Pay-for-Performance PR...why, what, and how...or how not

One truth is not so self-evident…all PR firms are not created equal. This certainly goes for those of us in the profession dedicated to the proposition that charging by the hour might be appropriate for a hot masseuse, but probably not for public relations…and absolutely not for media relations. It seems the economic disaster of the last three months has once again turned attention within our profession toward something “unique,” something “new,” something almost “revolutionary”…pay-for-performance PR. Once more, a compensation model that has been practiced successfully by myself and a few others for almost two decades is being trotted out of the shadows into the bright sunlight by our own trade media as either the “answer” to reduced marketing budgets at best…or as a viable test at worst for companies willing to experiment. How To Get Good PR Without the Big Retainers

I recognize this happens every few years when the traditional big hourly retainer PR firms and their clients begin to feel the economic squeeze of constricting budgets, or heaven forbid, a pang of guilt. Ok…the guilt thing is way overrated.

And with this renewed focus on pay-for-performance PR, comes the usual confusion as to what it is, who does it, and most importantly how do you go about selecting a firm should you decide it’s your path. Here are some thoughts from those two decades…

Pay-for-performance PR goes by many names….”pay-for-results,” ”incentive-based compensation,” “contingency-based,” and the most unglamorous, “pay-for-play”…but all are intended to describe PR firms that utilize a compensation system where the majority of their charges are based upon successful media placements or completion of actual designated services, i.e., speaking engagement, etc….and not by hourly fees or large retainers based on such fees. Some may offer some combination of hourly fees and/or retainers depending on the PR services being requested. However almost always the media outreach portion is performance based. One of the most common misunderstandings about pay-for-performance PR is that it is some how “cheaper” than under a traditional compensation model. Not necessarily. Over the long run of several months or years, a client may pay close to the same number of dollars, but the difference will be that each one of them will be attributable to a specific tangible result…not wasted effort.

And in spite of the old-fashioned basic fairness of this compensation structure, only a few PR firms practice it on a regular basis…and only a very few have practiced it successfully over a long period of time for all of their clients. Some large traditional PR firms have experimented with “pay-for-performance” for short periods or have tried to pass off the hourly/retainer model under its guise but seldom with any long-term success. The most common reason for failure lies in the fact that it is the antithesis of an ingrained compensation culture based on charging for the abstract “consulting” and “effort” rather than for a tangible something.

So, if there is only a small percentage of PR firms practicing legitimate pay-for-performance PR, how do you know which will best serve your needs as a client. Here are several pointers…

• Do a search for “Pay-for-Performance PR” on the Internet and review their web sites. Then contact the principle of the firm directly, discuss your particular PR needs, and their experience with similar challenges. 

• Do not hire a PR firm strictly online no matter what inducements may be offered. You can’t go “cheap” by filling out detailed PR or media needs online and expect any real level of successful service. Successful PR placements are the result of a collaborative process between the client and the agency…not a questionnaire. 

• If still interested, ask for a detailed written statement of the PR firm’s compensation structure and how their fees are determined. It is fair and appropriate to discuss budget and estimated potential charges at this point, but understand that under pay-for-performance compensation, the good news is that budget ceilings may not always be achieved. 

• Be leery of bundled pricing. Ask to see what’s in the “bundle” and that you’re paying for what meets your needs, not the agency’s.

• Make sure that compensation is based on real “performance” based on the successful publication, broadcast, or posting of your story…not just the “setting up of an interview opportunity at a specified date and time.” Make your agency deliver the actual placement…along with its invoice.

• And always make sure you’re willing to work with the agency as a team whichever PR firm you select…i.e., check the chemistry, not just their experience. As mentioned previously, successful PR is a collaborative process based on trust, responsiveness, and teamwork. And oh…patience.