PR TECHNIQUE PERFORMANCE-BASED BILLING: Pay-as-you-place PR -Performance-based billing can be motivating for agencies and makeclients see their value for money. But, as Julia Hood reports, you needa good system

PR agencies that bill clients according to the number and quality

of media placements are fanatical about the system. The mantra of

success-billing loyalists is: 'measurable success rewards customer and

consultant.'



'It keeps everybody focused on goals and objectives,' says Chuck

Greener, senior partner at Porter Novelli. Greener consults with clients

who pay based on results. 'You are a true partner with the client.'



Graham Wilson, president of PRStreet, has been offering

performance-based rates for four years. 'It is a great way to get new

business,' he says. 'When I mention it to a potential client, their

eyebrows go up.'



But performance-related billing also has its critics. 'I don't believe

in it,' says Noemi Pollack, president and CEO of the Pollack PR

Marketing Group. 'It changes what our profession stands for. We become

bounty hunters rather than professional counselors.'



But Wilson says success billing helps win back clients who became

disenchanted with PR after paying agencies on retainer without seeing

the media placements they expected. 'It leaves the client feeling like

they are getting what they pay for,' he says. 'I am big on

accountability, and clients welcome that.'



Dick Grove, CEO of Ink, a virtual PR agency, defines its appeal even

more succinctly. 'Ultimately, top management wants one thing from their

PR firm,' he says. 'They want ink; they want publicity; they want to see

themselves in the media.'



Any PR agency or start-up firm implementing success billing needs to

develop a specific operating model to decrease risk and manage client

expectations. The first step is to determine how to calculate media

placement value. This can be tricky; not everyone will necessarily imbue

the same value on a particular media placement.



Some agencies create a media menu for clients, listing the cost of

placements according to varying tiers that might be determined by

circulation, ratings, media outlet prestige or advertising rates. The

problem with the approach is that publication or program desirability is

often subjective.



'A client might really want the Akron Beacon Journal, and that might be

worth more to them than The Wall Street Journal,' says John Hellerman,

EVP of Levick Strategic Communications, which specializes in PR for law

firms.



It is essential that the agency help the client identify which media

placements will best achieve the desired results. 'The first thing we do

is try to determine their objectives in terms of exposure,' says

Grove.



'Then we try and design a program that includes media targets that they

feel will help them achieve those kinds of results.'



PR firms must strike the delicate balance between building a profile of

the ideal media targets and ensuring the clients have a realistic

understanding of the challenges facing the agency in pitching the story.

'It's managing the client's expectations,' says Grove. 'Be straight and

truthful with the client and never, never over-promise.'



Securing high-profile coverage can be time-consuming. 'It can take

months to get them that placement,' says Wilson. 'Last year I had a

client on CBS Evening News, and it took six months to get that. Another

client was on Oprah, and that took almost a year.' The client must be

educated in the complexities of the process, he says. That will prevent

the company from growing impatient or, worse, defecting to a

retainer-based firm.



Protracted negotiations can be a hardship for the agency. A PR firm has

to be financially solvent to survive the lean times that will sometimes

come while waiting for a pitch to succeed. Some agencies, such as Ink

and PRStreet, choose to combine a retainer- and results-based fee

system.



The retainer, substantially lower than typical retainer fees, covers

time-intensive tasks, such as writing press releases, and more

difficult, defensive PR services, such as crisis communications. Bonuses

are paid for media placements.



Success includes unique complications. Since the client pays only when

media placement efforts succeed, the original billing discussion can be

easily forgotten. When media hits start rolling in, the total cost can

take the company by surprise.



'We are so successful that sometimes it gives the client 'sticker

shock,' because we get them more results than they imagined,' says

Wilson. 'We brace them and say, 'Look we are getting a great response,'

to soften the blow.'



Wilson recommends weekly e-mail or fax updates to keep clients

up-to-date on responses to pitches.



Wilson says clients will sometimes ask to change to a retainer system,

which is actually a credit to the agency's success.



Finding the right PR practitioners is crucial to the survival of a

success-based operation. 'You find out who is really good at media

relations and pulls their own weight, and who stinks up the place,' says

Steven Blinn, principal of Blinn PR. 'There are a lot of PR people out

there who don't like to pick up the phone and talk to reporters.'



Hellerman adds that a performance-based billing system also appeals to

employees.



'I think people have a tendency to feel like telemarketers, and that

creates burnout really quickly,' he says. 'Our people love coming to

work because they know that they are doing whatever it takes to see that

there is a return on the client's investment.'



TECHNIQUE TIPS



1. Do meet with clients at the start to determine primary goals



2. Do keep clients up-to-date on progress



3. Do be flexible. It might be best to combine retainer and success

billing for certain clients



1. Don't make unrealistic promises about the likelihood of media

placements



2. Don't hire people who are uncomfortable pitching to reporters



3. Don't assume the client's dream is to be in The Wall Street Journal.

Discuss priorities.



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