Evaluation: Money on delivery

Does payment on demand motivate PROs to perform better, or is it completely unrealistic, asks Steve Hemsley.

If the experts are to be believed, the PR industry is full of insecure people worried they are not taken seriously and desperate to prove their worth.

The traditional problem of just how PROs demonstrate effectively the value they bring to their clients' businesses is fuelling this apparent lack of confidence. A feeling that many senior client managers do not fully understand the role of PR is adding to the anxiety.

In this context it is understandable that the topic of payment by results (PBR) has crept up the industry agenda, especially as client procurement departments are increasingly getting involved in buying marketing services.

They are demanding value for money, and the lack of robust measurement and evaluation tools to judge the return on investment (ROI) from a PR budget is making some of them twitchy.

The concern among PROs, however, is that there are too few educated buyers of PR within client organisations, while the procurement processes employed are often overly complex and create frustrating barriers to entry for smaller consultancies.

Thorny issues

The IPR and the PRCA have been involved in numerous studies and workshops around the thorny issue of PBR and evaluation in recent months. They have been working with third parties such as the DTI, the Henley Management Centre and the Incorporated Society of British Advertisers.

What is clear from the research and debate so far is that the industry is split on whether a system of PBR will become the accepted norm over the next few years.

Henley Management College associate Dr Jon White has spent many months asking client chief executives whether it is possible to accurately judge ROI from PR. He says that while PROs want clients to understand their role better, many of the people he talks to seem resigned to the fact that PR is not an area of corporate activity that lends itself to precise measurement. Instead, most bosses regard it simply as a cost of doing business and are happy to rely on their gut instinct to judge whether their PR budget is working for them or not. After all, they argue, they can see how much coverage they are getting and know if their company and brand has a good or bad relationship with key journalists.

Nevertheless, even senior managers who are not particularly excited about PBR welcome any additional information on what effect their PR spend is having on their company's bottom line.

This means any agency or in-house team that can prove a client's sales have increased, the share price has risen, or a brand's perception among consumers and journalists has changed following a PR campaign, is in a much stronger position to negotiate a budget increase, or to expect a bonus of some kind.

Tracking tools

The internal communications team at British Gas used tracking tools from i to i Research to show directors how its strategy matched and supported the company's brand values and made a real and measurable contribution to the overall marketing plan.

'We could show how people were thinking and likely to act when they saw our activity and how with more money we could achieve even better results,' says senior corporate affairs manager Sue Beeson.

Agency Buffalo Communications is another strong advocate of PBR, with around 80 per cent of its business tied to its proprietry evaluation model PR 2.0. This tool creates a benchmark for what a client wants to achieve from any campaign. For instance, Buffalo will generate an A, B and C-list of target publications and use a points system to rate the coverage, from a news brief in a B2B magazine to a full page in a national newspaper.

The model also uses perception studies to measure the effect of keeping a company's name out of the media spotlight if necessary.

'For PBR to work, clients must understand the value of PR,' points out Buffalo managing director Kerry Hallard. 'There is a reluctance by some agencies to go down the PBR route - because they feel it will cost them money, but if it is done properly then everyone stands to gain.'

Media evaluation company Thomson Intermedia says it is receiving more enquiries from clients than agencies for its PR measurement tools. These include Newsmetrics, which can analyse the effect of PR on brand perception, a new product or a company's market position against its main competitors.

'Many senior people within organisations do seem to want to know more about what PR can and cannot do for them,' says sales and marketing director Charlie Brookes.

Target-defined contracts

This is certainly true at economic development agency Scottish Enterprise, where senior manager for international marketing Judy Torrance says PR agencies must be prepared to work on a PBR basis. 'We are moving towards PBR and at the pitch process we make it clear that output from our PR contracts will be aligned to our operational targets and success judged around that,' she says.

Consultancies that rely on large retainer fees could feel they have most to lose from PBR. Yet supporters of the concept insist clients are not looking to harm the morale of their PR teams. In most cases PBR usually relates to a percentage of the agreed retainer or is used only for a specific project. Also, if all parties are clear about the aims and objectives of any activity, it should motivate PROs who know there is an incentive for exceeding set goals.

Porter Novelli strategic planning director Paul Miller says any element of PBR should only be included as part of the overall remuneration package and it must reward excellence. 'Motivation is the key. If PBR penalises and reduces payment for perceived poor performance, PROs become demotivated and everyone suffers,' he says.

With many clients having no experience of buying agency services, the involvement of a procurement professional who understands how creative businesses operate can be valuable to client and agency in terms of time and money saved.

'It is a fact of life that agencies need money to run a client's account, so the entire fee cannot be based on PBR as the results might not be known for some time and there are external factors that might be outside the agency's control,' says Tom Wells, managing director of PR procurement specialist Gyroscope.

'Many of the transactions in creative industries are also based on relationships and intangibles so any system of PBR must reflect this,' he adds.

Indeed, PBR could be one way to drive up budgets over the longer term as it encourages clients to take the role of their PROs more seriously.

For an industry that knows it does a good job and makes a difference, this is all it has ever wanted.

WILL THE INDUSTRY MOVE TO PAYMENT BY RESULTS?

YES - INTERCONTINENTAL HOTELS VICE-PRESIDENT OF GLOBAL COMMUNICATIONS LESLEY MCGIBBON

'There is certainly a market for payment by results (PBR) as long as clear guidelines and objectives are set out before the start of a project and everyone is clear what is meant by the term "results".

'If all those involved know the aim is to generate an uplift in sales, enhance a company's reputation, or ensure key messages are conveyed in the media, then the PROs and the agencies we use have nothing to fear.

Smaller agencies are much keener on PBR because they see it as a way to get a foot in the door at large clients.

'Our senior management has become very aware of the PR function in recent months following our split from Six Continents which attracted a lot of media interest. We use media analysis consultancy Metrica to help the directors evaluate the work of the in-house team and demonstrate the value we bring to the business.'

NO - ELOQUI PR CHIEF EXECUTIVE AND INSTITUTE OF PUBLIC RELATIONS PRESIDENT-ELECT CHRIS GENASI

'I do not think we will move towards PBR because in my day-to-day experience senior managers in the private sector know PR is important and they are happy to measure it on gut feelings. Formal research and evaluation seems a long way down the list compared to how they feel they are perceived by stakeholders in their company and by journalists.

'Having said that, there is an opportunity for the PR industry to be more analytical about what it does if it wants to increase budgets. Better planning, such as showing a client the threats it faces and how to react, rather than evaluation is the way forward.

'In the public sector there is more interest in judging PR based on agreed targets. This is perhaps understandable in a culture of league tables, but private companies know spending money on PR is crucial to business success.'

THE CLIENT'S POINT OF VIEW

INCORPORATED SOCIETY OF BRITISH ADVERTISERS DIRECTOR OF MEMBERSHIP SERVICES DEBBIE MORRISON

'All purchasing professionals are interested in establishing elements of payment by results (PBR) to their remuneration models. This is because they have a strong interest in encouraging work that can be shown to have a demonstrable effect on the bottom line. It makes it easier to justify future budgets, which is why effectiveness modelling is so important.

'But PR is renowned for its inability to establish depth evaluation and effectiveness models and it is a bit of an issue for clients. So, if you cannot establish effectiveness in a proficient and acceptable manner, how can you put a real PBR scheme into place? We are working closely with the PRCA on this whole area.'

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.