Agency 2020: fair fees, flexible time

Last week, agency heads met to paint a picture of the future PR agency. Daniel Rogers heard the debate roll from staff retention to profits and overservicing

Attracting and keeping good staff is the biggest challenge facing PR agencies, and by some margin, according to new research by business consultancy firm Tenon Outsourcing.

The other leading concerns among agency heads are the overservicing of clients and the growing cost of pitching for business.
The research formed the basis of an industry forum, held last week at the offices of 3 Monkeys Communications, in which senior consultants predicted the look of the PR agency in 2020. Ninety per cent of respondents believed PR would continue to be valued more by clients, but that ongoing low barriers to entry into the profession would cause big problems in maintaining industry standards.

Forum attendees said that the fight for quality staff was becoming ever fiercer. And Christopher Lee-Roberts, manager of Median Recruitment, confirmed that the PR market was indeed 'growing faster than candidate interest in the profession, particularly in the healthcare sector'.

Julia Harries, co-founder of healthcare specialist Red Door Communications, agreed. 'Stories abound about people being offered jobs after ten-minute interviews,' she said.

The Red Consultancy CEO Mike Morgan had noticed a generational shift in the PR workforce: 'Many senior agency people are baby-boomers and differ from the generations Y and X, who demand more work/life balance. As a result many of these young people self-select themselves out of the industry. This means staff retention is a big problem down the line. People are spending five years or so with agencies and then downshifting or relocating.'

Knock-on effect
Graham Goodkind, founder and chairman of Frank PR, said it was
consequently 'extremely tough' to find account director-level staff.

The PRCA's Patrick Barrow thought another factor was graduates' debt burden. 'They don't stay in jobs very long because they feel the need to chase bigger money,' he warned.

Most agreed that these reasons – and the 24-hour nature of modern media – were forcing consultancies to adopt more flexible working practices.

However, College Hill partner Tony Friend said while his agency had tried to be flexible, service ultimately had to be client-led: 'In my experience, individuals either want to add maximum value to clients or be less ambitious. There will inevitably be a divide between hunters and farmers. The key is to have teams comprising both.'

3 Monkeys principal Angie Moxham believed the answer may lie in PR agencies structuring themselves more along the lines of their advertising counterparts. 'Agency 2020 may be remodelled with divisions between account handlers and other practitioners, by the creation of, for example, a newsroom,' she suggested.

However, there was some concern around the table that this could increase inefficiencies in the system and distance clients from the agency team.

There was consensus that the growing value that clients place on PR could help attract the best young talent, particularly at the expense of the ad side. 'PR is the coming force,' argued Morgan. 'In an age of mass information, advertising is increasingly seen as shouting at people, whereas PR is active listening. Mediation is what PR consultants are about. We can tell clients how to behave in a consensual world, and in that sense we're more like lawyers than advertisers.'

Frank's Goodkind added: 'The media rules have all changed again, in just a year. Our type of agency is suited to the new world. This is an intellectual challenge and a lot of fun.'

However, he warned the challenge of how to charge properly for input remained, bringing up the old spectres of evaluation and overservicing: 'Ad agencies are generally better at hanging on to intellectual property and selling their creative ideas for a decent price. The right people, with the right experience, can come up with a great idea in five minutes, but that doesn't mean we should charge five pounds for it. I believe we have to overservice but we also need to charge for it.'

Emma Cantrill, PRWeek's Freelancer of the Year in 2005, agreed: 'The PR business in 2020 will need more balls to ensure it is paid for the job it does. Why not operate on bonuses for great work, as ad agencies do?'

Lucy King, director of B2B outfit Buffalo Communications, reported that her agency regularly uses a system of payment by results (PBR), with mixed success. Moxham therefore called for a PBR standard.

Profit priority
The debate then returned to the fundamental area of concern: how can agencies be run as more profitable businesses in the future?
Red Door's Harries argued that PR agencies still needed to better understand clients' marketing objectives. She also warned that procurement, a relatively recent arrival in healthcare PR, was fast becoming commonplace.

Kevin Taylor, senior director at IT and telecoms specialist Companycare Communications, said since his agency had started charging clients by the hour, rather than by the day, it had pushed its prices up and stopped internal wastage. Cantrill, meanwhile, urged greater transparency: 'Clients should know we need to make money.'

'The more we keep clients informed of what we're doing, the more we find we can negotiate better payment,' added College Hill's Friend.

Tenon's Richard Fifield, chair of the event, summed up: 'We have learned that there's often a conflict between the creative buzz of consultancy life and the pressures of making a buck. Agencies must realise the value of intellectual property and overcome the all-too-familiar traps of overservicing and unprofitable business.'

Main survey findings

Which PR disciplines do you think will see the biggest growth?
1. Healthcare
2. Corporate
3. Financial

Which disciplines will have the least growth?
1. Public affairs
2. Consumer
3. Brand consultancy

Are you planning to diversify significantly in the next few years?
No: 80 % Yes: 20 %

The biggest problems you face?
1. Getting the right people/
2. Overservicing/unprofitable clients
3. The cost of pitching

Do you think standards are slipping in the industry?
No: 60% Yes: 40%

Is media coverage harder to achieve than five years ago?
Harder: 50 % Easier: 25 %
Same: 25%

Source: Tenon Outsourcing

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