and the clients need to share their business plans so that the consultancy has a full understanding in order to align PR goals to wider reaching organisational objectives. Subsequently, we can look at the best communications approach, how best to maximise the budget and the personnel, and level of experience within the team as well as skills set, to support the client. All this together then shapes the fee and the operational expenses.”
If you are fighting for a share of a marketing budget with agencies from other disciplines, there is no reason to cut fees to make PR seem good value. On the contrary, this will undermine the value of PR. Louise Lloyd, founder of agency Popcorn PR, justifies why PR should demand its fair share: “PR was often considered the poor relation when handing out marketing budgets, but has really moved up the agenda in recent times. As PR experts we can go to places where advertisers simply cannot and more importantly, we can go there quickly – stopping to re-evaluate and change direction if necessary. In these fast paced times, this is not to be underestimated.”
How can PR get fair payment for its services?
Julia Ruane, director of agency ChiCho Marketing:
“As companies are so focused on the ROI in these cash-strapped times, PR is seen as a cost rather than an investment. And there are plenty of other areas in the marketing mix that can prove why they deserve such high fees. Will this ever change? Not until we enter Minority Report territory and can measure how PR has changed people's intentions and actions.”
Samantha Howard, freelance communications consultant:
“Think carefully about pricing. It’s so tempting to come in really low, but what does it say about the value of your work? As scary as it is, put in the right price, that reflects the skill and effort involved to do a great job. OK so you may end up negotiating down, but no one ever gets to negotiate up.”
Written by Daney Parker