G8 Round table: Plotting the route to recovery

Six of PRWeek's own 'G8' group of agency leaders met up last month to discuss e-auctions, second-guessing nervous clients and hanging on to smart staff. Suzy Bashford listened in.

G8 Round table: Plotting the route to recovery
G8 Round table: Plotting the route to recovery

Like the political heavyweights of the G8 who strive to come up with some core recommendations for change, our own G8 group, formed last December, aims to provide leadership on the future direction of the PR agency sector.

So, against the background din of the election campaign, six of our G8 met for their own summit at PRWeek's offices. They thrashed out the challenges of running a PR agency in a (just) post-recessionary world, and came up with their own manifesto (see page 29).

Making the client's job easier

As the UK crawls out of recession, clients are still feeling very insecure. Consequently, many are risk-averse and nervous about making decisions. Euro RSCG Biss Lancaster chairman Graham Lancaster predicted: 'This risk-averse attitude is increasing and is going to hit PR far harder than other disciplines as we're particularly affected by risk. Clients now are more worried about making a mistake than they are about making the right call.'

So, what to do? Our G8ers said that really getting to grips with the client's motivations, ambitions and fears was paramount. As an ex-IBM client himself, APCO's UK MD and executive director EMEA, Edward Walsh, knows that often consultants are 'obsessed with interpreting the official brief, without necessarily seeking to gain a full appreciation of the type of pressures that the client, as an individual, is under'.

It may be that the client does not want an agency to come up with a groundbreaking, daring campaign that pushes his or her head above the parapet, but rather wants a simple, safe execution that simply keeps the business ticking along.

'The key to an agency's success is to understand how to make the client look good internally in front of his or her peers and line manager,' he said. Walsh does this by spending a great deal of time, for which he does not bill, building a rapport with clients and getting a clear understanding of the company's internal dynamics.

Sometimes a meeting with a client can turn into a session in which the PR professional is counselling the client on issues such as career moves or how to educate colleagues about the importance of PR. In a business environment where most advisers, from accountants to lawyers, are reluctant to ever express a clear opinion owing to red tape and the desire to cover their backs, PROs have a huge opportunity to take on the role of trusted confidante.

'Clients need advice. We should be brave enough to have opinions. Other advisers feel uncomfortable dealing with big reputational issues. They retreat to giving the client middle-of-the-road advice, or saying they can't help. This is exactly where we can help. Communications is our skills set; that puts PR centre stage,' said Mandate chief executive Sacha Deshmukh.

Putting our own house in order

As clients increasingly integrate their campaigns, the thorny issue of agencies' structure continues to rear its ugly head, with many realising their model must adapt for the digital era. Another spin-off of integration is that more and more big, global brands are handing their entire budget to an agency network as a lump sum. Whereas previously the client would have to deal with the ensuing bun fight for budget, now the network has full responsibility for carving the money up by discipline, leading to some interesting internal dynamics.

'We've shifted from negotiating with the client, to negotiating internally. It can be an easier negotiation if you're part of a network where there is a strong working relationship between the agencies. The other positive is that they have a better understanding of what we do.

So far, we've had more positive experiences than negative ones,' said MS&L CEO Kelly Walsh. The one issue, however, that is causing much tension is the question of which discipline should 'own' digital, with all agencies currently vying to grab this land.

A key factor hindering a PR agency's ability to maintain good client relationships, said our group, is the lack of talented account directors and associate directors. Both of these are linchpin, client-facing roles and if these contacts are constantly changing, it is detrimental to the relationship. One reason for the lack of talent at these levels is the mass exodus of women from the industry following childbirth, which MS&L's Walsh believed the industry must address: 'We have to be more flexible. There are too few women at the top. We need to do four-day weeks. More flexible working. More working from home.'

Another reason is that gifted PROs are specialising 'too early' in order to gain quick promotions. But by doing this they fail to see the bigger picture, get pigeonholed, then - frustrated - leave the industry. The G8 agreed that PROs today need to have specialist areas of interest but also good general knowledge. As Lancaster said: 'People should come into the industry because they are polymaths and incurably curious about the world. If they are not, they need to ask: is PR right for me?'

Sourcing opportunities

The recession has consolidated the role of procurement in client companies and agencies are still grappling with how best to deal with these process-driven, left-brained professionals. The G8 were unanimous in their view that agencies must brush up their negotiation skills and ensure a senior, experienced consultant negotiates with procurers, rather than a hapless account executive as is often the case.

Views were polarised on recent moves, such as making roster agencies pitch for every project regardless of value, and e-auctions. What the group agreed on, however, was that these changes are forcing agencies to be much more commercially savvy and thus know when to say no to a pitch or account.

'Boundaries have to be set around when an agency will and will not pitch. But it's hard to walk away. It takes a lot of courage. There are two phone calls that it's great to have in your career. The first is to be told that you've won the business. The second is to tell a client you're going to exit the business, or not going to pitch,' said Tonic Life CEO Scott Clark.

Agencies need to ask themselves whether the investment in time and resources to pitch for a piece of business is going to be worthwhile, or whether it is going to cut too deeply into their margins. The recession has only brought this more sharply into focus. As MS&L's Walsh observed: 'We're actually much more likely to walk away now because there's just no slack in the business.' Our experienced G8ers believed that one could sense whether a pitch was simply a 'beauty parade' with a foregone conclusion, but agencies' egos often persuade them to pitch, particularly when it is for a big blue chip brand.

The need to know your numbers is never greater than in an e-auction, but again ego can get in the way and there are stories of agencies taking on business that actually loses them money because they have recklessly put in bids that are too low. Deshmukh described a pitch by e-auction as a 'worthwhile experience that everyone should try once, like going to a casino and getting drunk, but we'd never do it again'.

Grayling CEO Loretta Tobin's retort, however, was that agencies are going to have to get used to them because they are here to stay, as procurement departments like them. For this reason, she advocated approaching them positively: 'They are more transparent and signal a move away from charging a day rate and pricing our businesses in a much smarter way, more like lawyers and management consultancies. They force you to have more rigour about your pricing. In my experience, which has broadly been more positive than negative, the business does not always go to the lowest bidder. In fact, it hardly ever does.'

Nevertheless, she advised that alarm bells should sound if the e-auction process starts out by asking questions purely about pricing. Well-run e-auctions assess and rank agencies on quality before the pricing competition starts, she believed.

What we can learn from other industries

While APCO's Walsh was working at IBM, it acquired PricewaterhouseCoopers and he saw first-hand the effect of an influx of management consultants on the business. 'They brought to the table process discipline and taught us to continually question whether we really added business value in line with company strategy. Clients want to understand how their agencies add value,' he said.

There is much to learn, too, from accountants and solicitors about engendering a billable hours culture. As Lancaster said: 'In PR we have time sheets, but we are far less focused on billable hours, client-facing time and knowing that this is how we are being valued and judged. We should embrace the focus on key performance indicators that procurement brings, as that is our best way of addressing the problem of over-servicing in our industry.'

THE SIX
Scott Clark, CEO, Tonic Life Communications
Sacha Deshmukh, Chief executive, Mandate Communications
Graham Lancaster, Chairman, Euro RSCG Biss Lancaster
Loretta Tobin, CEO for UK and Ireland, Grayling
Edward Walsh, UK managing director, executive director EMEA, APCO Worldwide
Kelly Walsh, CEO, MS&L

G8 members not present:

Colin Byrne, UK & Europe CEO, Weber Shandwick; Tim Allan, MD, Portland

THE PR WEEK G8 MANIFESTO

KELLY WALSH

PR is engaged in a Darwinian battle with other agency disciplines to own digital communications and our future survival depends on winning this battle. Clients are totally confused. They can't decide how to centralise digital ownership. We are best placed to take the lead but we have to show that our strategic advice sets us apart and not hide behind proprietary tools

SACHA DESHMUKH

We need to work hard as an industry to ensure there is a strong career path for graduates in our agencies so that top-class talent can rise up through our ranks. We need to get better at promoting ourselves as a good career to follow and highlight those PR consultants who have enjoyed successful careers agency-side. We are getting better but we are not there yet and significantly behind other professionals such as legal, accountancy and medical.

LORETTA TOBIN

Honesty and straight talking are essential for understanding clients and nailing their briefs. Often in PR we don't listen enough or ask difficult questions. We should strive to really understand the client's personal motivations and ambitions, as well as what the campaign has to deliver. But it's also important to set expectations at the outset and manage them. There are still too many agencies over-promising in order to secure budgets.

EDWARD WALSH

One of the most effective ways of understanding a company and its internal politics is to assign some of our PR consultants in-house for a time.

The caveat is that they might end up being poached, but this can often prove beneficial as well.

GRAHAM LANCASTER

Agencies need to ask what the client's internal KPIs are. Your ground-breaking go-for-gold solution could be too risky. I've gone in with too risky or ambitious recommendations, when the client may only have wanted to defend or maintain their market share. Very sophisticated clients often just want an excellent solution and not a grand insight. I'm not even sure we should be encouraging clients to be braver because that's not our role.

SCOTT CLARK

There's a mass fear of taking risks among clients at the moment. Agencies can help clients put risk into perspective. I did this recently by telling a client that the campaign amounted to less than half of one per cent of the PR budget. When I put it in that context, he started doing things. We also need to encourage a culture of learning, which means accepting learning often comes from mistakes. Unfortunately, it's more about covering backs today.

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