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The 10,000 Question…

Tim has a great post on the multitude of start-ups with $10,000 to spend on a PR agency. OK, I’m one of them. It just seemed like such a nice round number to start with. Somehow it’s crept-up a little bit though… Must fix that…

Tim is right (he is right on most things)… we all want PR pros. But I don’t want $15,000 dollars worth of service. I don’t even know what that is!

I want results. I don’t care what it costs or whether an agency has to under or over service to deliver it. I just want results against the agreed budget. You commit, I commit, we all commit together.

What is more troubling to me as a Valley CMO is:



1) finding a great agency is bloody hard work. They are few and far between. At any billing rate. Few CMOs I know get the value of PR or AR, let alone the value of a good agency… I accept we are part of the problem, but…

2) finding an agency that gets your business and has a real enthusiasm for contributing to the growth of the business – harder still

3) finding an agency that understands that great ideas get funded – near impossible. They are caught in the conundrum or belief that ideas require budget prior to being generated. Bullshit. (and I am talking about real ideas, not those regurgitated from the last pitch)

4) finding a team that can explain why they should get paid more and then associate some kind of outcome with the result – well, if you find them, let me know. The most common justification – “we’ve been over servicing your business for six months now, you need to pay us more” – is nuts. Nuts!

5) finding an agency – the word is a bit of an oxymoron. It implies some kind of powerhouse of ideas and execution – the strength of a team. What you generally end-up funding is one very dedicated individual surrounded by some other folks – generally you aren’t quite sure what they are doing but they all arrive for meetings and scribble madly into notebooks.

What is needed is a new kind of agency. One not built on billable hours and 10k budgets. Maybe one built on the power of ideas to drive a startup’s growth curve? One with the courage and conviction to articulate a value proposition that resonates with the CMO of a start-up and ability to explain what the budget should be.

You see, we live less in the conceptual world of brand and reputation and more in the real world of qualified opportunities, pipeline growth and time to sale.

Until then, 10k sounds like a nice round number to start with. Agencies shouldn’t let it end there. We will pay more. And I am willing to put my money where my mouth is.

12 Responses

  1. By Tim Brook on August 3rd, 2006 at 1:04 am

    Totally agree, and this is the case for extablished companies as well as start-ups – espeacially “in the field”. I would love to be told by an agency that my plan or idea is lame, weak, unworkable – but only if the agency brings along something truely innovative to replace it – unfortunately not something that happens very often. Good consultancy should involve disagreeing with the client occasionally, but if the agency is strong (and smart) the end result can be so much more impressive.

  2. By james governor on August 3rd, 2006 at 4:34 am

    i know you’re already spending money with us – but we’d be more than happy to chew up the consulting time and take some of the budget described above. did the conversation ever happen about the HUGE log problem in london i put you onto?

  3. By Kevin Dugan on August 3rd, 2006 at 8:32 am

    Andy – This brings me back. Dot com 1.0…good times.

    Agencies and clients need to spend more time/money at the beginning of the relationship. In my agency days we would bill the opposite, going from a lower monthly fee to a higher one as we ramped up and took over from the last agency. It was just the opposite as we busted our ass to learn the client, industry and media.

    Someone coming back after six months looking for more money did a bad job of estimating what it would cost to serve the client. Or they simply bought the work by undercutting their fee. Bad move.

    A one-time ramp up fee leading to a more modest monthly based on what the agency needs to do sounds much more realistic to me.

    “What do I get for $10K a month” has me warping back to the dreaded dot com 1.0 days. It sucked and I am glad to be on the other side of the problem now.

    The client should also expect to spend more of their time at the beginning helping the agency ramp up by giving them access. Agencies cannot feign passion but they need more than an RFP to obtain it.

    Clients hire agencies so we can delegate and do other things, but we need to realize it is anything but a handoff once the contract has been awarded.

  4. By Andy Lark on August 3rd, 2006 at 8:36 am

    Hi – it’s me. Glad this is stirring-up some debate.

    I am talking about those 10k a month retainers.

    On ideas you are confusing idea generation with monetizing ideas. The Apple analogy someone used is a good one. Nobody at Apple asked the market to fund the idea – they funded it then monetized it.

    So long as agencies get stuck in the current paradigm of fee-based idea generation they are screwed. Why shouldn’t you have charged for outcomes rather than billable hours? What you in effect did was turned yourself into a high value commodity.

    Oh, and btw, ad and interactive agencies got over this a long time ago…

    I agree the billiable hours thing is hard to grasp on the agency side – spent most of my life there. But the sooner agencies understand that the billable hour is only useful as an internal metric, the better. Externally, we don’t care and are happy to pay for value. I’m actually surprised at how often agencies are willing to show in public how inefficient they are.

  5. By Edward O’Meara on August 3rd, 2006 at 9:58 am

    Andy,

    Absolutely agree with you.

    Ex-agency folks (and I am one) optimistically hope and argue for such change. But mostly I see a game of rearranging deck chairs as 10k retainers shift from one disappointing engagement to the next. And blame does fall to both sides.

    Outside of the big brands and big agencies model, which works because timesheets aren’t relevant, I’ve been thinking lately that the single valid remaining agency market is as global outsource partner to midmarket companies. We need an extra body in Sydney, an arms-worth in Seville, and just a hand-off in Buenos Aires.

    Applying such an approach, I believe smaller companies can find a good, virtual copywriter that will commit to press release development, as well as localized virtual experts that will execute other activities on your behalf. They’ll use SKYPE, they’ll sign NDA’s, and they’ll be responsive.

    As for the strategic layer, with your network I bet you could engage 2-3 amazing brains (prsa accredited or not) that would contribute a set of hours a month with you and your team, and build a better strategic plan for that $10k/mo. Think Board of Advisors, or Thought-Partners. I know one firm who pays a few, unrelated individuals a $2500/mo retainer just to be on call – and it works like a charm. Smart people, with amazing ideas, resourcefulness, and enthusiasm for making a difference!

    But the real point is: forget that $10k = 50-70 billable hours a month. I don’t know about you, but I prefer to put that $10k against a dream team pool with a required goal of one amazing idea per month. It may even take just three minutes of thinking. But at least you don’t have to stare at an invoice and wonder whether that’s all you got anyways.

  6. By Dennis Howlett on August 4th, 2006 at 9:23 am

    Andy, as an ex-hack, I’ve never understood what PR was meant to deliver other than command and control over the message plus a good piss up on ‘press trips.’

    So many PRs define outcomes by the depth of the clippings book but people like myself and James both know (we worked on the same title years ago) that’s a meaningless measure. But then you’ve maybe no idea how many CMOs task PR to get them in the FT, WSJ etc plus a spot on CNN Money and then deem that successful when it happens.

    It’s important to define the outcomes you’re seeking. To many, it’s about ink on paper but as I’m sure you don’t need telling, that’s dead tree thinking.

    In my mind, PR is about connecting business values to what customers need and influencing the necessary conversations so that supply and demand are aligned. It’s not about a single set of ideas or, god forbid, a ‘campaign.’

    So I’ll throw it back at you. What outcomes do you want to see? If it’s about lead gen then it requires the client to tip their hand on plans as the starting point of an assessment as to how that might fit with existing market conditions. That’s not to say market disruption is a bad idea. But it should be reserved for when the time is right. Creatives will argue that but as I guess you’re saying, you live in the real world, where real money changes hands and where outcomes need to be measured.

    In short, I sense you’re asking PR to be accountable as part of the marketing machine.

  7. By Dennis Howlett on August 4th, 2006 at 9:24 am

    Andy, as an ex-hack, I’ve never understood what PR was meant to deliver other than command and control over the message plus a good piss up on ‘press trips.’

    So many PRs define outcomes by the depth of the clippings book but people like myself and James both know (we worked on the same title years ago) that’s a meaningless measure. But then you’ve maybe no idea how many CMOs task PR to get them in the FT, WSJ etc plus a spot on CNN Money and then deem that successful when it happens.

    It’s important to define the outcomes you’re seeking. To many, it’s about ink on paper but as I’m sure you don’t need telling, that’s dead tree thinking.

    In my mind, PR is about connecting business values to what customers need and influencing the necessary conversations so that supply and demand are aligned. It’s not about a single set of ideas or, god forbid, a ‘campaign.’

    So I’ll throw it back at you. What outcomes do you want to see? If it’s about lead gen then it requires the client to tip their hand on plans as the starting point of an assessment as to how that might fit with existing market conditions. That’s not to say market disruption is a bad idea. But it should be reserved for when the time is right. Creatives will argue that but as I guess you’re saying, you live in the real world, where real money changes hands and where outcomes need to be measured.

    In short, I sense you’re asking PR to be accountable as part of the marketing machine.

  8. By JesseCiccone on August 7th, 2006 at 10:56 am

    As a current agency guy (having also been the client on a couple of occaisons in the past), I will try to avoid sounding at all defensive here b/c I agree with Andy’s overall sentiment, as well as the majority of the comments.

    The sticking point on this whole thing is the client’s ability to deliver its own “results” in the form of executing against its business plans and product roadmap. A good PR program is one that is designed to achieve results that positively impact the client’s business. But if strategy is changing weekly, or product development is consistently delayed (or, worse, constantly of the ‘me, too’ variety) or partnerships/major customers fall through, the client needs to be accountable and flexible, too, in terms of measuring an agency’s effectiveness.

    As far as the retainer goes, my firm’s fix is a simple one…work on a true retainer! That means no hourly billing rates. You work with the client to develop business-driving metrics, you build a program to achieve those metrics and you do whatever it takes to meet them. If your staff doesn’t have hourly billing rates, there’s no such thing as over- or under- servicing. You grow budgets by doing great work on what you were hired to do and then identifying additional areas – that will be valuable! – where the client can benefit from your services.

  9. By Deborah Schultz on August 8th, 2006 at 5:01 pm

    Yup – the model is broken. And iPosted about my suggested solution. But additionally, I realize that there are concrete items a PR person (or agency is best at) – pressrelease (we stil lneed those) and acting as an outside voice to ensure the client does not drink their own kool-aid and gets a temperature check on the market. That said – I still hold that with patience an in-house approach and direct contact with your customer’s is the best way to build good pr over the long-haul. Short term tactical goals – such as tradeshows, press releases, a bit of ink here or there etc – may be a different sotry

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