The best business advice anyone ever gave me was, "never give something away for free that you're good at." Taking it further, you should know to price it well, if you're good at it.
In these credit crunchy times, people and companies get desperate. We've had a couple recent incidents where we've lost a pitch at the hands of a PR whose price was "Free." Yes, free. In these cases even the prospect found the situation a little ridiculous. And I never mince words when I tell a prospect that I do not respect that model, no matter what the supposed 'rewards' are at the end of it.
Is this starting to become an even bigger problem in the PR industry? it completely devalues our work. And you're smoking something if you think people in the industry are convinced you are going to pick up the phone and pitch a company to the press (well), and do a good writing, tracking, measurement and reporting job, all for free. That's like offering to go to jail when you haven't committed a crime. It won't help a struggling PR's career and it definitely won't dig you out of the rut you'd have to be stuck in to even consider something so crazy.
A colleague pointed out that it seems very '2001' when companies were digging themselves out of the dotcom bust. I think it's downright toxic to our industry (which you've probably picked up on). PR planning takes an incredible amount of business creativity, the execution is hard work and it is very specialised work. No matter what the situation, unless you are doing your best friend a HUGE favour, should a business service like that be given away completely free.
NB: Some type of compensation model based upon performance is a different story, and we'd agree that it can often be the right pricing model. This post is purely about proposals given for zero, nada, nothin.'
So - I'm really interested to hear if other PR's have faced this situation and what your thoughts are.
2.6.09
Subscribe to:
Post Comments (Atom)
Hi Emily,
ReplyDeleteI couldn't agree more. We've recently had a similar experience where an agency approached one of our clients and offered a stupidly tiny fee, as overviewed in my post from yesterday: www.liberatemedia.com/blog/devauling-pr/
I have come also come across agencies offering services for free in the past, and as you say this can only damage the industry as a whole. How can we continue building confidence in the services we offer if we give them away one month and try to charge for them the next. It makes no sense.
it's too early to undervalue PR services. these freebie types must be desperate and - in a GROWING (not retracting) industry - you've got to wonder WHY they're so desperate. It's not 2001/2. maybe they're just not up to much?
ReplyDeleteThanks Lloyd - your post is excellent and I highly recommend our readers click on it! It's a more level argument than my rant :-)
ReplyDeleteI think one of the worst impacts of devaluing PR is that PR is already one of marketing's biggest goldmines. For the price of a good PR you can get a huge piece of publicity in a great publication - costing thousands if it was advertising - and editorial has far more impact than advertising anyway, so the AEV isn't even half the story.
This issue really touches on a nerve for me. Businesspeople who think they are getting a good deal with 'free' PR need to think again. As Chris points out, there is a reason that person/company is so desperate for work.
Hi Em, I couldn't agree more. Price is now a key factor in the procurement decision but it shouldn't be the most important factor OR the single deciding factor.
ReplyDeletePRs who under sell their services - and work for peanuts - can surely only offer monkeys!
How can a PR consultancy remain credible when it engages in a price war? There's other measures of worth than price alone; have factions of the industry forgotten about results, service and consultancy?
In the past I've seen ADs offer 'make & do' style PR campaigns for next to nothing - just to bag the business. Yes - it worked. However, this approach simply wins the account on a totally false promise and results in huge levels of over-service and lost profits. Plus, no end of grief for the people who work on it or inherit it when said 'enterprising' PR goes off to work elsewhere.
I'm all for a bit of healthy negotiation when it comes to price & pitching for business. FIRE recently walked away from an FMCG pitch where the prospect decided to encourage a bidding war between three consultancies. I won't go into specifics - other than we were the only independent and the smallest. We held our heads high and walked away!
There's no business sense in working for free or peanuts. Unless of course these people who do so - work in PR as a hobby. ;-)
I'd second the sentiments here as well. It's something that has been sneaking in to our industry and it's just not cricket.
ReplyDeleteI can't see how underselling services in this way can really benefit anyone. It's just bad practise.
Spot on. See my blog (and cross post). Blogger won't let me cut and paste the URL for some reason.
ReplyDeleteAgree completely! I've been having similar issues, and conversations with prospects (and clients) expecting something for nothing or pretty much nothing - the recent viral sums it up nicely.
ReplyDeleteAs a small agency we used to be able to compete with the big boys on price, confident that we could provide a 'big' agency service for a competitive fee. With more and more agencies undervaluing PR services and working at next to nothing this is becoming increasingly difficult.
Unfortunately there is still an underlying perception that PR should be cheap that what we do is whacking out a release and maybe calling the odd journo. This is now being perpetuated more than before by agencies piling them high and just chucking an AE onto the account, or overservicing to hell and giving a false impression of what a packet of peanuts buys a client.
Also been having several 'payment by results' conversations. I'm happy to look at a performance based structure that works for us as well as the client but as soon as I've started talking about ways to give us an ROI as well the conversation tends to grind to a halt - there is always a PR or agency a call away willing to give what we do away for nothing.
Thanks, Gavin - who are these free service providers? surely only medium-big agencies could offer that as boutique and freelancers (like myself) couldn't possibly afford the diversion.
ReplyDeleteWe need to name and shame wherever we can, they're undervaluing our industry!
I remember back in the dot com boom being approached by a number of businesses who basically wanted us to work for free on the basis that "when we are successful later, we'll pay you".
ReplyDeleteEvery time I suggested making this a formally binding contract (eg if we work for free, you guarantee to commit to us and pay us later) or sharing in the profit of the business, or giving us shares in the business, they all started to moan. "Oh, we have to have flexibility to choose our suppliers, etc".
In short, we were being asked to shoulder all the risk, without any kind of commensurate reward for taking on that risk. In every case
I told them - politely - to try elsewhere. Strangely enough, I don't think any of those businesses are talked to then are around now - I wonder why.
Working for free is the ultimate concession - and any concession loses its value almost immediately - and a concession that has no value in the first place has nowhere further to fall - the client will therefore view the "service" provided as virtually worthless from the start. Imagine what the client thinks of agency that "caves in" to working for free - doesn't that say something about how vigorously they would act on behalf of the client?
Giving away free trials when you are selling a product is fine. However, whilst goods are consumed, services are experienced.
May I therefor recommend the following Harlan Ellison video on the subject of working for free:
http://www.youtube.com/watch?v=mj5IV23g-fE
"They wouldn't go 5 seconds without being paid"
Thanks for all the great comments. That link to Wadds' cross-post, and a really funny video, is here: http://www.speedcommunications.com/blogs/wadds/.
ReplyDeleteThe Harlan Ellison video is also a really good watch, thanks Escherman!
I don't like using this blog as a place to name and shame, so won't be going down that route. I guess the best way to fight back is to point out how ridiculous any prospect is to expect to get services for a really cut-rate or free.
Hey, I mentioned this post in my podcast today.
ReplyDeleteWell, I guess it was fairly inevitable that the PR fraternity would all crowd around this topic, with their tin hats on, guns at the ready and a self-interest that is perhaps understandable and therefore hard to criticise. It's not fun losing business, so fair enough, people are a bit miffed.
ReplyDeleteHowever, it's playing a very dangerous game indeed to sit on your moral high ground, or down in your defensive bunkers, and rubbish this perfectly legitimate business tactic. This is a week where GM has gone bust, after spending years and years with their heads up their bottoms over challenges and threats that were blindingly obvious to everyone else. For sure, they make cars, not “do PR”, but there's a lesson in their demise for everyone in business.
You might not like it, or agree with it – but if it's pinching business away from you, sitting there all moaning about it, rubbishing the people doing it, well, it's all a bit sour grapes – and is of little help to lost pitches.
Nothing is free, ever. Someone, somewhere along the line is picking up the tab, perhaps unwittingly. Clients aren't stupid and know this. They can spot a loss leader when they see one – and most probably know that they'll pay for free work in the long-term if they establish a new relationship with this company. Also, clients who continuously jump from free PR to free PR are almost certainly going to end in a disjointed mess.
So, putting aside the headline “freeness” of your competitor's pitch – because it's not really going to be free or sustainable long term for your clients or competitors – maybe, just maybe, there was an element of “betterness” about their pitch. Either that, or there was certainly “sameness” about it, in which case, cost was left to be the deciding factor.
You just have to make sure cost isn't the deciding factor, with positive reasons to choose you – perhaps even, shock horror, changing your pricing strategy in order to win new business.
Crying foul won't get anyone anywhere. Free is here. Deal with it. It can be done – you're PR people, it's in your nature to get inside minds and get people to react as you wish. That's unless you're one of those PR people who've become “Press Relations” not PUBLIC relations, in which case, you're more expert at getting in papers than minds.
Frankly, a bit of competition seems right and proper – with hints of cartel-esque pitching going on in the world. In a communications world changing very rapidly, don't be so quick to assume your great worth. PR will change beyond all recognition, I'm off down the bookies to bet on it.