The coronavirus will obliterate the traditional agency model

Brick and mortar PR agencies large and small face a day of reckoning says Mark Rose of Finsquared.

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The public relations business is about to undergo a dramatic and much-needed jolt to its business model. Coronavirus will force brick and mortar PR agencies large and small into a day of reckoning.

The PR business will suffer in ways it never has before. Around the globe, and accelerating in the U.S., we are being driven indoors. We are absorbing information online, ordering food, watching movies and substituting social interaction for whatever connection we can squeeze out online. The internet is proving its great value during this crisis.

Some agencies are touting that their Chinese and Asian offices are returning to normal. But there is no 'normal' when a good portion of the world is battling a health crisis. This is delusional.

Suddenly, all the assets that traditional agencies boast about are liabilities. What good are Edelman's 65 offices, if they're forced to close for an indefinite time? What happens to its 5,000 employees if they're forced out of those offices? The same questions apply to every brick and mortar agency of every size. And every client should be asking their agency these same questions.

As PR workers disperse and work from impromptu home offices, we'll see a shakeup in the traditional PR agency model that has stubbornly resisted change in the 30 years I've been in the business.

The most vulnerable are the top-tier PR firms with unsustainable bureaucracies built on a hierarchical structure where a significant percentage of their clients' retainer goes to agency administration and overhead.

If all that real estate is non-functioning, clients will wonder what they're paying for, and with good cause. Isn't there a more efficient and effective way to deliver PR services?
There's a good chance this health crisis will lead to a recession and that always hurts the PR business. Adding the uncertainties of a pandemic will have agencies trying to rejigger operations while trying to serve clients.

All the ingredients are there for a major restructuring of the PR business. That's not great news for agency owners wedded to the old style of delivering PR services. But it is great news for entrepreneurial PR pros who want to band together to explore a better way. They will find opportunity among the wreckage.

PR agencies are issuing countless missives about what clients should do in the face of this global health crisis. What they should be concerned about -- and what I would focus on if I were a client -- is what my agency is doing.

How will it respond to this new world order and show it understands the nature of a connected, mobile workforce?

PR agencies are wedded to the professional services model with ever-escalating hourly rates, physical offices, and managers overseeing practice areas, geographic locations, and administration.

In the post-coronavirus PR world, I see collectives rather than agencies, where top talent works on accounts from remote locations.

Fees will drop by eliminating bureaucracy and overhead and creativity will rise when we eliminate strict hierarchies. PR pros will form talent clusters suited to each assignment. This un-organization breaks down the silos found at larger agencies and integrates capabilities for greater effect.

This pandemic is a tragedy on many levels. But it may just be the shock that forces traditional PR agencies to adapt to the mobile, digital world the rest of us live in.

Mark Rose is president of Finsquared, a public relations collective.

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