Firms wait out retainer freeze from clients

With many clients asking agencies to go on hiatus in '09, experts now stress success through flexibility

A number of PR firms are reporting that clients are asking them to take a hiatus from full-time work as the country enters 2009 with a sense of trepidation.

The effect appears to be spread across verticals given the global impact of the financial slowdown that produced results like an expected 2-million-plus shedding of US jobs in 2008, and an 11-day work stop order in Japan at Toyota.

“You hear the same thing: ‘We still want you to be our agency of record. We don't want you to go anywhere. We just need you to hang on for a little while,” explains Aaron Kwittken, CEO and managing partner at Kwittken & Co. Two clients recently requested that the agency take a temporary hiatus from their retainer, he says.

In California, Morgan/Dorado Public Relations' founder and principal Josh Morgan says that within a six-week period, three clients put marketing programs on hold.

“It's been unprecedented, from what I've seen, that type of immediate reaction from so many people,” he adds.

Agencies are responding to the requests in different ways. New York-based Kwittken began handling project work for both clients during this time.

Susan Lindner, president of New York-based Lotus Public Relations, had three clients ask to go on hiatus, and came up with individual solutions for each. For a client backed by a venture capital firm, the agency ramped up efforts before the hiatus to ensure the client still saw coverage while work was halted.

“What we did to brace for that was help them through a big trade show, turn on the heat in terms of media relations, and look at getting placement in long-lead publications,” she says. “[That way], the PR... we were doing for them would last through the hiatus. We anticipate them coming back mid-Q1 because we maintained that relationship with them.”

Continuing into 2009 possessing client-relationship flexibility will need to remain a part of agencies' strategic planning, others says.

“We just need, overall as an industry, regardless of size, to be more flexible in the way we work with clients,” Kwittken adds. “You have to view it more as month-to-month, and look at everything in bite-size bits, not necessarily longstanding, long-term commitments.”

He also suggests, though, that agencies allow a company only 30 to 45 days of hiatus before discussing the topic of termination clauses.

“The economy outside is not something we can control, but the relationships we have with our clients and the services we offer, that is something we can control,” Lindner adds.

One way Morgan/Dorado has been building relationships is by offering a “quick-call retainer.” Originally meant to help start-up companies before they were ready for a full-time PR agency, the program allows companies to pay $750 per month for up to 10 hours of PR counsel.

“When clients come to you and they do ask [for a hiatus], that demonstrates that there is a level of trust and commitment to the relationship you formed,” says one PR professional who had a client put a hold on their contract. The client had recently suffered revenue problems and laid off a number of its staff.

The source, who declined to be named, adds, “When you have that kind of relationship, it makes these hiccups easier to get through.”

Several larger firms surveyed by PRWeek, including Ruder Finn and Euro RSCG Worldwide PR, said they had not received hiatus requests from clients – to date.

“Obviously, it's very early in the year, so a lot can change,” says Lisa Sepulveda, CEO of Euro RSCG Worldwide PR. “I've seen a little more caution with the yearlong budget, but I have not seen any cuts. Everybody is pushing for really smart thinking... 360-integration, so that you are really maximizing budgets.”

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