Is a debate against the way users of public relations pay for external PR agency services likely to erupt within the Australian PR industry? That’s a question in-house PR Managers and PR agencies should asking given the revolt that seems to be emerging in the local legal profession about charging systems.

Judging by the space given to this topic recently by The Australian (and by other legal media over recent times), the legal professional is strongly against billing by the hour and advocating more fixed fees.

Furthermore it seems from media reports that law firms and their clients seem united on the fact that billing is one of the big areas of friction between them that detracts from, and undermines, the quality of service and the work done.

I will be surprised if the legal battle over charging doesn’t spill over into the PR sector. Potentially, I believe this issue is more meaningful, and contentious, than the effort by PR agencies to start charging for their intellectual property when pitching for new business which I commented on recently.

While there are clearly differences in the nature of the extent, scale and type of work done between the legal profession and PR, their core billing methodologies are both based on the hourly rate.

After 30 years running a PR agency I would be very surprised if a survey of Australian PR agencies and their clients wouldn’t bring to the surface concerns about how external PR services are charged. In my experience, billing and perceptions of value-for-money are never far from the surface in all agency-client relationships.

The latest survey figures I saw from the PRIA’s Registered Consultants Group  indicated that Australian PR agencies claimed that the majority (about 60%) of their clients were being billed on a project basis (which I assume to be principally hourly based) with 40% being billed by way of retainer.

Here’s my perspective on how both sides view the issues:

The users of PR services – the client:
• Retainers have become a less favoured method of remuneration – unless there is a major outsourcing of PR. In my experience most PR Managers (and more importantly their superiors) don’t think they get value-for-money. They think there’s no guarantee of delivery and performance from the PR agency to match the retainer. And they think they are beholden to an ongoing contract.
• Project fees or hourly rates are increasingly preferred because the client feels they have more control and flexibility.  It’s perceived to put the client in the driver’s seat.

The provider of PR services – the PR agencies:
• Retainers provide certainty of income and cash flow, and allow staff hours to be allocated to the client. Often a retainer is not as profitable for the agency, but the certainties that come with it make it attractive.
• Project fees or hourly rates have, from my observation, become more prevalent in recent years. This is partially because PR often works for different parts of a business (i.e. finance with IPO’s, corporate with crises, and marketing with product launches) which naturally lends itself to self-contained – and often one-off- projects. They have also been favoured by many PR agencies, facing more competition and lower margins, prefer to try and recover the actual hours spent on behalf of a client.

Interestingly, what this indicates is that while law and PR follow the same billing principles the trend in PR appears to have been the opposite to law i.e. away from retainers towards hourly rates and project fees.

In this regard The Australian had an interesting story on the Perth law firm Lavan Legal which has really cast tradition aside by abolishing the standard billing system that requires lawyers to account for every six minute period throughout their working day. Who would have thought this would transpire?

Some of the issues regarding the delivery of PR include that by nature PR is less definitive than the law, more creativity and less process is involved and, given the degree of contact and liaison needed with influencers and third parties, accurately estimating the amount of time involved is often fraught with difficulty.

Having said that I can’t help but go back to an earlier observation – too many PR Managers simply don’t manage their PR agencies well enough. If PR Manager’s want better outcomes from their budgets it should start with a clear brief and definition of the project that the PR agency is engaged to handle.

Furthermore, PR Manager’s have to begin to more effectively manage the progress of projects and campaigns as they evolve, and the activity of the PR agency, rather than simply waiting to the end only to find that the PR agency has overspent by 20 percent.

However, notwithstanding the need for more disciplined management by PR Managers, the bottom line is that if those working within the corporate environment are revolting against the billable hour when buying legal services, what chances are there that their PR or Corporate Affairs colleagues down the corridor won’t catch the same disease and be forced to justify their actions?

It seems to me that at the very least this outbreak of war amongst the legal fraternity will result in both PR Managers and PR agencies facing increased scrutiny around charging and budgets in the near future.

Both should start doing their homework now.  PR people – both in-house and in agencies – need to take-on-board some of the arguments being made by the buyers of legal services. To me it begs the question as to whether the way the legal discussion is going PR is likely to head back towards the retainer and fixed fee.  That would be ironic!

Note: I’ve written on the subject of PR client-agency relationships and fees previously in PR Influences.

Related posts:

1. BRW article highlights PR agency relationship challenges
2. Don’t blame the PR agency. It’s up to you to manage them!

This week’s BRW (June 3-9) focuses on what I believe is the tip of an iceberg in Australia – a quite widespread ‘disconnect’ between organisations and their PR agencies and PR consultants. 

Quite simply I believe that most organisations are simply are not getting the most from their PR agencies or consultants; largely because they don’t know how-to!

Too often they are only getting half of the benefit they should expect from using a PR agency or consultant.  And they often know it!

BRW touches on the topic in its article on public relations – but mainly from an SME perspective.

Their front cover sets the scene by proclaiming ‘Using Spin Doctors – get the most from PR firms’.

Inside in its ‘The business end section’ Leo D’Angelo Fisher examines how small to mid sized companies such as business software company Attache, accounting firm William Buck and management consultant Vantage have struggled to find the right public relations relationship – and deliverables.

Leo D’Angelo Fisher sought my views, and quotes me in his article on public relations, because to the best of my knowledge I am the only person in Australia who specialises in helping internal PR Directors and Managers in a range of areas including how to better manage their relationship with PR agencies and consultants.

As well I’ve written several previous articles on managing client and PR agency relationships in PR Influences including articles about making internal and external PR work, how to get the most out of external PR resources as well as providing tips for first time users of public relations.

Of course the temptation is to confine the issue BRW highlights mainly to the SME market.

Not only does that sector often attract PR agencies who know little more than publicity. SME companies seeking PR are often first time users who have unrealistic perspectives, and expectations, of what PR might do for them – – and especially how quickly they can expect to see results. Not to mention limited budgets to achieve it!

But in my experience the ‘disconnect’ extends right up the corporate tree to some of the biggest users of external PR services.

While there are some very capable PR agencies around that have the ability to really add value to their clients’ businesses, having spent 30 years on the agency side of the fence it’s my belief that I know that many PR Directors and PR Managers often don’t know how to get the best out of their PR agency.

There are many reasons – indirect and direct- that can contribute to this. They include:

People issues:
• A lack of senior management commitment to PR which inhibits the whole relationship with the PR agency, and especially attempts to make the PR agency more accountable.
• A lack of knowledge by the PR Director or Manager as to how PR agencies work and what is ‘best practice’ in client-agency relationships.
• International management from people with the organisation who don’t understand the Australian environment.
      
  Structural issues:
• Functional reporting line issues around marketing, HR, PR etc.
• International reporting line issues.
• A lack of clear definition of the role of internal v external PR and communication, resulting in ambiguity re the PR agency role and contribution.

Deliverable issues:
• Not having a clearly enough defined view of the role PR and communication can play in helping achieve business outcomes.
• Too much focus on ‘outputs’ rather than ‘outcomes’ from PR agency.

 PR agency management issues:
• Ambiguity in reporting and responsibility.
• A lack of clear process and procedure in the day-to-day PR relationship.
• No regular or annual review process.
• No dispute procedures or mechanisms for addressing relationship issues
• No formal contract.

The role of a PR Director or PR Manager can be lonely and challenging. On the one hand dealing with the internal challenges and politics; on the other hand having to manage an external resource, often without the necessary first-hand knowledge and experience.

In my experience most PR Directors and Managers value and respect their PR agency. However, they often know in their heart that the results could be better and that both parties would be happier if some issues could be addressed and solved.

Most PR Directors and Managers also know that it is their responsibility to solve these issues. Regrettably few seem prepared to take the steps necessary to achieve this, which is a shame.

PS  You might be interested in other recent blogs I have posted on this topic under PR Agency Relationships

Related posts:

1. Addressing dysfunctional PR agency relationships
2. PR agency billing:is it time for a discussion and review?
3. Don’t blame the PR agency. It’s up to you to manage them!

Australian and New Zealand PR Directors and Managers and their PR agencies should be reviewing their roles, responsibilities and protection as legal proceedings on both sides of the Tasman put corporate public relations practices in the spotlight.

In Australia 10 former directors of James Hardie are arguing about a press release in the NSW Court of Appeal. They were found guilty last year of having breached their duties based principally on a contention by the Australian Securities and Investment Commission (ASIC) over what was said in the press release relating to the funding of Hardie’s asbestos compensation trust.

In New Zealand , where there has been a flurry of actions instigated by its Securities Commission, Lombard Finance is facing criminal prosecution, accused of misleading investors through its prospectus, road shows and other company communication efforts.

It’s ironic that in these two cases it’s been the Directors of the company that have faced the music. 

To date, as far as I am aware, no PR Director or Manager or a PR agency has been caught in the legal web, although James Hardie’s former head of public relations Greg Baxter (now with News Corp) was reportedly grilled intensively at the court hearings last year (but as a witness – not as a defendant).

And ironically one of Lombard’s Directors facing prosecution– Lawrence Bryant – ran a public relations agency in New Zealand for a number of years!

So if corporate PR practices are being put under the regulator’s blowtorch what does it mean for those in work in, and advise on, public relations and communication – from within the company and from external PR agencies?

There’s no need to panic. But there is a need to address the issue in a deliberate and formal manner so that protection is afforded to all.

I think that focusing on the following three actions will provide 90 percent protection for PR Directors and Managers and/or PR agencies:

1. All those who might draft or release corporate communication must have formal indemnity protection. In my previous PR agency life all contracts included this provision (although whether there was always a formal contract with the client is another matter!). PR Directors or Manager’s should insist on this as part of their terms of employment and this is especially important if they act as the organisation’s spokesperson.
2. At a policy level there should be a written, codified procedure for the approval and release of corporate public communication which the PR Department and/or PR agency formally agrees to. This should include appropriate levels of authority for the approval of all materials – and their release. The aim of this is to ensure that if the internal or external PR advisors follow this procedure they are automatically afforded a degree of protection (and if they don’t they only have themselves to blame if they find themselves in the gun).
3. At the implementation level ideally every piece of written corporate communication that is released (or any messaging or scripts that are to form the basis of answering questions) should be formally signed as approved by the responsible executive. In the old days a client had to sign everything produced by its ad agency.  PR people have, in my experience, been lax in this regard!

For the PR Director or Manager there’s a double challenge. On the one hand they have to act on behalf of their organisation if their PR agency decides they want to have greater indemnity protection. On the other hand they have to negotiate an appropriate indemnity for themselves.

There’s one other matter to consider. That’s when an organisation is clearly facing challenging times and the corporate communication is demonstrably risky. In such situations it is always wise for the PR or communications people to draw up specific agreements and procedural

Of course, all kinds of side issues arise. Merchant bankers, lawyers and every Tom, Dick and Harry like to get involved in press releases and public communication. Not to mention the Corporate Counsel!

That’s fine. What I’m proposing is unashamedly aimed at protecting the butt of the PR and communications people. If others get in the act and there’s a foul-up so be it.

My three actions sound simple. But from experience they can be difficult to implement. Over my career I’ve had many arguments with the legal counsel of clients about how communicators need to be, and should be, protected by indemnification. And in the rush of battle getting your Managing Director or CEO to actually countersign a simple press release can be seen as awfully pedantic and small minded.

Nonetheless times are changing for Australian and New Zealand public relations and communications’ professionals.  By taking a more professional and disciplined approach we might just help keep some of our masters out of Court. Then they would thank us!

Related posts:

1. Australian PR agencies seek payment for pitches
2. 5 actions to get PR recognised in the C-suite

Dysfunctional relationships with PR agencies are about as common as marriage relationship issues. This week I felt like the PR Doctor (or relationship counselor) as a long-standing corporate acquaintance had a cry on my shoulder about the troubles she  was having with the organisation’s PR agency.

The concerns/complaints were nothing I hadn’t heard before – and experienced first hand during my 30 years on the agency side.

There were lots of first-hand examples of ‘we wanted this’ but ‘they did this’. But summed up they came down to an apparent disconnect between PR agency and PR department staff and disappointment at some of the outputs and outcomes from the PR agency’s work.

The sad thing is that this Australian organisation is one that any PR agency would be falling over to work for; and the agency has a good reputation, good people and does good work. And they’ve been together for nearly three years and to the outside world it seems a solid and good relationship – a good marriage between two parties suited to one another!

To continue with the medical analogy like any doctor there are a range of tests and procedures that I adopt when faced with working with an organisation that has PR agency relationship ‘problems’ and has determined that it wants to seriously diagnose work to address them. Now’s not the time to go down that path!

But in a general sense like all relationship issues it’s my experience that there are normally faults on both sides.  The courting stage (ie PR agency selection) was exciting, the honeymoon (the first 2-3 months) were fulfilling. But now the PR relationship has to run on a day-to-day basis and its not going as smoothly as both parties (or at least one!) had hoped.

Over the years I’ve found that the two most common issues are around:
• Power. Both the PR Director/Manager want to be recognised by general management for their contribution. However, sometimes a PR Director or Manager can feel vulnerable or threatened and deny the agency access beyond them. In other situations the PR agency can be too aggressive and assertive and try and go around the PR Director or Manager. Neither is healthy or productive.
• Process. Very often there’s a lack of reporting systems and mechanisms governing the relationship. That means the lines of responsibility and accountability can cause expectations to become blurred. In such situations good outcomes are difficult – if not impossible – to achieve. 

Taking a comprehensive ‘health check’ that pinpoints all of these is the starting point to getting the relationship back on track.  The issue is whether this can be initiated by the PR Director/Manager or whether it’s best to bring in an independent party.

As I said to my acquaintance, seldom do either of the parties wish to part company.  But too often that’s exactly what the outcome can be within a few months if nothing is done to address the issues. And as with her case, there was little wrong that couldn’t, with goodwill on both sides, be fixed!

The sad thing is that as with marriages there are a lot more unhappy client-pr agency relationships out there than there should be. And it’s so silly when the underlying issues are not that insurmountable or the remedies that difficult.

All it takes is the courage and commitment to address them.  And being the initiator of that first step is often half the battle!

Related posts:

1. BRW article highlights PR agency relationship challenges

With the clouds of recession in Australia now fading more PR Director’s and PR Manager’s seem to be deciding that its time to ramp up the public relations and communication effort.  As a consequence PR agency relationships are being put under the microscope resulting in an upsurge in PR agency reviews and selection processes.

Evidence comes from an increase in announcements by marketers of competitive PR agency pitches being planned or having taken place, and successful PR agencies issuing press releases about their wins.

But with the increased activity around PR agency reviews and selection processes, comes the inevitable grumbles. Whether it’s just from sore losers, or whether some of the practices employed in choosing a PR agency do genuinely leave a lot to be desired, it’s hard to tell.

Having spent 30 years on the PR agency side, and been through my share of pitches,  I’ve seen too much that has gone wrong. And because I strongly feel that much could be done to produce improved results for both the client and agency if more structure, process and commonsense were applied, PR agency selection is a service I’m now offering.

A lot of the gripes from PR agencies comes from the pitch process itself – and I will write about this at some point in the future. But I think as many frustrations arise in the first part of the process.

What my experience tells me is that many PR Directors and Managers, by treating the initial stages of a the pr agency selection process as more of an administrative chore, actually end up eliminating PR agencies that might actually be the best choice in the final analysis.

Some of the key factors that determine how you get the best short list to finally pitch include:

 
1. How you handle the incumbent PR agency.  If, as many organizations do, you aren’t up front with the incumbent and they suddenly find themselves in a competitive pitch with a group of pre-selected agencies it doesn’t send the right message to your future PR partner. If you treat your current PR agency this way, isn’t that a good indicator as to how they are likely to be treated once the honeymoon is over?

 
2. How you arrive at your initial list of PR agencies. The PR industry is diverse, especially in these days of specialisation. Yet how some organisations arrive at a list of PR agencies they want to hear from is not only frightening, but often incredibly hit and miss. A lot of time needs to go into this part of the process. Regretably often that doesn’t happen. So the process is flawed, and very restricted, right from the beginning. 

 
3. Your brief/RPF (request for proposal). It’s not easy to prepare a proper brief, but inadequate and poorly thought through briefs are probably the biggest complaint by PR agencies.  Too often organisations delegate the task to someone within the Department who has the time. But that’s normally a more junior person without the right experience for the task. The Brief or RFP is probably the single biggest factor in an organisation getting the PR agency that is the right fit for it.

 
4. Your qualifying pre-selection process. Too often a number of agencies are asked to provide a written credentials or capabilities submission and the decision as to who goes to the short-list and actual pitch is made solely on this without the opportunity for face-to-face contact. If the brief is inadequate then this process may result in the potential best agency being excluded because something has been excluded or misunderstood.  This is often the single biggest gripe and frustrations of agencies and it directly leads to bad decision making at this crucial preliminary phase of the PR selection process.

 
5. Management of the initial phase.  This is not a job for a junior or an administration person. It needs someone who is a PR decision maker who is going to be personally engaged with all those invited. From this group will come your eventual new PR agency partner. You want to create an environment that provides every opportunity for the right agency not to get lost or eliminated because of administrative procedures. So be connected, be available, and meet the agencies face-to-face. It’s worth the time commitment.

How organisations go about selecting a PR agency is changing. However, regrettably many of those involved in the PR agency selection process have little understanding of how agencies work. Too often, in my experience, the importance and relevance of this initial part of the process is completely under-estimated.

Related posts:

1. Australian PR agencies seek payment for pitches
2. Addressing dysfunctional PR agency relationships
3. BRW article highlights PR agency relationship challenges

For Australian Public Relations and Communication Managers the Christmas/New Year ‘quiet’ period provides a great opportunity to take stock on departmental progress.

If I were running a PR or Communications Department I would be assessing my performance under these three broad headings:

1) PR Department Management.

Overall I would be asking myself how my management of PR or Communication has measured up with what I set to achieve this financial year. Specifically I would be asking myself that at this time of the year:
• Have I done enough to improve my standing with the CEO and the other members of the Executive team?
• What criteria do I think my colleagues are applying to assess my performance and contribution to the team?  And how do I rate my own standing and performance against these criteria?
• What are the areas or actions which I think have strengthened my standing? Conversely where might I have not done so well?
• How do I think my performance compares with the best of my peers – those I know have the eye of the CEO?
2) Communication Delivery

Overall I would be asking myself as to whether the projects my Department undertook, or the initiatives I introduced, delivered the outcomes that I honestly had hoped for at the beginning of the year. Specifically I would be asking:
• Which projects/initiatives were successful?  What contributed to these successes? Were there common factors in those that were successful?
• Which projects/initiatives were not as successful as I had hoped? Why was that? Again, were there common factors that impacted on these projects?
• Are there structural or organisational matters that it is apparent are central to the way the Department is running? If they are good and positive how do I ensure these continue? If there are problems how do I best address them?

3) Agency Relationship

If, as most organizations do, I also employ a PR agency I would be asking myself whether I am getting the best out of my agency.  Specifically I would be asking:
• Am I setting an environment which encourages my agency to produce the best results and outcomes for me?
• What did the agency do in the first part of the year that was particularly good? What has the agency done that was not the best? And what factors contributed to each?
• Do I have in place mechanisms such as a formal review of the agency that will enable us to review, and if necessary, strengthen the relationship?

Having gone through this self analysis I would be setting myself goals and objectives for the second half of the year and for those areas that I think I (or others) need to improve I would putting in place forms of measurement that I can refer to six months from now.

Related posts:

1. PR agency billing:is it time for a discussion and review?
2. Addressing dysfunctional PR agency relationships
3. Australian PR Managers and agencies put in spotlight by court cases

News that LG Electronics Australia has shifted from one multi-national PR agency to another as part of an international re-alignment, apparently without a pitch from either of the agencies involved, or indeed any other local Australian PR agency, is a further signal as to how much PR in Australia is becoming driven by international factors.

Moves of this nature, as a consequence of ‘global decisions’, are not unusual in advertising. But this is a reminder as to how much PR is following in the advertising slipstream.

I’ve seen this move towards internationalism at first hand. During my last 10 years in the ‘agency world’ my agency was an independent that was able to ‘act local’ for several multi-national clients. But as the Australian associate of an Omnicom agency we were also at times the grateful recipient of international business that we won by overnight email, out-of-the-blue from New York or London.

Both worked – depending on the client.  But PR is not like advertising. Advertising is still about buying platforms and delivering consistent messages. PR, on the other hand is about developing relationships.

The former can be orchestrated from anywhere – and the buyer can be changed without too much disruption. The later need connected people on the ground, who are able to build and sustain long-term relationships. In the old adage’ think global, act local’ advertising is the former while PR is the later.

Most Australian PR Manager’s of multinationals that I’ve met have been sceptical, suspicious or resentful of the increasing multinational approach to PR. 

From my experience issues that arise to irk PR Managers include.

1. Relevancy.  What works in other countries is often not appropriate for Australia – and it can take a hell of a fight to be the exception. 
2. Budgets.  Local budgets are often not adequate to tackle the tasks that Head Office is implementing and wants its Australian operation to duplicate.
3. Endorsement. Local internal management can often have more of a sales perspective which can leave the PR people bereft of local endorsement.
4. Process.  Marching to the international drumbeat can result in a large proportion of scarce internal and local agency resources being chewed up in liaison and reporting with little left to actual implement the PR work!
5. Media. Trying to duplicate American and Asian media initiatives can be fraught with risk given Australian media that can be fiercely critical and frank at times.

There’s no point in shooting the messenger – the multinational PR agencies. Instead PR Manager’s need to be stronger and more proactive in protecting their patch and fighting for their independence (providing that they commit to following international policy and messaging).

One way is to bring more process and transparency into the PR agency selection process.

Too many Australian PR agency appointments are still made without a rigorous process. Multinationals would likely be less inclined to make arbitrary decisions in favour of multinational agencies if they knew that equal or superior local Australian PR agency talent was available – and their local PR Managers or Marketing Managers insisted on having a genuine competitive process.

LG has had its share of issues to handle in Australia and there have been some rumours that it hasn’t been the easiest client to work for. Nonetheless the agency on the way out -Burson-Marsteller -has done some major high profile work for LG and its likely that neither LG Electronics and  Burson-Marsteller locally are too happy with having the rug pulled out from under their feet.

The only one smiling will be those in WPP because the irony is that both the present and new PR agencies (part of Ogilvy) are owned by WPP. So it doesn’t matter one iota to them.

Welcome to the new world of international PR.

Related posts:

1. Australian PR agencies seek payment for pitches