It’s Important to Know the Difference Before Hiring

Every week, we talk to entrepreneurs and authors who dearly want and need publicity, but are terrified. They tell us they’ve already spent tens of thousands of dollars with a retainer firm and they have next to nothing to show for it. A man once even telephoned me in a rage.

“You’re the reason I blew $150,000!” he said.

“Me? What do you mean?” I asked.

It seems he’d tried to call me months earlier but I didn’t get the message and so hadn’t returned the call. Figuring I wasn’t interested in his business, he hired a retainer-fee PR firm. When all was said and done, he’d paid $150,000 for one poorly produced video news release and two mentions in trade publications.

“If you’d called me back before I went with them, I wouldn’t be out all that money!” he yelled at me.

He was right.

What makes all those gun-shy prospective clients reach out to us, despite their fears, is they see we’re a “pay for performance” agency that guarantees results. We don’t charge a retainer fee, rather, we guarantee certain quantifiable results for a set price. While many aren’t sure exactly what that means, it sounds better than the monthly retainer firm’s “best effort.”

So, what are pay-for-performance agencies? Since we’re a rapidly growing segment of the industry, I thought I’d give you some history and a better understanding of the differences.

When I launched EMSI in 1990, we were a pioneer, one of only three such agencies that I knew of in the country. Almost all the rest used the traditional PR business model: Charge the client a retainer fee, upwards of $4,000 a month and, in addition, bill by the hour for every action taken on behalf of the client.

Since pay for performance was such a new concept, I had to figure things out as I went along. Over the decades I’ve developed a model for EMSI that isn’t necessarily what you’ll find at other agencies. For them, it’s an evolving frontier — many turned to pay for performance only during the recent economic downturn. Even their definitions differ from one agency to another. Some define it as the action or service they provide: “We’ll write a marketing piece and you’ll pay X for that.”

At EMSI, our definition is getting actual media exposure. With radio, for instance, clients pay a per interview fee to get booked on 15 talk shows within a given period of time. If we get them only 12 shows in that time, they can get a refund for three. With TV appearances, we book first and then bill. In social media, we charge a flat monthly fee for a guaranteed number of connections. In print, clients pay for exposure in terms of circulation, or visitors per month for online publications.

Retainer firms defend their billing practice by saying it would be a nightmare to try to put a dollar value on every action taken and every possible result. Is a sentence in the New York Times worth more than a full-length feature story in the Burlington Free Press? What if a print placement the agency secures results in a TV station booking the client on a talk show?

On that, the retainer firms are right. Clients end up paying a lot more than they anticipated when a campaign does really well. For example, a placement in a national magazine may generate a $25,000 fee, while a mention in a small newspaper might run you $200.

I tried that approach back in the ‘90s and I had clients who should have been thrilled with their great placements instead yelling, “STOP! I can’t afford this!” So I dropped it after just a few months.

But many of the newer pay for performance agencies – and those switching over to this model – use a similar value-based pricing structure.

Our goal is to get the most exposure we can and the best we can so that our clients will re-sign with us. That’s why we contract for quantifiable results, for which clients can budget, and aim for quality, which gives us the repeat customers and referrals that have kept us growing for 22 years.

I hope that gives you a better understanding of your choices when hiring a PR firm. Keep in mind, knowing how the fees are structured is critical, whether you hire a traditional agency or a pay for performance.

And please, if you call us and someone doesn’t get right back to you, feel free to call again. I don’t want anyone else blaming me for their $150,000 loss!

Retainers are for teeth!
Marsha