Nightmare clients: If a PR firm drops them, the loss may affect its top and bottom line. But retain them, and an agency’s own reputation may be forever tarnished.
This was the dilemma Olson Engage faced last week when it became public that Papa John’s founder John Schnatter used the n-word on a conference call. Olson Engage quickly decided to end its PR AOR relationship with the pizza chain.
PRWeek readers overwhelmingly agreed with Olson Engage’s move to resign the Papa John's account. In response to a poll PRWeek published last Friday, 228 people said Olson Engage's decision proved it cares more about values than money, while 104 people said the firm missed an opportunity to provide counsel and help the pizza brand through this matter.
Is it ever worth it for a PR firm to stand by a problematic client through a reputational crisis? PRWeek asked experts on LinkedIn.
A major con of holding on to a client considered "toxic" by an agency’s workforce is that it will hurt the firm’s ability to hire quality staffers, says Proof Analytics founder and CEO Mark Stouse.
"Given the top- and bottom-line stagnation we’re seeing in many agencies, you might expect that an agency would hold on to revenue with everything in its power and look past these client issues," says Stouse, via LinkedIn. "However, the press for talent prevents them from doing that because their current model hinges on having enough talent to bill enough hours."
Kathy Grannis Allen, strategic partner of PR and media relations at SalientMG, adds that PR firms should consider what’s best for their staffers and brand, regardless of a contract.
"PR leaders would be wise to look at their client's behaviors as they would their own staff when it comes to moral and ethical issues," she adds.
And Praytell CEO Andy Pray explains that he prioritizes his agency’s values versus its obligation to a retainer.
"If our partners betray a code, then we cut, because if the reputation issue had been present before a pitch, we simply wouldn’t have worked with them," says Pray. "The change that triggers our value alarm system resets the stakes."
However, some experts argue that more is accomplished by working with an unpopular client in the hope of changing behavior instead of sweeping it under the rug, notes Nick Kalm, founder and president of Reputation Partners.
Mike Paul, founder and president of The Reputation Doctor, says he would work for a client whose actions conflict with his own ethical compass as long as the client can look him in the eye, admit an action was wrong, and "truly have a heartfelt change in spirit."
"People make mistakes, run from their problems, and blame others every day," Paul says. "And some seek to change not only because they were caught, but because they know they’ve hurt others, including their own families, and some seek to become better human beings for the rest of their lives."
To really change, Paul says a client needs a strategy for how to repair its reputation and character, while rebuilding trust and honesty.
It’s a red flag, however, if a disgraced client simply needs expert advice on how to weather the storm. Tom Galvin, cofounder and former managing partner of Vrge, says a PR firm that retained such a client would be "selling spin" and should quickly bail.
Another reason a PR firm might cut off a relationship with an embattled client: the agency might not have crisis comms experience. Paul says he works with "nightmare clients" all the time because his firm specializes in crisis PR and reputation management.
"There is a place and time for traditional advertising, marketing, and corporate communications work," says Paul. "And there is a place for true counselors to come in to best help."
As of Friday, at least four agencies have cut ties with Papa John’s, starting with Laundry Service, the agency that was on the now-infamous May conference call with Schnatter. Olson Engage quickly followed. This week, creative agency Fallon and media shop Initiative both reportedly parted ways with the brand.
Representatives from Olson Engage declined to comment beyond its initial statement about dropping Papa John’s as a client.
However, experts say a trend is emerging: PR agencies are more quickly running out of patience with complicated clients.
Olson Engage’s decision to terminate its relationship with Papa John’s was likely not just about personal or agency reputation, according to Stouse. More firms are "simply unwilling to work for a jerk," he says.
"We’ve long said that people usually don’t leave companies; they leave managers," Stouse explains. "Bad leaders are among the most costly mistakes a company can make. Unfortunately, the PR profession has seen more than its share of these sorts of leaders, but that’s changing because increasingly people and agencies simply won’t work with them for very long."
Stouse adds that the "marketplace of shame" has made it hard for companies to get good PR representation because agencies are concerned that clients’ problems will rub off on them, creating disaffection among their employees and potentially with other clients.
"I think the scope of issues that might trigger this sort of action by [a PR firm] is pretty tightly focused on deeply moral failings," says Stouse. "#MeToo, for example; racial prejudice as we saw at Papa John’s; products that society sees as morally flawed, like cigarettes; calculated breaches of data privacy, a la Cambridge Analytica."