Pitch battles

Now that power is firmly in the hands of clients, PR agencies are having to jump through hoops to win business.

Now that power is firmly in the hands of clients, PR agencies are having to jump through hoops to win business.

Tom Larson has picked a PR agency twice in the past few years, but the experiences were very different. The first time, in 1998, he was working for a start-up while the tech boom was still on an upward trajectory. Choosing an agency then was a whirlwind affair. "I was a one-man operation in the US for a British company," recalls Larson of his time with Baltimore Technologies, a maker of internet security products and services. "We didn't have any marketing established at the company, and we hadn't gone public, so it was really starting from scratch. I had a tremendous sense of urgency." Larson relied on a referral from investment bankers for Text 100 International and didn't interview any other agencies. After only a couple of meetings, he hired the agency. "There was not a lot of due diligence," he admits. When earlier this year he went looking for a PR agency for his new company, Sagem Morpho (which makes technology devoted to identification of individuals using biological characteristics such as fingerprints), the search had a more formal feel. This time around, the VP of strategic development applied a more careful approach. "We did a scan of the whole [PR] industry, and I had a number of requirements to start off with," says Larson. He augmented his industry research with recommendations from trusted business acquaintances, and narrowed the search down to three companies who could meet his checklist of necessities. Each of that trio was then given three weeks to create a two-hour presentation - and come up with a price. "We gave a list of goals to the agencies, and told people that we would have a limited budget as we were starting out," explains Larson. The result? Once again, Text 100 won the account, beating out two big-name generalists. But this time, the agency worked much harder to land the deal. A buyer's market Despite identical results for Larson's two searches, the change in methods highlights an overall shift in the marketplace. Gone are the new-economy days of big budgets and fast decisions. In the boom bubble of the tech era, an agency could be hired after a single meeting. Money was no problem, and scoring press clippings in magazines like The Industry Standard and Red Herring was an end unto itself. Today's marketplace looks grandfatherly by comparison. Cash is tight, clients are demanding better measurements of success, and the pitching process can linger on for months. In short, it's a buyer's world when it comes to choosing an agency. "We've got pragmatism in the market today," says Text 100 CEO Aedhmar Hynes. "There is far greater competition now for every piece of business." But is all that power helping clients get better service for less money? Or are there dangers in being in the driver's seat? While most agencies optimistically tout that competition keeps their adrenaline going, clients are aware of the power shift in the industry, and are using that extra energy to make prospective agencies jump through hoops. Across the country and in every market sector, PR pros are grumbling about clients who interview dozens of agencies in drawn-out pitches before making a choice - which offers hazards for clients as well as those looking to service their accounts. Companies are even increasingly using RFPs - once the territory of government contracts - to get as many proposals as possible. "We've been in some amazing cattle calls, with sometimes as many as 10 agencies pitching over two days," laments Dan Durazo of Los Angeles-based Durazo Communications. But some PR professionals point out that more isn't always better. Like an episode of The Anna Nicole Smith Show, pitch marathons often become about spectacle over specifics, leaving clients stuck with partners who look praiseworthy only from a distance. "The problem with those big cattle calls is that style usually wins out over substance," says Durazo. "Agencies recognize that the flashiest presentations have the best chance of winning, so they go all out." In fact, too much interviewing can drive away good agencies that see the mass calls as fishing expeditions that sap their resources and offer little opportunity to highlight their nuts-and-bolts skills. "There are some people doing a dog-and-pony show because they don't know what they're looking for," says Harvey Englander, head of The MWW Group's Los Angeles office. He adds that he avoids RFP work in favor of networking for new clients. "It takes a lot of money and a lot of time - both in hard costs and soft costs - to do a good proposal, and sometimes you have to know when to say, 'You know, I don't think we'd be a good fit.'" Instead of interviewing en masse, most PR pros say clients would be better off doing a bit of legwork before starting the search to find agencies that generally fit their requirements, then give those firms the access and information needed to do an in-depth pitch. For Larson, that meant connecting his three potential agencies with marketing managers at his company, plus granting them access to the web site and creating a packet of information outlining Sagem Morpho's expectations. That enabled all three agencies to tailor their pitches to the exact needs of the company - and have a fair shot at the business - rather than try to razzle dazzle through a crowded field. Building long-term relationships The client-agency power shift doesn't end with the pitch process, though. Many firms are finding that even after being chosen, companies are loath to sign an agency of record without a trial relationship to start. "There is now a piece beyond the pitch," says Hynes. "It's almost added as another element." That was the case for New York-based Alan Taylor Communications when it began working with St. Louis-based Sara Lee Bakery Group. "When we were looking for a PR agency, we wanted someone who was more interested in becoming a partner with us and learning our business than just billing hours," explains Sara Lee's Steve Mura. Even though Mura felt Alan Taylor fit that bill, he started the firm out by having it work on a single project: a triathlon for kids. Only after that project was successful did Mura extend the relationship. "Over the last couple of years, as we've gotten used to their style and as they've gotten used to our expectations, we've used them more and more," says Mura. "PR is now a larger piece of our marketing mix because of their proven track record. It was just a one-project PR hit, but we've done basically everything under the sun with them now." While most agencies don't mind building up to long-term relationships, some clients are making it difficult to meet initial expectations by getting tougher on the bottom line. It's no secret that fees have dropped over the past few years. "A reasonable return in 2002 is less than a reasonable return in 1999," points out Englander. "I think all of our fees have gone down since then." But some clients are taking advantage of the current market to negotiate for rock-bottom discounts. "There is an expectation that you have to be competitive on the price," says Hynes, "and they expect more for that price." Like cattle calls, the practice of driving down billings comes with caveats. "Some of those budget battles are going to cheat the client ultimately," warns Bonnie Goodman, head of Hill & Knowlton's LA office. She adds that her company focuses on building partnerships over simply billing hours. "Our business isn't about couponing. It's about value. [Price cutting] is a bad downward spiral, and that's not the situation you want to be in." PR pros worry that cheap bills equal shoddy service. While senior executives may give a perfect pitch, it's unlikely that those experienced elder staffers will be doing the grunt work on a low-budget account. "We've got massive agencies going after five-, six-, seven-thousand-dollar-a-month accounts in Los Angeles," says Englander. "Clients love to have a big agency name for $7,500 a month. But are they really going to get the person who is pitching their business, or are they going to get a junior person working for them?" Despite warnings like Englander's, the fact remains that clients are in the power position when it comes to negotiations, and probably will be for some time. That doesn't mean agencies are powerless, though. As much as clients interview for a good fit and the best deal, smart PR firms do their own due diligence to find new accounts that can mature into old relationships, and shun the ones that are too opportunistic. "Clients really do worry about losing agency relationships once they have found a good one," says Gary Hughes, associate director of PR for MVP Healthcare, pointing out that the current equation isn't completely one-sided. So despite the nation's ongoing economic dip, forward-thinking companies and agencies are both looking for partnerships that fit the reality of the current downturn - but leave room to grow when the market recovers. ---------------- Pitching ordeals For an internet-services company in California, four of us arrived with a large projector and laptop, only to find that we're doing this with one guy in a small cubicle. Somehow, our presentation hits home, and he asks us to come back a week later and meet his boss. We arrive a week later, but when we ask for the PR manager, the receptionist nervously tells us, "Oh, he doesn't work here any more!" After some chatter, we find out that there's been a power play - he's out as of the day before. We start over with the new PR team members, and just talk our way through a new intro. Again, we manage to get invited back. One week later, we arrive at the appointed time, to find our new PR manager coming down in the elevator with a large cardboard box, accompanied by two security guards. She explains that she has been thrown out by the marketing director. Again, the intro dance, new players. We managed to keep the business for about six to eight more months. By the end, we had reported to five different execs. The last one decided to hire in, instead. -Joe Riser, APR, Los Angeles We once made a pitch to a new marketing director who showed up for our presentation with a killer hangover from the previous night. He fell asleep 15 minutes into the meeting. Needless to say, we did not get his business! -Jennifer Gross, Skutski & Oltmanns, Pittsburgh We made the first two selection cuts with the local management of a large national company. The next step was to talk to the rather eccentric company president. After cold introductions, he and I sat next to each other on the same side of the conference table, literally knees to knees. His opening line was, "What're you going to do for us?" For the next 60 minutes, I pitched my brains out. He never smiled. He never blinked. He never breathed. He never nodded. He never asked a question, "hmmmed," or yawned. He didn't even grimace at my bad jokes. When he had apparently heard enough, he stood up and walked out. And we got the business. -David Shank, Shank Public Relations Counselors, Indianapolis

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