Pay As You Go for PR
In the June issue of PR Week, a mainstay in our office, two industry veterans discussed an issue dear to my philosophy: fee retainers vs. billing for services rendered. Sean Cassidy, president of DKC, advocates for set monthly retainers. In his opinion, – the fixed monthly retainer means that account teams spend their time on activity, such as strategic counsel, medical relations, and digital marketing – not on managing bureaucracy. While I hear what he is saying, I disagree. To us, retainers are like capitated fees in managed health care: an HMO (the agency) makes money when you (the client) stay away, and the patient (your client) wins when she consumes more services than she pays for. Often, you bicker about what is covered. This type of incentive is counterproductive.
Steve Cody, cofounder of Peppercom, suggests a pay-as-you-go method is more equitable to the client and agency. I agree. While you still want clients to consider budgeting for the year, any agency worth its salt should be able to balance this annual budget across 12 months, with the understanding that some months may be slightly higher, some lower. Sophisticated software makes accounting for activities performed on behalf of clients simple, effective and informative, not bureaucratic, as Mr. Cassidy suggests.
At Pivot, our belief is that clients should pay only for services rendered. We can tell clients within 24 hours where their charges stand, and we can easily ramp up or down based on their needs and direction.
“Give me a flexible annual budget that can be managed to meet the ebbs and flows of an account, and I’ll show you a true win-win client-agency relationship,” says Mr. Cody. Spot on, I say.
Mr. Cassidy, on the other hand, says the retainer lays the foundation for a “motivated staff” at his firm. If a retainer is necessary to motivate an agency to do creative, energetic PR work, I’d be looking for a new agency.
