Smart measurement the key to riding out 2023 suggests PRCA study
This month’s PRCA ICCO Confidence Tracker showed a continual decline in confidence amongst global agency leaders. It’s not hard to see why.
Political volatility, war in Europe, and supply chain issues continue to cast a shadow over economic forecasts. In the UK, rising living costs are having a devastating impact on people’s lives and reliance on food banks is at an all-time high.
PR Fees are on the up
The cost of everything has gone up, and so too has the price of PR.
The Confidence Tracker research showed more than half (56%) of PR agencies are raising fees, with the majority hiking fees by up to 10%.
Fee increases are a natural response to the economic environment, but they don’t come without risk.
Every professional service raising fees in these conditions needs to be able to articulate its value with confidence and clarity.
Richard Bagnall, co-managing partner of CARMA, says: “In these stormy days of economic uncertainty and soaring inflation, PR budgets are under greater pressure than ever. Clients want to pay less, yet agency costs are rising.”
He adds: ”A healthy agency must increase its fees. But in return it has to show that it is generating value for the client, and not just tactical activity with no tangible benefit.”
So where do we go from here?
The solution, Richard argues, is to “improve the agency’s measurement and evaluation to move away from the counts and amounts of the vanity metrics.
“We need to demonstrate that PR and comms are critical components for delivering against client objectives”
In short, vague objectives and meaningless metrics will not cut it in 2023. Agencies and in-house teams should use AMEC’s Integrated Evaluation Framework to demonstrate the true impact of their work.
How would you like to pay for that?
It’s just not prices that are changing. The way communications professionals charge is evolving.
Less than a quarter (22%) of agencies now bill clients exclusively using a traditional hourly-rate model. A growing number (17%) charge fees according to organisational value or specific projects delivered. The majority (56%) use a combination of models.
But is the industry still behind the curve when it comes to billing? Hard Numbers managing director and co-founder, Darryl Sparey believes there’s a “huge opportunity” for agencies to reimagine how they charge, and adds: “Clients don’t care how long a result took to deliver, just that it was achieved.
“Agency staff don’t want to work for businesses that make them itemise every moment they spent doing something. Agency owners or finance teams don’t want to spend hours chasing up timesheets after month end.”
Darryl argues the prioritisation of time over value means PR agencies are selling themselves short: “All the time agencies persist in charging by the time it takes to do their work and removing the incentive to take advantage of the benefits of platforms and technology, we commoditise the work we do, and we displace value from creativity and investment in technology to activity. As a result, we move ourselves further down the pecking order of marketing disciplines that we’re competing with for budget.”
The rewards are there for those embracing progressive approaches measurement, evaluation and billing. Darryl points out: “if other agencies continue doing what they’re doing, and selling their services by the time it takes to deliver, rather than the value created, Hard Numbers only looks more differentiated in comparison.”
Prediction for 2023
Fee increases are welcome. PR has traditionally over serviced and undercharged. Having proven its value to business and society in the last two years, our industry has a prime opportunity to start charging what it’s worth.
The prevailing economic headwinds make it imperative for agencies to draw a direct correlation between their activity and their client’s business objective. The markets will prove uncompromising for those unwilling or incapable of demonstrating value in 2023.
Written by Koray Camgöz, director of communications and marketing at PRCA
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