Is payment by results too much of a “scattergun” approach?

Even if we weren’t coming out of a recession, it makes business sense to get as much value from PR as possible. For many clients, payment by results (PBR) seems the most straightforward way to ensure that they only get what they pay for. However, many agencies point out that measurement of results is far from being an exact science.

Charging a monthly retainer may be the easiest approach, but is unpopular with many clients. Jamila Juma-Ware, PR manager at agency Chocolate PR, believes that some clients are wary of paying upfront for PR because of having been burnt in the past by expensive agency fees: “As brands and marketing managers are striving to make budgets go further and are reviewing their spend on PR, many are switching off for good having seen dire results and a much lighter bank balance thanks to unproductive PR retainers. This makes it harder for the rest of us who are actually willing and able to work for our money, to get a foot in the door to talk PR.”

Juma-Ware suggests that costs should be tailored to the activity involved, for example, depending on whether it is generating new business, or changing opinions. She explains: “Ongoing support paid for in the form of retainers often leads to budgets being spent without a great understanding of the results. A better approach is a rolling contract based on monthly activity plans, so a greater ROI can be achieved.”

Matching fees to planned activity may be fairer than a fixed fee, and it could arguably lead to more effective campaigns than a PBR approach. That is if you agree that PBR focuses on quantity rather than quality. Jo Jamieson, director at agency Berkeley PR says: "Agencies with this payment model are often so desperate to achieve results that they take a scattergun approach to media relations in an attempt to achieve as much coverage as possible. For me, I would prefer to achieve one piece of targeted coverage, which reaches the right audience, rather than dozens on possibly irrelevant sites.”

Jamieson also worries that PBR devalues the service and consultancy that PR agencies provide to their clients: “For example, an accountant wouldn't expect to be paid by a client only on the condition that it reduces its tax bill. PR works on the same principle as accountancy; we are charging for our time and expertise. We are providing a service.”

Those agencies that eschew PBR agree with Jamieson that it undermines PR as a profession. It is also unfair on the agency as it is inevitable that some types of PR work are not easily measured. Rassami Hok Ljungberg, director of PR agency rassami says: “PBR is not the best way to charge – as work will be done independently of the results.” Although Hok Ljungberg does think that PBR can work for some types of PR, as long as it is clear on what the definition of “successful results” are.

James Kelliher, managing director of PR agency Whiteoaks, believes that his agency has found a way to link PR charges with results. He explains: “Rather than charge by the results that we deliver retrospectively, we tell clients upfront exactly what the consultancy will deliver, the results that it will achieve, what it will cost and the real return on investment that they can expect to see, prior to the campaign start. At the end of the campaign, if we do not achieve the target and perception and/or behaviour change set out in our performance commitments and service level agreements, we will provide a fee rebate to the client.”

What the trade associations say:

Francis Ingham, PRCA director general::

“PBR sounds attractive, but just doesn't work. Until we have much more sophisticated evaluation techniques – and until everyone in the chain is willing to pay for them – it will always revert to the default option of measuring the thickness of the press clippings pack. The occasional consultancy might make it work for their clients, but they are very much the exception rather than the rule. PBR's time may come, but that time's quite a way off.”

Jay O’Connor, CIPR president

“There remain fundamental issues with the PBR approach: How do we define 'result'? Is it media coverage? Briefings with media, bloggers or analysts? Product reviews? Obviously it depends on the organisation's plan and there will be very different interpretations of what constitutes a result.”