The process by which a tech company selects an agency involves a lot of variables. So, I’m going to focus on how a startup in its early stage of growth should pick a PR agency. Here are some rough guidelines from my years in the trenches.
BIG AGENCY OR SMALL AGENCY
Most startups should go with a smaller agency. The reason for this would surprise many. Larger multi-national PR firms are intensely profit-driven. There are exceptions to this general rule but the majority of large firms are acquired entities of larger holding companies (such as WPP, Interpublic, Omnicom, etc). There was a wave of acquisitions about ten years ago where ad agencies acquired almost all of the established PR agencies. These ad agencies saw the commissions on media buying continue on a downward spiral while watching their PR agency counterparts enjoying healthy growth in high margin, client fees. These large firms have to show their parent companies that their profit margins are being improved and that each client is being organically grown (ie., fee increases on retainers and/or “special” projects). Unfortunately, startups do not have deep pockets and commonly cannot increase its retainer every time the agency contract comes up for renewal or extension.
What suffers if you don’t keep upping the ante (ie, retainer)? Well, a larger firm will typically look for more profitable use of its staff’s time. This can come in one of two ways: a) get a client who signs on for a bigger retainer and/or b) spent less time on your account while keeping the same retainer fee in place. A smaller firm is also a business. By definition, a business needs to make money so even smaller firms certainly are profit-motivated. Small firms, however, care more about how pleasing it is to work with a particular client. One of the reasons why a successful small firm remained small is that it chooses to focus on client satisfaction above all else. It cannot afford client turnover. All it really aims to do is produce a steady, predictable stream of client fees. Stability is more important to small shops than growth. Again, there are exceptions but this is the general difference. So, think not only about your own business but the agency business. It matters.
AGENCY NAME VS. PEOPLE
Agency name is worthless. Really. The reason why a big PR firm is valuable to a large tech company is not because of its name. Larger PR firms typical have a network of offices and staff around the world to efficiently support your entire global PR effort. If you’re getting revenues from a ton of places around the world, consider enlisting one of these mega-agencies. Most startups get their revenue from their home market and possibly one or two other established markets. Stick with the small agency. Small agencies can provide a near term solution if you need to generate awareness overseas through affiliate agencies in the local region or country(-ies). The more important part of an agency to evaluate is the account team. The specific individuals who will work on your account will be critical to your success. Smaller firms attract more seasoned PR pros than their larger counterparts. Nobody really joins a large PR firm to stay there for a long time. There are brilliant PR pros who do stay for years but they usually get promoted to a comfortable VP or EVP job (all big agency careers are on a fast track mainly because of the high turnover) where they care more about new business and profitability of accounts and no longer personally handle client work. Again, there are good PR folks at both large and small firms. It’s more likely that the good one will directly work on your account with commitment, longevity, and passion when dealing with a small firm.
LOCATION MATTERS
Contrary to popular belief, PR is expensive. A typical startup in the early revenue stage will spend roughly $12-18k monthly on its PR retainer at bare minimum. The yearly spend will land in the $150-$220k range. This is approximately 10-20% of a typical startup marketing budget. And, we’re only talking about the program dollars since we’re looking at the fee for outsourced “services” and out of pocket expenses. In addition, you probably have a dedicated PR manager on the payroll. Your VP of marketing probably spends a ton of time with the PR function and agency. Your CEO, product marketing managers, and other VPs get involved in press interviews, messaging sessions, meetings, etc. The real number gets a lot larger than you ever imagined. When getting an agency, you’re paying for one thing … time. Agencies are structured in a way that every individual member of the account team bills according to a schedule. An hour of VP time is going to cost you $200-300. An hour of an entry level account executive will cost you $100-180. You get the idea. It’s a lot of money. Avoid having to unnecessarily pay for travel time. If you can, find an agency local to your business.
PR EXPERTISE OVER (TECH) DOMAIN EXPERTISE
I often laugh when I hear that somebody selected agency XYZ because they had the necessary background in a particular technology area or space. This is the dumbest comment I’ve ever heard. First, there is no such thing as a “PR expert on technology XYZ.” The most competent PR professionals are expert at communication and masters at using solid relationships with media and analysts to build and validate credible corporate reputations – regardless of product or domain. Most PR pros couldn’t tell you what a BUS does (maybe take passengers to a destination?) or know what XML looks like (it’s a language, right?). If you find pros who know both PR and your tech space, hire them asap. You’ve found a gem and they are out there. But, if you’re choosing one over the other, go with the accomplished PR expert who has some learning to do on the technology space or product area. They’ll be quick studies.
CREATIVITY VS. BASICS
Everyone wants a creative PR maestro to work wonders. In reality, PR is 10% inspiration and 90% perspiration. Look for an agency that does the basic PR 101 exceptionally well with a dash of creativity here and there. Most of the creativity in PR is found in the execution of an outreach, campaign, or launch. There are cases where a creative idea sparks an entire campaign but these are usually infrequent. You don’t want your entire year depending on a few creative spots here and there. Pin your PR efforts around solid execution of basic things (e.g., relentless media pitching, edcal shaping and monitoring, developing content, influencing media and analysts through your customers, speaking engagements, getting incluson in big roundup pieces, etc.) through every quarter.
- John
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