Analysis: Will ‘no cure, no pay' model catch on?

Two industry grandees will next month launch a PR consultancy that offers clients a novel 'no cure, no pay' service. Sarah Robertson asks four agency bosses to assess the pros and cons of this approach.

Industry stalwarts Adrian Wheeler and Christopher Broadbent are to found a consultancy based on a unique payment model. The former GCI Europe chairman and the Barclay Stratton founder are promoting Agincourt Communications, which opens on 1 July as a troubleshooting shop, on a ‘no cure, no pay' basis (PRWeek, 2 June).

While a few agencies earn their fees entirely on, say, the strength of the coverage they help to achieve, Agincourt is claiming to be the first comms agency to commit itself to this model.

Typical briefs, they hope, will include helping organisations win planning consent, boosting firms' graduate intake, and helping them deal with groups such as animal rights protesters.

Agincourt's plans have caused a stir. PRCA director-general Patrick Barrow says: ‘It will make PROs shudder. It is brave, but deliverable, and lends itself to many markets. Public sector procurement managers will be delighted, as will the City and financial sectors.'

Public affairs campaigns will also work well under this model, with influence on policy easily measurable, says Luther Pendragon partner Mike Granatt. But he adds: ‘The drawback is that the devil is in the detail.'

College Hill Associates executive chairman Alex Sandberg says: ‘This model is fine for a couple of senior consultants who want to back their own ability, but it is not for a large agency.'

Other industry figures believe not charging for research and planning is unsustainable. AAR head of PR Alex Young argues: ‘Payment by results shouldn't be offered until an agency has held a client for six months, so it can learn about the client and plan.'

Wheeler retorts that Agincourt's fee structure will be transparent: ‘We will select projects with a yes or no outcome. If there are extraneous influences, we would walk away from the brief.'

Should Agincourt achieve partial success - say, planning consent for one out of two warehouses - they would charge 50 per cent of the fee, he says.

‘Most clients want a full-service, retainer-based deal for which the big PR firms are set up. We will be based on solving issues that are around the edge of conventional PR,' he adds.

JAMES KELLIHER, MD, The Whiteoaks Consultancy
‘I like the concept, but the difficulty will be proving that it is specifically comms that have achieved the results.

‘There are so many elements that can go into the mix, so to determine the specific influence that comms have had will be tough. For example, if your client wants to link PR to sales, it may be that they have a good PR team but a poor sales team, or there may be problems with their product or channels to market. These things will have an impact on the company's ability to reach its sales objectives, regardless of its PR.

‘The key is to find a way of proving it is PR alone that achieves results. The model that Agincourt is adopting lends itself well to the public sector, which has campaigns with a clear start, end and tangible outcome; for example, flu-immunisation or the take-up of benefits.

‘Overall I'd say the idea is workable, but how confident you can be about delivering results through PR alone is another matter.'

SARA PEARSON, chief executive, The SPA Way
‘There is no greater accountability than charging by results, and Agincourt's model offers greater quality control than we have seen before: with this model you cannot take on a project if you have any doubt about delivering it.

‘It is good news for the PR industry. For a long time people have been too complacent and charged fees without delivering. With SPA's model, we are paid as we achieve coverage, and if we do not deliver, we rebate the client. Agincourt's model is realistic and achievable, and we will be watching with great interest.

‘This is another example of two people with a conventional agency background who recognise there is a better way of doing things. The model suits all aspects of PR, and once a client uses this model it will be reluctant to change - and why would it if the investment is guaranteed? My only advice is that they make sure their terms and conditions are crystal clear, so that there is no haggling at the end.'

JOHNNY PITT, chief executive, Launch Group
‘This is neat positioning and a good way of attracting interest. But is it really new? What this model does is give out the message that the work will be transparent and accountable, and I am a strong advocate of that.

‘Given they are working on the basis that if they don't achieve targets they will not get paid, one potential pitfall is that it would be easy to dumb down targets.

‘The targets need to be as ambitious as they would be at any other agency. They also need to be careful not to damage creativity - they might look for safe campaigns where it is easy to achieve results, and creativity could suffer.

‘They also need to make sure that they are not overcharging - they could become quite expensive. I imagine Agincourt will attract charities, public sector and emerging businesses that need to see bang for their buck.

‘Overall, for me, any pay model moving in this direction is a good thing, as the traditional retainer model is tired and breeds less creativity.'

‘The challenge will be to see if this truly is new or just very good marketing. Most agencies have an element of charging by results already - 70 per cent as a retainer and 30 per cent on results is a good balance. But apply this to projects such as a hostile takeover, where positive media is everything, and you could charge very high fees.

‘It could be highly profitable if they can prove they are doing something different. Moreover, if this model encourages clients and agencies to decide objectives at the start, it can only be good.

‘The pitfall could be unrealistic objectives, with a danger of overselling. If they are saying that PR alone will achieve the outcome, they could face problems.

‘For example, if you are trying to boost graduate recruitment to a firm and the rival bumps up its starting salary, PR probably won't make any difference.

‘Agencies also need to be paid for the time they spend on things such as research, examining messages, audiences and CSR policies.'

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