This is the first in a series of articles on best practice which
will appear on the pages of PR Week in the coming months. These
guidelines have been created as part of PR Week’s Best Practice campaign
that was launched in June with the support of the CBI’s Fit for the
Future initiative and the DTI. A compendium of all the coming best
practice guidelines will be published in January, 2001.
The intention is to provide illuminating advice on the management of
different facets of communications. In this first instance, the subject
is: what constitutes best practice in the area of client-agency
relationships?
The guidelines, which have been sponsored by Mediadisk, appear on the
following pages. They are, of course, useful in themselves. But the
process by which they came to be formulated is a fascinating one. At its
heart was an impassioned debate which involved some of the PR industry’s
leading lights with additional help from the marketing profession.
In trying to devise any set of guidelines that seek to espouse best
practice, credibility is key and the fact that the CBI and the DTI
support the points set out on these pages means a great deal in terms of
raising the campaign’s profile. Yet the acid test of whether best
practice recommendations have worth is whether they are considered
realistic and desirable by practitioners.
With this in mind, PR Week cast itself as a catalyst, seeking to trigger
and facilitate debate. The hard work was done by senior figures from
agencies and in-house teams who selflessly brought their expertise to
bear.
An initial meeting led to a first draft that was considered flawed, but
which raised some issues of crucial importance to maximising the
potential of client-agency relationships. Commitment and attention to
detail at a second meeting, followed by some further tweaking of the
revised text, saw the guidelines knocked into shape.
At first, the intention had been to draw up separate sets of guidelines
for clients and agencies. But once these appeared in black and white a
consensus developed that this was the wrong way to go about it. In
Ketchum chief executive James Maxwell’s words: it would be preferable to
offer a ’partnership tool’ that emphasised the high level of
co-operation necessary to get the best out of a relationship. This, the
practitioners felt, should be called the Partnership Charter.
But let’s begin at the beginning. Discussions kicked off by trying to
define what lies at the core of a fruitful client-agency
relationship.
PRCA chairman Adrian Wheeler spoke of ’the golden triangle,’ a phrase
used by his consultancy, GCI, to describe happiness at all points of a
client-agency relationship.
Obviously client-agency partnerships have less of an opportunity to
blossom if they start off on the wrong foot. Therefore it was necessary
to look at the pre-appointment stage of the relationship as well as all
that follows.
One bugbear shared by many was the trend of clients asking for full
competitive pitches from too many agencies. Shandwick Europe chief
executive Michael Murphy said: ’It’s sensible that we as an industry
should be more high-profile at getting clients to ask three firms to
pitch instead of six or seven.’
Everyone agreed that so-called ’chemistry meetings’ between client and
agency were a useful way of narrowing down pitch lists. It was less easy
to reach agreement on the matter of clients paying agencies a
contribution towards their pitching costs.
’I can live with a contribution to costs,’ said PricewaterhouseCoopers
director of marketing and communications, Roger White. Central Office of
Information business effectiveness manager Pat Johnstone added: ’A lot
of public sector organisations have no idea how much it costs an agency
to put forward a pitch.’ In the end, the formula settled upon for the
guidelines was that clients should be prepared to pay a reasonable
contribution towards the cost of a pitch that involved substantial
creative and strategic work by the agencies.
Another thorny issue at the appointment stage was payment to
unsuccessful agencies for use of their ideas by a client. Ketchum
director Richard Houghton cited a client company in the automotive
sector that had paid his agency pounds 10,000 for an idea that it wished
to use, despite preferring not to appoint the agency that came up with
it.
This is the kind of responsible client behaviour that typifies best
practice.
Essentially, the intellectual property of creative ideas presented in a
pitch belongs to the agency, until or unless it is hired. Should a
client wish to use an idea offered by an agency but opt not to hire that
agency, discussions should be held to agree a figure that compensates
the agency appropriately for its idea.
No one was in any doubt that a comprehensive brief with clearly stated
objectives and anticipated outcomes was the foundation on which a
successful partnership could be built. The more time and information a
client is prepared to put into the brief, the more productive, creative
and to the point the agency response will be. Moreover, for really
worthwhile results, agencies should be given at least two weeks to
respond to a brief.
The need for a good brief becomes even more important once an agency has
been retained. As Johnstone said: ’Accountability is down to how you
deliver your brief.’
This means that measurable objectives must be set at the outset - as an
inseparable part of the PR campaign planning process - so that the
effectiveness of programmes can be accurately evaluated. Clearly,
provision for research and evaluation within budgets will vary,
dependent upon the size and nature of a particular programme. However,
the sentiment among practitioners was that 10 per cent of budget - as
campaigned for by PR Week’s Proof initiative - was a reasonable figure.
Returning to the issue of charging, there was agreement that any success
fees should be tied in to agencies achieving specific, measurable
objectives. In order for this to work there needs to be utter clarity
from the client as to what constitutes the criteria for success.
BT manager of marketing services purchasing, Steve Sargent, argued that
there was no point trying to reinvent the wheel and that the guidelines
should recommend the use of the Public Relations Research and Evaluation
Toolkit as a means of achieving best practice when measuring PR
effectiveness.
Sargent also argued that clients should bring some of the rigour they
used in purchasing other marketing services into hiring and managing PR
agencies.
The contract between client and agency underpins their partnership. If
there is a delay in getting it signed this can cause all sorts of
problems.
Shandwick Welbeck managing director Claire Davidson said: ’If you want
to manage your client relationship you need some form of contract,
promptly signed.’
The tricky matter of potential conflicts of interest came under
discussion too. This was resolved fairly quickly, with all practitioners
present happy that ’conflict should be defined by the client at the
credentials stage’.
In order to keep a strong grip on their reputation, client companies
need to foster the commitment of their senior management to PR. If
senior staff at the client company make themselves available to the
agency team this greatly helps them understand the corporate culture and
decision-making process. Again, this is one of the cornerstones of a
proper partnership.
Extending the concept of partnership further still, it was felt that one
point in the guidelines should encourage regular joint briefings that
bring the PR agency together with other marketing services agencies -
advertising, direct marketing, sales promotion, media specialists etc -
working on the client’s business.
When the issue of price transparency was raised, the animated reactions
of everyone at the table made it immediately clear that this was one
issue that would need to be tackled. It was soon evident that it might
not be all that straightforward to formulate into best practice.
While there was agreement that charging transparency was a good thing,
some practitioners were keen to ensure that this would not be distilled
down into advice that prescribed only hourly charge-out rates. The
focus, it was felt, should be more on quality of output, with success
fees to be encouraged where appropriate as a means of incentivising an
agency and helping the client meet its objectives.
Not surprisingly, Chime Communications chairman Tim Bell was trenchant
on this point, arguing that while hourly rates might be a sensible tool
for managing a PR business they were not always a good basis for
charging clients. He said: ’Hourly rates assume that if somebody is
younger, or less senior, what they do is worth less. That’s part of the
reason why this whole industry is so undervalued and underpaid. What we
should be selling clients is the quality of work we do and we should be
paid for the quality of the results - naturally with some basic
retainer, otherwise we all go out of business.’
H&K chairman David McLaren put it another way: ’Agencies should
constantly remember that time does not necessarily equal value.’
In a related issue, there was also concern that client expectations were
being distorted by agencies ’over-servicing’ accounts. Houghton said:
’Let’s be honest about it, over-servicing means giving your expertise
away for free.’ A situation which in the eyes of the client clearly
devalues the quality of advice on offer - in that, if a consultancy
prizes its time and skills so lightly that it occasionally gives them
gratis, the seeds of doubt will be sown as to what they are really
worth.
It was agreed that the guidelines ought to spell out the fact that
retained agencies should not offer clients their time or expertise for
free. Should an agreed budget have been exhausted, or a client ask its
agency to undertake activity not foreseen when the budget was discussed,
extra and appropriate payment should be agreed to cover the time and
expertise required. The phrase over-servicing does not appear in the
guidelines because as a euphemism for free advice it was deemed to have
no purpose. Ideally it should be struck from PR practitioners’
vocabulary.
Although all responsible clients will try to keep their agency costs
under control, PricewaterhouseCoopers marketing and communications
director Roger White conceded there should be a recognition that ’an
agency has an expectation to make a reasonable margin.’ There was a
brief discussion as to whether the size of a ’reasonable’ margin should
be defined in the guidelines - with figures of 15-20 per cent bandied
about - but the majority view was that putting figures in would only
cloud the issue as there is no such thing as a standard profit margin
that would fit agencies of different sizes and varying ownership
structures.
In addition to outlining best practice, McLaren suggested that a list of
10 things that could ruin a client-agency relationship might also be
useful. Other practitioners were supportive of this view and so our
guidelines come appended with 10 examples of worst practice.
McLaren was particularly aggrieved about client poaching of agency
personnel which he feared was ’increasing exponentially’, especially
within the dot.com sector. Other definite no-nos included difficulty in
contacting the right person, high staff turnover, late payment and
allocating account teams that bear little or no resemblance to the team
that pitched for the client’s business.
Overall, there was plenty of soul-searching as to how to make the
guidelines useful to as wide an audience as possible. The hope is that
they have indeed met this objective, but everyone was aware that
comprehensive though the end result is, it is not a panacea.
’You can only create best practice from the biggest examples,’ said
Bell.
’You’ll never write a set of guidelines that applies to every
situation.’
The massive disparity in the size, nature and business sectors of both
client companies and PR consultancies made getting the right tone for
the guidelines one of the most difficult tasks. Disparity also made it
hard to gauge what to include and what to omit.
What market leaders do as a matter of course may not be the case with
smaller players. The desire was to avoid sounding patronising but at the
same time ensure that nothing was left out that might be helpful in
improving a client-agency relationship somewhere.
It may be that a few points appear trite and obvious to the more
sophisticated operators in the business. But as Bell said while
considering this problem, we have to ask ourselves why they need saying.
The answer to this question is simple: they are not universally carried
out. Were they to be, there would be many healthier relationships than
there are today.
Best practice cannot be foisted on an industry. Fortunately, every
indication is that it will be welcomed with open arms because it is of
benefit to both clients and agencies.
There will always be relationships that fail but it is the hope of those
practitioners who drafted these guidelines that fewer client-agency
partnerships will come unstuck because of deficiencies in working
practices that could easily have been resolved. It all boils down to
realistic expectations, achievable goals, prudent relationship
management and delivering results.
The next set of Best Practice guidelines on the use of new media will be
published on 4 February. Further details of the Best Practice campaign
can be found at www.prweekuk.com and comments can be e-mailed to
best.practice@haynet.com.
AVOID AT ALL COSTS
10 Things That Can Ruin A Relationship
1 Poaching staff.
2 Failure to achieve agreed objectives.
3 Dishonesty and evasion.
4 Difficulty contacting the right person.
5 High staff turnover.
6 Repeatedly ignoring advice given.
7 Late payment of fees/reimbursement of expenses.
8 Lack of transparency on charges.
9 Irrational changing of objectives.
10 Account team bearing little or no resemblance to the team that
pitched for the client’s business.
THE PARTNERSHIP CHARTER - PITCHING
Prior to appointment
- Clients should ask agencies for their credentials: published
information that they supply to new business prospects. Often this
extends to a no-cost presentation of the agency’s capabilities.
- Put a low limit on the number of agencies invited to make formal
presentations.
Ideally, no more than three or four agencies should take part in a
competitive pitch. However, beginning with a long credentials list is
eminently sensible.
- So-called ’chemistry meetings’ are a useful means for clients to
narrow down their pitch lists. Informal get-togethers between client and
agency staff are a good way of working out whether people and business
cultures are compatible.
- There should be a comprehensive brief with clearly stated measurable
objectives and anticipated outcomes.
- The more guidance and information a client is prepared to put into the
brief, the more productive, creative and to the point the agency
response will be.
- Give agencies at least two weeks to respond to a brief.
- A good brief should include the following: a history of the
organisation including its goals, structure, strategy, culture and key
people; the size and nature of the market it operates in and the
standing of the organisation within that market; identification of
competitors and strengths and weaknesses in relation to them; problem
areas or markets; other issues of concern; and identification of
communication target audiences.
- Clients should make relevant research available to agencies at pitch
stage.
- Pitches should never be held if a client does not have a budget
allocated for a PR programme.
- Where substantial strategic and creative work is required for a pitch,
clients should be prepared to pay a reasonable contribution to costs to
the unsuccessful agencies. Such contributions should not be viewed as a
way of reducing agency risk but rather as a means of fostering better
quality ideas and programmes.
Creative Copyright
- The intellectual property of creative ideas presented in a pitch
belongs to the agency, until or unless it is hired. Should a client wish
to use an idea offered by an agency but opt not to hire that agency, the
agency should enter into discussions to secure appropriate recompense
for the use of its intellectual property.
THE PARTNERSHIP CHARTER - BUDGETS AND EFFICIENCY
Budgets and Charging
- Budgets should include provision for research and evaluation. PR
Week’s Proof initiative suggests 10 per cent of budget as a guide.
- If the agreed budget has been exhausted, or if the client wants the
agency to undertake activity not foreseen when the budget was discussed,
extra and appropriate payment should be agreed.
- There should be total transparency in agency charging to avoid giving
the client any nasty surprises.
- Fees should be submitted monthly or quarterly in advance, except for
public sector clients where payment in arrears is the norm.
- Any success fees should be tied in to specific, measurable
objectives.
- Expenses for work on client programmes should be charged monthly in
arrears, against agreed budgets.
- All handling charges (mark-up) should be made crystal clear.
Efficiency and Effectiveness
- Measurable objectives need to be set so that the effectiveness of
programmes can be evaluated. Research and evaluation should not be a
retrospective justification for PR. Research and evaluation should be an
inseparable part of the PR campaign planning process.
- Not everything can or should be measured. If a PR programme has
wrought change it is important to know why things have changed and to
what extent rather than merely that change has occurred.
- Use the Public Relations Research and Evaluation Toolkit, as developed
by the IPR and PRCA.
- Regular reviews should be held at which agency and client review
objectives and if necessary reset benchmarks for evaluation. Objectives
should be flexible enough to adapt to changing circumstances.
- Progress reviews should be part of a system for continuous management
of PR programmes which allows clients to keep track of activity
undertaken in their name, results achieved and budget status.
- If the communications remit is extended (to cover new products, brands
or different forms of PR) agencies should ensure they are thoroughly
briefed on their enhanced role by the client, that a sufficient budget
is allocated for these new responsibilities and that all changes are
agreed in writing.
- Senior staff at the client company should make themselves available to
the agency. This helps agencies understand the corporate culture and
decision-making process.
- Ideally the business relationship will be more akin to a partnership
than a client-supplier situation. But remember, some clients choose to
work more closely with their agencies than others. Some want strategic
advice, others just implementation.
- All PR activity should be planned and managed carefully, but clients
must be prepared to act quickly if their agency advises it is in their
interest to do so.
- Clear guidelines must be agreed as to which persons at the client
company are authorised to act as spokespersons. It must also be made
clear which person or persons has/have the authority to sign-off written
and other materials presented by the agency for use in PR activity.
- The limits to an agency’s authority on a given brief should be made
clear so that its staff know the situations in which they need to get
client clearance.
- Regular joint briefings that bring the PR agency together with other
marketing services agencies (advertising, direct marketing, sales
promotion, media specialists, new media hotshops etc) offer a useful way
in which to share ideas and may assist in fine-tuning PR and broader
marketing/communications strategy.
THE PARTNERSHIP CHARTER - THE BASIC REQUIREMENTS
Ethical Behaviour
- Agencies must inform a client before accepting an assignment from any
other client organisation whose business or products are in direct
competition with those of the client. Conflict should be defined by the
client at the credentials stage.
- There is a duty not to disclose without a client’s permission any
confidential information supplied to them by the client, including
studies or surveys commissioned and paid for by the client. This
obligation applies both during and after an agency’s term of
appointment.
- Clients should not subject retained agencies to competitive review
merely for the sake of it. If there is a problem with the relationship
or new thinking is required, these issues should be discussed.
- Payment of fees and expenses should be within 30 days of receipt of
invoice.
Contracts
- It is impossible to manage a client-agency relationship properly
without having a signed contract in place.
- The date at which a contract commences should be made clear.
- In the case of clients that use agencies on other than the specified
brands, products or services, or for a different PR remit, the contract
should establish the sole appointment of the new agency for its
designated tasks. Clients should be willing to agree not to use another
agency to carry out services that an agency has been contracted to
undertake.
- The contract should be drafted in such a way that it allows either
party to terminate it ’without prejudice’ if either side breaks any
important agreements set out in the contract or if one party goes into
liquidation or receivership.
- If a client-agency retained relationship is to be terminated, at least
three months’ notice should be given in writing, or three months’
payment given in lieu of notice.
- Before terminating a contract due to breach of agreement, constructive
discussion should take place with a view to resolving the situation.
Fourteen days is considered a reasonable amount of time for such
discussion.
- Agencies should be free to use any general marketing or market
intelligence gained during the course of their appointment for planning
and implementing campaigns, as long as the client does not object.
THE PARTNERSHIP CHARTER - AGENCY GUIDELINES
Points Specific To Agencies
- Cost communications programmes properly, including the profit margin
you wish to make. This then becomes the basis for sensible discussion
about budget.
- The amount of time that staff spend on an account should be monitored
closely to ensure that it does not become an unprofitable piece of
business.
If payment proves to be insufficient for the job in hand, try to
re-negotiate the budget to a more appropriate level with the client.
- Hourly staff charge-out rates are very useful for internal business
management purposes. However, agencies should also build into their
charging structures costs for factors such as 24-hour availability,
market expertise and, where appropriate, success bonuses. Agencies are
not just selling time, they are selling their ability to deliver
results, which should be an important factor when costing
programmes.
- Manage expectations by constructively challenging what clients say
they want from a relationship to make sure that in the end they really
do get what they want.
THE PARTNERSHIP CHARTER - CLIENT GUIDELINES
Points Specific To Clients
- Before approaching agencies, clarify for yourself why you believe you
require agency support.
- Establish expectations from the outset by being clear on what is
wanted from the relationship.
- Look hard for areas open to misinterpretation in a brief. Try to make
sure all pitching agencies understand the brief fully.
- All necessary internal approvals should have been secured prior to
releasing a brief to agencies.
- Should a client have trouble formulating a written brief on its own
for a specific programme it should ask for input from its agency,
although it should never hand over full responsibility for a brief. Once
a satisfactory brief has been written, the client should sign it
off.
- Strategic programmes cannot be developed overnight. Err on the side of
briefing agencies too soon, rather than too late. Last minute briefings
can mean lost opportunities.
- Try to supply PR agencies with as much information as they need. In
order to give the best advice, agencies need to have the full
picture.
Access to the ’information loop’ of top management and knowledge of any
proposed important business changes will enable all PR implications to
be fully explored by an agency.
- Recognise that agencies are entitled to make healthy profit
margins.
- Encourage agencies to advise candidly, without fear of penalty, even
where the advice they give is not to the liking of the client’s
management.
- Be prepared to pay a premium for genuinely superb creative ideas that
exceed expectations.
- Unless you are willing to recompense agencies for any expenses
immediately, you should be prepared to pay handling charges to cover the
cost to agencies of managing cash-flow on your business or purchasing
goods and services on your behalf.
