Does PBR mean good PR?

Public relations has changed. Gone are the days when clients would call two weeks before a product launch: Marketing objectives were set. Advertising was finalized. Retail programs were in place. Public relations was a very late addition to the mix.

Public relations has changed. Gone are the days when clients would call two weeks before a product launch: Marketing objectives were set. Advertising was finalized. Retail programs were in place. Public relations was a very late addition to the mix.

Now, more often than not, we find ourselves at the table with the advertising agencies, researchers and marketers – a key part of the team involved in the strategic planning of a new program or product launch.

From our experience with clients like Coca-Cola and Levi Strauss, this has meant increased accountability for public relations as clients seek to evaluate their communications programs with the same types of measurement used by advertising agencies. Everyone is talking bottom line and, with executives increasingly compensated on a performance basis, the pressure is on for agencies to consider alternative payment structures.

One alternative has been causing a lot of debate lately: payment by results (PBR). As advertising agencies are being driven by their clients to consider PBR structures for compensation, these models are also being proposed to public relations firms.

The question is, can PBR work as a viable model for public relations?

Or, more importantly, does PBR promote doing the best possible job for your client?

This largely depends on the PBR model. PBR can take many forms, from the moderate base remuneration plus bonus, to a more radical form where costs are recovered, but all agency fees are based on performance. The more extreme models raise some questions.

How do you balance ethics and incentive?

There is at least one PR agency in Canada that is compensated solely by the quantity and location of media coverage it generates. For example, if a media release gets picked up on the front page of the Globe and Mail, the client pays $25,000. Inside the paper? $10,000. No coverage? No bill.

Apart from the fact that this

quickly reduces public relations

professionals to mere publicists, there are two major issues.

The first is that media relations, on its own, does not equal a comprehensive communications program.

It can be a key program component – but it rarely, if ever, is it the only activity. PBR plans often suggest that the only valuable measurement is editorial coverage. They do not take into account the research and strategy necessary to get to this point or the fact that there may be other audiences to communicate to – employees, customers and special interest groups.

There’s also the danger the PBR could prompt agencies to make an announcement into something larger than it really deserves. But not all drugs ‘save lives,’ not all product launches are ‘first ever, one-of-a-kind,’ and not all tech toys will ‘revolutionize the digital world.’

Which leads to the second issue.

Getting the client’s story on the cover of the Globe and Mail is not always a good thing.

There are times when the best advice we can give our clients is to do nothing. No media release. No press conference. No interviews.

This valuable counsel could reduce the risk of future issues or could create a story with stronger news value at a later date.

What is the incentive to give this counsel if there is no compensation for anything other than the weight of the clippings binder?

Does PBR promote good PR?

If agencies are compensated largely on results, there is less incentive to take risks. It is much safer to propose and execute conservative, calculated programs, which are pretty much guaranteed to deliver a moderate return.

In our experience, the greatest public relations programs are those that build upon both the client’s and the agency’s past experience of what will work, but also have a strong component of uniqueness, innovation and creativity.

And that requires some risk-taking on both sides.

Is there a role for PBR in the PR industry?

There are executives who are compensated solely on a pay-for-performance basis – and there are clients who want to work this way. Finding a PBR structure that is fair to both sides is key.

This year, Kevin Edwards, VP

of marketing for Toronto-based Jamieson Laboratories, challenged us to restructure our relationship and implement a component of PBR in our compensation structure.

‘It’s the only way we work now,’ he explained. ‘Why shouldn’t the people I hire be compensated in the same manner?’

Together with Jamieson Lab-

oratories we created a contract that provided an ongoing retainer plus bonus structure, based on a mutually agreed upon set of objectives. These included agency service, quality of media coverage and an increase in sales.

In the end, it was a win-win for both sides.

What was interesting is what we learned as an agency from this experience. The bonus was not an incentive to work harder (sorry Kevin!). The bonus was just that – a bonus. A way for us to prove ourselves – not a hindrance to providing strategic counsel, or recommending innovative programs and taking calculated risks.

We believe in being compensated fairly for doing good work. And a bonus to recognize this work is simply icing on the cake.

But as an incentive to work harder? No chance. We’re already passionate about what we do and no incentive will change that.

Pat McNamara (pmcnamara@apexpr. com) is president and Tracey Bochner (tbochner@apexpr.com) is VP at Toronto’s APEX Public Relations, a full-service agency specializing in marketing public relations, technology, corporate communications and issues management.