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The business of PR – part two

(Note: this post first appeared here on May 16th, 2005)

I’ve been enjoying Michael O’Connor Clarke’s Seven Deadly Agency Types – not least because he clearly speaks from experience – and it reflects a lot of what I have seen myself over the years.

His current analysis is of large, multi-national PR firms – I’ve highlighted some his comments below and added my own commentary.

A key part of the value proposition these behemoths offer to clients is the apparent advantage of homogenous, fully integrated PR representation in every region you might want to operate. The promise is that you’ll be able to get the same quality of service, the same methods, the same reporting tools, and complete coordination of all activity wherever you need PR.

The key word here is “promise” – in reality, even the PR firms themselves would acknowledge in private that they can’t offer the same quality of service everywhere – by definition, some agencies have better people and better experience in some things rather than others – or the pool of local PR talent is just not applicable to every client. For example, the German agency may have a great reputation for handling telecom work, but no experience of enterprise software – however, the promise is that everyone, everywhere will be able to provide the same quality of delivery. In fact, in most cases, the clients know this too – however, they want to believe it is true – and there are other motivating factors for their decision to go with this kind of approach – more on this below.

You have finite marketing resources. If you’re like most companies, your PR dollars probably represent a relatively small portion of your marketing budget. And your marketing budget these days is, no doubt, considerably lower than it might have been in the crazy days of the mid 90s. Your mid-sized budget for agency services now has to be split somehow between two or more different offices – each office bearing the same brand identity, but each of them running on their own individual P&L and productivity targets. What might have been a decent size of retainer for one firm, suddenly becomes a lot less attractive when it’s chopped up. If, like most clients in this situation, you opt for something like a 70/30 or 80/20 split – one of the offices is going to find it tough to justify hauling themselves out of bed to service your account for the fractional budget portion they’re getting. For the good of the firm, they’ll probably agree internally to handle you as an investment account – hoping the budget will grow as they deliver great results for you. The reality is, you’re still going to get short shrift.

This is the another dirty little secret of international PR networks – as described above, most of the agencies are doing this as a “favour” to the lead agency (either in the US or UK). By any rational business analysis, the work they are expected to do does not justify the amount they are being paid – however, they do it for the “good of the network” – but the account teams who have to burn the midnight oil for these loss leaders don’t quite see it that way. The fact is that domestic PR work accounts for the vast majority of agency income even in big international networks. Which leads to another PR paradox. The agency people who get the best out of international agency networks are those that are prepared to spend time with their counterparts in other countries and do unpaid “favours” for each other – ie the French agency has a client in London for a few days and wants a few press meeting setting up – however, they have a miniscule budget – UK agency does it on the basis that they may need to call upon the French for a favour some time. When a big international client has a particularly demanding campaign, the guy in London with the most favours in the bank can get his international colleagues to play ball – when under any other circumstances they’d laugh till they cried.

The paradox is – the person who puts in this extra unbilled time to elicit this relationship doesn’t get any thanks for it – in fact he/she probably gets a ticking off for not pulling in any revenue for this unbilled time – even though they are trying harder than anyone to making the international network concept work.

It’s entirely natural that big clients are gravitationally attracted to big PR firms. In a trend that has paralleled the ongoing consolidation in the agency world, many Global 1000 organizations have been moving to centralize their agency relationships. For a multi-billion dollar company, with operations in fifteen or so countries – appointing a single global agency of record just seems to make good business sense. Certainly, the alternative approach – individual agencies selected on merit in each region or for each business unit – can tend to look messy.

What is often forgotten is the real driving factor behind going with a single agency network. Having a single rear end to kick is certainly one element of this – also, some clients don’t actually consider results as their main priority – they are more bothered about the process – and making sure they have something in place to cover themselves if things don’t work out.

Big global clients may think they’re being smart by signing a single contract with one of the top tier shops, but I’ve seen many, many examples where a head office mandate to use the same agency everywhere in the world has ended up causing horrendous problems for individual regional offices.

The real problems occur here when the decision to go with a single agency is taken centrally with no consultation with the company’s local organisations. Those on the ground who have probably been working with their own local PR agency very happily are told they have to drop them and work with a bunch of people they had no hand in choosing and who they don’t know from Adam. Human nature suggests that resentment is built into the relationship from the start. The new agency spends most of its time trying to deal with people who bitterly resent them being there in the first place – so even when the agency might be quite good, they end up spending inordinate amounts of time just trying to placate their local clients rather than actually trying to do any work for them.
And please, don’t tell me your award-winning global intranet solves the inter-office communication problems. Even with the most sophisticated networked communications infrastructure, how much of your budget do you really want to see chewed up by staff keeping up to date with what everyone else on the account has been doing for you lately. There’s better ways to skin that cat.

Award-winning global intranets are either:

a) Vapourware – if the client ever asked to see the thing in action as opposed to the slide about it at the pitch, they might be in trouble

b) Crapware – some of the most god awful intranets every built are those that big agency networks have tried to put in place – in fact, they’d all make great case studies for how not build an application – hopeless design specs, inappropriate software development staff, total lack of user input, etc.

Lets face it, most international agency internal communiation is done by a weekly telephone conference call which never gets 100pc attendance. Or every agency submits a Word document which some poor sap at the hub has to try and consolidate into one completely unusable report.

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