Despite a lot of talk about ’performance billing,’ it appears unlikely that PR firms will enter into agreements under which their fees are based on clients’ product sales.
Despite a lot of talk about ’performance billing,’ it appears
unlikely that PR firms will enter into agreements under which their fees
are based on clients’ product sales.
Procter & Gamble announced last September that it was going to require
all its advertising agencies worldwide to accept compensation based on
product sales. It was suggested that PR would be wrapped into this
The announcement earned headlines in the business press, unleashed a
chorus of praise by ad-agency executives and inspired a conference on
’alternative’ fee systems for PR firms.
Incidentally, our firm has drafted numerous contracts under which fees
were based on publicity secured. This can be called ’performance
billing,’ but should not be confused with compensation based on client
In fact, neither the conference nor a series of interviews with P&G and
past and present PR firm principals has identified any large firm that
has considered basing its compensation on a client’s revenue. The
problem is not that PR firms are unwilling to enter into such deals, but
that clients are not really prepared to do so. They may be thrilled by
the idea initially, but their enthusiasm fades when they contemplate the
Here are a few examples of the problems: is a sale counted when the
product is shipped to a wholesaler, when a consumer pays for it or when
its guarantee expires? Over what time period will sales be credited to
the PR firm? What if the manufacturer is unable to produce enough goods
to satisfy seasonal demand? And with integrated marketing does the PR
firm gain authority over advertising, direct mail and other marketing
The reason for client interest in PR-fee gimmicks often is not a desire
to save money, since PR fees usually are a tiny part of the client’s
Rather, the PR firm has failed to tie its PR program explicitly to the
client’s substantive goal, and the client is looking for a way to focus
the agency’s attention on that.
The problem is that PR pros often assume they understand the goal of the
client when they do not, and then become overly focused on the
communications process. The client, on the other hand, usually is
focused on the substantive goal and has only mild interest in the
process. PR people must learn to stop talking about their communications
expertise and dwell on the client’s concerns.
Especially when there is no PR person on the client side, constant
detailed repetition and restatement of the client’s substantive goal is
essential, however boring or even childish this may seem.
Lee Levitt is a management consultant to PR firms.