Wednesday, November 4, 2009

Is Pay for Performance PR for Real?

The banner ads scream like an old school infomercial.

"Guaranteed placements!"

"If we don't book, you don't pay!"

"Big time public relations without the big-time retainers."

In between the come-ons, however, is the reality that pay-for-performance (PFP) public relations is coming of age, according to one expert.

"Businesses are struggling in this economy and success in today's world requires business leaders to market in a way they may never have done before," said Marsha Friedman, author of Celebritize Yourself from Warren Publishing, ( "Just as people thought they'd never see people like Bernie Madoff being carted off in handcuffs, there are actually some positive shifts in the business world that are just as unbelievable. Not a myth, pay-for-performance PR - when executed correctly - can surpass the efforts of traditional retainer agencies at a much lower cost."

The advent of PFP PR began in the late 80's and was considered revolutionary at the time, Friedman said.

"It hit with some fanfare with an article in the New York Times, and soon after, other companies opened up with the same approach, but varying degrees of effectiveness," said Friedman, who is also the CEO of EMSI Public Relations, a pay-for-performance agency for nearly the last 20 years. "At the end of the day, whether it is a retainer-based agency or a PFP agency, the results will vary depending on the quality of their work. Just like there are good attorneys and bad attorneys, PR firms are in the client service business, so their effectiveness will always have less to do with their business model than with their capabilities."

One recurring criticism that retainer firms have leveled against pay-for-performance firms is that they lack the strategy component. Friedman says that the PFP model does not eliminate good strategic services. In fact, she believes it actually enhances the focus on strategy.

"When an agency is getting paid on a performance basis, it requires the agency to have a solid strategy, because their work and overhead are on the line with every client engagement," she added. "The bottom line is that the agency needs to inherently understand what the news media wants in order to secure placement. If the agency doesn't approach the news media with ideas and stories that are compelling for their readers, they won't get the placement and won't be able to serve their clients."

Other criticisms revolve around how it is difficult to execute print media campaigns in the PFP model, because the size and scope of the print media is so varied. Friedman says one easy fix is to approach print campaigns with project fees, as opposed to fees for each placement.

"A print campaign can be treated as a unit, with a guarantee on impressions and circulation," she said. "In that way, the full depth and breadth of the print media can be approached, without it winding up being too expensive if it's really effective. If it's not effective enough, the agency can always continue to work until the requisite impressions level has been reached.

The question remains as to whether it is less expensive than retainer firms.

"In can be, however, it's not so much about the expense, but rather, the value," she said. "By mitigating the risk of a client who wants results for the money they spend, PFP is far superior to the ‘best efforts' agreements from retainer firms. Moreover, there is no time clock on a PFP campaign. So a six month engagement across all media can wind up costing thousands less per month than a retainer contract that doesn't guarantee anything except that the agency will have the client's money at the end of the month, regardless of the amount of media they generate."