A New World for group Relations: Are Retainers On the Way Out?

Employment - A New World for group Relations: Are Retainers On the Way Out?

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In a world of economic uncertainty and shrinking budgets, collective relations (Pr) firms and internal Pr departments are being required to demonstrate and prove the value of Pr investments. The way Pr effectiveness is measured in a retainer association is murky at best. It can be inadequate, misguided or ineffective and does not hold the agency accountable. The traditional retainer-based collective relations model is being called into quiz, more and more. It has often leads to dishonesty, unethical behavior and over charges. This is not the case with every firm, but new events in the media furnish evidence that some collective relations agencies have been caught with less than ethical conduct. So what is causing this?

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Employment

Supporting Cases

Why do some agency executives think it is legal to forecast a client's billings and then secretly adjust those bills upward to meet the forecast when less work was performed than predicted? Two new cases dramatically demonstrate the problems potential in a retainer model. The city of Los Angeles and the White House both took issue with over billing problems with their Pr agency. In both cases, the respective individuals were indicted for their part in fraudulent bills leading to over-billing the clients for media campaigns. These cases furnish evidence of what could happen as the supervene of poor tracking and a lack of potential to show documentation supporting the billing figures. So why do it this way?

Public relations have evolved from a discretionary part of the marketing mix to a primary component of most company communications programs. This evolution has been driven by any factors, together with the concept that Pr is an efficient complement to advertising, direct marketing and other marketing tactics. The cost model is shifting to meet changing market expectations, which is giving hope to clubs that want to hire an agency and a company model that is fair. This is evidenced by the performance-based model that is common in other areas of company today. Consumers pay per hour for the use of computing time, virtual office space is now ready on a pay-per-use model, and many people's compensation is based on performance. So why not use this model for the collective relations industry?

Accountability is the key issue facing the collective relations manufactures today. Estimation of collective relations value has never been more important. For collective relations departments, the potential to prove value and return on Pr speculation may be the difference in the middle of getting budget approval or not. For agencies, the potential to attract, support and grow clients may depend on the potential to prove the value of their work. The challenge and opening exists to evolve beyond the traditional retainer based model to a new model that offers accountability and results.

Who Pays For Non-Performance?

Traditional collective relations agencies have historically relied on a 'leap of faith' somewhere along the way to prove the worth of their efforts. In the retainer model, the agency is paid either results were produced or not. This cost structure leaves the client company to bear the burden of non-performance. Furthermore, the model lends itself to errors, inconsistencies and the temptation to milk an list for every billable hour. For example, some agencies will bill you a full hour for 15 minutes of work, similar to the mobile phone services where they bill a client a full little for a 15 second call. In addition, administration often places undue pressure on agency staffers to say a very aggressive level of billable hours. This type of convention opens up the risk for fraud and errors, and ultimately over-billing.

A performance-based pay structure is seen in many industries and individuals compensation packages. For example, only about 20 percent of a Ceo's pay is base wage the rest is made up of incentives based on the company's performance. The rationale is that if the company is performing well and the shareholders are production money, then the Ceo should share in that success. In the same spirit, with the pay-for-performance Pr model, the agency is paid for results, not activity.

Case in Point

When CenterStone Technologies, a Denver based software firm, wanted to commence their new sales order administration application, they knew exactly what they wanted from a collective relations agency - national trade media exposure. But Pr firms only quoted monthly retainer fees of up to ,000 for a broad package of services -- and none would guarantee results. That's when Peter O'Neil, administrative vice president of sales and marketing found Matrix Marketing Group. "Matrix Marketing Group's Pay-for-Performance program is a great tool for us right now. Their unbundled services offer us more flexibility and furnish us the very excellent expertise we are seeing for, said O'Neil. Plus, we are a results-oriented company and with this program we only pay when Matrix Marketing Group delivers results."

Is There another Way?

Buyers want to pay for only what they want and need and nothing more. It's a "have it your way" society. Google and Yahoo's Overture changed the Internet advertising model with unbundled, results-based pricing, called pay-per-click advertising. Now it's spicy into the Pr industry. The pay-for-performance collective relations programs offer clubs a much best way to quantify and demonstrate the outcomes of their Pr speculation because they only pay for the results.

The pay-for-performance model is worth specific consideration. Clients only pay for the results after they are achieved. The retainer-based and pay-for-performance models are on opposite end of the spectrum. While there is room for a hybrid model that offers both fixed-fee and performance-based fees, Pr professionals not already comfortable with the concept of a performance-based model should get comfortable soon.

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