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Thoughts on the Pay-Per-Placement Model of PR

I was scanning some PR questions in LinkedIn Answers today and I came across a user looking for referrals to PR agencies or professionals that work on a pay-per-placement model. While there are firms out there that use this model I always hated this topic when I was running my agency. While it’s a seemingly fair request from the client’s point of view, it’s the wrong way to go about pricing and managing PR campaigns.

I thought it would be a good topic to through out there for discussion. First, my perspective on the topic – I’ll debate a couple of different angles for you.

Why Pay-Per-Placement Makes Sense for Clients

PR can be expensive. While PR is about much more than clips or placements, a lot of clients don’t see it that way. Most of the time, they hire a PR firm to generate publicity for them. So why not expect that a firm would be willing to work on a contingency basis? Why should clients take all the risk, shouldn’t the agency put some skin in the game? If you hired a new sales manager, and the manager wanted to receive their entire salary, commission, and bonus regardless of how many sales they closed, they would quickly be shown the door. Why should it be different for a PR agency? If the firm has extensive experience in media relations, with solid relationships in your industry, shouldn’t they be able to capitalize on this structure to earn more fees? Why are firms hesitant to adopt this model?

Why Pay-Per-Placement Doesn’t Work for Agencies

There is a lot of work that goes into developing and executing a PR strategy for a client. An agency should be compensated for that work. Whether it’s research, strategy development, messaging and positioning, or the tactical work of pursuing and securing coverage, there’s a lot of legwork that goes into the process. It’s not just picking up the phone and getting somebody to write about the client’s news.

Secondly, it’s near impossible to develop a pricing structure based on the results generated. There are too many variables. What is a one-sentence mention worth in TechCrunch, versus a product review in a trade magazine? Do you get paid more for quotes or mentions of a phone number or URL? What if a journalist does an interview, but doesn’t write a story? The client now has a valuable relationship they can leverage down the road, and isn’t that worth something? Even if the client and the agency can agree on compensation for specific types of coverage secured, there’s always going to be disagreement after the point – and agencies will be hard-pressed to collect those fees.

Finally, the PR reps have no control over what gets covered. This is where the real problem lies – many PR firms don’t do a good enough job of educating clients and setting expectations. Many clients don’t understand the ins and outs of PR, and what they should expect for results. If some clients truly understood the realistic amount of coverage that could be generated for them, based on the news value of the stories they give the PR firm to work with, many wouldn’t sign-up. PR firms are in active competition with each other, and projected results often get inflated during the proposal stage. If you don’t promise to deliver a certain level of results for the client, your competitor will – and they’ll get the business. Clients want to believe you can get them in BusinessWeek and The Wall Street Journal. If they believe you’re the firm to deliver, you’ll probably get the business… for a while at least.

Why It’s Not Fair for Journalists and Bloggers

When you work on contingency, you only get paid when the placement happens. This puts even more pressure on the PR teams to get results – their fees are directly tied to placements. As a result, it’s likely that they’ll be more aggressive in their pursuit of stories with journalists and bloggers. They’ll demand coverage and want to know exactly when and where a story will appear – or they won’t take “no” for an answer from the journalist or blogger. This will only create more conflict between the media and PR pros, ultimately hurting everyone involved in the process. This is already happening today, and the problem is only magnified when you put media relations pros in a commission mindset.

Isn’t Media Relations Really Pay-Per-Placement Already?

Most firms are already working on a pay-per-placement model, whether they know it or not. Every agency generates fees from pursuing media opportunities. They are paid to pitch the media and to secure coverage. If they don’t deliver the goods, they’ll quickly be resigned by media-hungry clients. While an agency may deliver a lot of value beyond the clip book, they’ll often be judged by the volume of coverage they generate. There is no other option for firms but to pitch their hearts out and hope to retain clients as long as possible.

The pay-per-placement model may help some firms land clients faster because the terms are more favorable for the client, but the outcome will ultimately be the same. If you generate a lot of coverage for the client, they’ll keep paying their bills. If you fall short of their expectations, they’ll move on. Plain and simple.

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