Tuesday, April 29, 2008

Views on Agency Compensation

One of the most hotly-debated issues in public relations has always been compensation; by that I mean what agencies should get paid, not what they should pay their people. This is especially now that we're in an era of push-button publishing and "how to" books purporting to make everyone instant experts in virtually any subject. While the debates rage on, I'd like to suggest they mostly miss the point.

For some time, there have been agencies and consultants touting a pay-for-performance model in public relations. In most cases, this simply means that agencies get paid based on how well they perform for the client. While that sentence may have been simple enough to parse, such a change in strategy is anything but simple and, in my opinion, not as great as it may sound.

In most cases, pay-for-performance models have scales that award the agency a fee based on the circulation of a publication or some similar metric. For the most part, such model changes have been suggested mostly for public relations, since there's always been a perception that it's in the best interest of a business to pay based on media coverage. However, one ad agency chief recently raised some eyebrows for suggesting a new approach that would extend to ad agencies.

In an AdWeek story, Andy Fletcher, chief of the Atlanta ad consulting company Fletcher Martin suggests one of the problems with the conventional agency compensation model is that agencies are rewarded the same for success as failure. Instead, he proposes a two-tier model: the first part of that model would involve clients paying a set fee for a program strategy; the second portion would be based on the results the client receives as a result of the strategy itself. Fletcher proposes that agencies should be willing to risk all their execution-based compensation because, if the client wins big, so does the agency. Again, Fletcher's not specifically mentioning PR in his piece, although such a methodology could theoretically apply there as well.

Fletcher's idea is certainly better than the pay-for-play approach that's traditionally been espoused in PR. The key question, however, would be whether such a model could really be effectively adopted by PR agencies. For example, there are certain scenarios where no agency could succeed, regardless of the quality of the strategy. These could include a flawed product design, poor program implementation, etc. While the agency would still receive a program fee, one would assume that their overall upside would be tilted toward execution rewards. In this case, those rewards would likely be muted by the aforementioned issues.

As someone who's spent a lot of time working with attorneys and other professional service providers, it's always struck me as odd that some PR pros devalue their services in an effort to compete. For example, you'd never see well-known corporate attorneys adopting a "winner take all" strategy when it comes to a piece of complex litigation; and they certainly wouldn't call a business model like that revolutionary.

For better or worse, however, PR has always seemed to do a poorer job of positioning itself than its clients. So if we're going to talk about alternatives, in my opinion, a model based along Fletcher's thinking is at least a step in the right direction.

Friday, April 25, 2008

Company Goes to Bat With Google Over Anonymous Blog Posts

Since it's launch, one of the things most lauded about the blogosphere is not only its ability to give practically anybody the ability to speak their mind on whatever they wish, but if they so desire, the right to do it anonymously. In yet another case pitting existing laws against emerging technologies, that may soon change.

Aircraft company Eclipse Aviation has subpoenaed Google in an effort to secure contact information for several anonymous posters on the Eclipse Critic blog hosted by its Blogger service. The legal action comes as a result of several comments made on the blog that question the features and characteristics of the Eclipse 500 Very Light Jet.

The company says that while it has no desire to shut down the blog, it feels compelled to go after the unnamed authors that it feels have defamed the company and its products.

Of course, it will likely be a while before this issue plays itself out in court. And while I'm not an attorney, it seems to me there are legal precedents at play that could make this issue rather short lived. In the recent past, there have been several cases regarding Internet service providers and the content they transmit; this issue was widely followed when the original Napster was still around and scads of users were swapping music files with one another. Basically, courts ruled that ISPs could not be expected to monitor their networks for unauthorized/illegal conduct transmitted by their customers. While it's true that technology might make it possible for the owners and controllers of content networks to keep an electronic eye out for certain types of content, the practicality of covering every base imaginable is a big question.

From a PR perspective, a question could be raised as to whether Eclipse would have been better served by actually tackling the issues raised in the blog postings rather than trying to silence the conversation.

Tuesday, April 22, 2008

Just What IS PR 2.0 Anyway?

It seems every time you look at a PR trade publication or an industry forum on a platform such as LinkedIn, you see someone asking about PR 2.0 and its importance on the profession. Maybe it's just me, but I think we should pull the plug on all the "upgrade" talk.

Although there's no universal definition, when most people speak of PR 2.0, they're playing off the Web 2.0 phenomenon that signifies the emergence of a number of Web-based platforms, such as blogs and wikis, that are truly interactive and foster two-way communications.

All these things can be wonderful additions to a PR program, especially for clients offering a consumer-oriented product or service and/or trying to reach a technically-inclined audience. These platforms foster a community-oriented communication that can, when used correctly, help clients gain additional validation via third-party influencers.

That said, all these things are just tools; they're appropriate for some campaigns and not appropriate for others. Even with the new tools, the time-tested and proven methods for conducting a successful PR campaign haven't changed and shouldn't be tossed out in favor of blanketing any new platform with a message about a client.

All too often, tools like these are seen by the industry as a chance to pad program budgets with extra fees and services that may or may not benefit the client. And at the end of the day, everything we do should be judged based on how well it benefits the client, not on whether it increases the agency's bottom line. For if we as an industry consistently do things that benefit the client, even if it's not always using the latest whiz-bang technology, the bottom line will almost certainly increase.

Tuesday, April 15, 2008

The Transformation of Content and Its Impact on PR

Practically since the beginning of the commercial Internet, there's been this back-and-forth tug regarding business models that have dominated the conventional business world and predictions over how much of that would translate to the Internet.

In the mid to late 1990s, the notion was that advertising would step in and solve everything, which explains in large measure why most business plans of Internet content sites based most of their revenue models around the ability to attract ads. Of course, the go-go 90s that played host to a ton of predictions about how the conventional world and its business models would be overturned got a big dose of reality in 2000 when the markets started cooling to the ideas.

While many thought that the fall out from the "dot-com boom" would usher in a new round of sanity and more fact-based analyses of the Internet's impact on the business world, sometimes it seems all that happened was just a thinning of the crop. Even now, with all the predictions of a dire economy that lay ahead, you still have people who bank on the Internet and related content platforms with rose-colored glasses that aren't giving them the full view of the picture.

For instance, many PR firms are treating the blogosphere as a vast, new media platform that will upend the conventional world as we know it. They're advising clients to pile a ton of money in new media initiatives, convinced beyond belief that it will pay off. Obviously, as a keeper of a blog, I'm not against the concept of blogs by any means, but I think we do have to radically realign our notions of what they are and the role they'll play.

One of the things I've never understood about the blogosphere is why we're promoting something so heavily that essentially just leads to a decentralized audience. By that I mean, having hundreds of platforms for content may be wonderful to those who want to read it, but when it comes to monetizing a platform like that and building revenue models around it, the challenge will be immense, since the audience will be so decentralized.

One one hand, blog enthusiasts could legitimately say the low barriers to entry from a cost perspective make that point largely moot; they'd be right if the goal was to simply establish a content beachhead, but when it comes to making money, you need some mass audience. Essentially, the more content platforms we have, the more the overall value of content is dilluted until we achieve some sort of mass.

In a recent editorial, Wired editor Chris Anderson predicts that free is the future of business. In promoting a system he calls "freenomics" -- a play on the widely read book Freakonomics, Anderson says decisions like that of The New York Times to take down their subscription wall and make all its content free serve as an example of things to come. Outside the content area, he also points to cases like the British rock band Radiohead, which freed itself from conventional record-label marketing to offer its latest album directly to the consumer and whatever price (s)he is willing to pay.

He goes on to point out how there are many versions of the "free" model, and most involve at least some sort of payment for a portion of a site or a value-oriented addition to a service. And in many ways, he's right about the fact that Google, Craigslist and others have shown the free model can work. However, it also has a number of big hurdles and we'd do well to examine them before creating Dot Com Bust II.

Tuesday, April 01, 2008

Will Social Networking Kill High-Margin PR Services?

As anyone in PR knows there are a variety of tools available that aim to greatly streamline specific tasks, especially those connected to media relations. And while they perform that function well, they're also very expensive and a budget stretch to many in the profession. Well, it now appears that these expensive "walled gardens" may soon be shaken up by social media platforms.

Of course, one of the most well-known social media network is LinkedIn. In addition to being a networking platform, LinkedIn's Answers functions allows people to post questions not only to their networks, but to the LinkedIn community at large. Currently, there are 15 separate categories spanning a number of industries and a separate category where members can share tips on using LinkedIn itself.

Lately, I've seen several situations where journalists, especially freelancers, are turning to LinkedIn to solicit story ideas that they can take under consideration for conversion into pitches to editors at publications for which they write. Given LinkedIn's large community that encompasses representatives of most every profession around, it makes sense to tap the group for both ideas and sources.

Another new entrant comes from PR and practitioner and new-media evangelist Peter Shankman titled If I Can Help a Reporter Out. It basically functions as an e-mail list, allowing reporters to send queries seeking sources to PR practitioners who subscribe to Shankman's list. Subscribers receive about 3 e-mail dispatches daily with details on stories reporters are working on and they can in turn suggest sources for the reporters to include in their story.

Shankman's idea, while it may not seem revolutionary, does have the potential to turn shake up things at very profitable units of major conglomerates like PRNewswire, whose ProfNet service currently dominates the landscape. While an unquestionably useful service, ProfNet's pricing is out of the reach of many small practitioners. Although there are other services around, such as Expert Click, there's yet to be a service that has gained enough traffic to be a serious competitor.

In his introduction to the service posted on the site, Shankman acknowledges that "...Help a Reporter..." will only prove useful if it can gain enough participation from both the source and PR community. In the interest of competition, I hope it's successful.