Pay-for-Performance or Retainers? Which is Better for PR & Clients?

Pay-for-performance versus retainers is a long-running debate in the public relations field. Should clients pay PR agencies and solo PR practitioners retainers or should they compensate them based on the number articles they place in publications?

Pay-for-placement advocates say it provides accountability and produces results. Opponents counter that earned media is just one small aspect of public relations. PR firms employing the payment structure are unlikely to develop deep, long-term relationships that are necessary for successful PR and ultimately are unlikely to deliver better results.

Part of the allure the pay-for-performance model may be due to the traditional difficulty in measuring PR’s effectiveness. However, with new technologies, PR agencies as well as corporate PR departments and C-suite executive leaders can more easily connect PR activities to key business objectives. The tools can monitor media mentions, determine how positive or negative the coverage was, and correlate the coverage to business objectives like sales. In addition, many PR measurement services employ human analysts to improve automated tools.

PR Needs Accountability

Marketing consultant Robert Hennessy, founder of MyMarketingDept Inc., recently argued for pay-for-placement. Most small companies cannot afford to pay several thousands of dollars a month for a retainer. Instead, they can obtain publicity through the Internet and social media.

However, because content marketing remains a mandatory component for B2B marketing, businesses still need PR services. The solution is pay-for-performance that encourages results and injects accountability into the process.

“The lack of accountability in public relations services is unacceptable in other parts of a company’s business operations,” Hennessy writes. “It should no longer be tolerated in PR either.”

A Bad Idea for Everyone

PR Consultant Chuck Tanowitz takes the opposite view. Although pay-for-placement is alluring for start-ups (as well as other types of organizations), it’s a bad idea for both clients and PR personnel, he contendes.

He listed several reasons why both PR pros and their clients should avoid pay-for-placement deals. Publications can decide not to run stories for any number of reasons beyond the control of PR. Hard work and an excellent pitch will then be rendered meaningless.

A single placement is difficult to value because many factors are involved in gauging its potential value.

PR personnel will probably dedicate more attention to clients paying retainers, as they seek strong ongoing relationships, and will likely give pay-for-pay clients a low priority.

Successful PR is much more than media placements. “Success comes over time by building relationships, momentum and exposure,” Tanowitz says. “It comes through all forms of media, whether that’s earned media (traditional placements), social engagement, owned content or even paid native ads. All of these play into a broad PR program that drives value.”

Depends on the Situation

Jim Bianchi of Public Relations argues that the better pricing structure depends on the company’s situation. Retainers may be better for larger, established companies, those that need more than just publicity, and those who seek a committed, strategic partner. A pay-per-placement approach may be appropriate for companies that:

• are start-ups or small companies;
• need only tactical publicity placements;
• do not have a highly technical product or operate in a highly specialized sectors;
• understand that placements do not equal PR — that is, publicity is only one part of an effective PR effort; and
• do not need strategic PR counsel, help in planning or message development, or outside perspectives.

PPP may not be more affordable for clients, despite what its proponents say, Bianchi warns. The PPP firm may seek to maximize its own revenue by pursuing large media audiences while ignoring the target audience. Ultimately, ROI may be disappointing.

Bottom Line: Pay-for-performance remains controversial in public relations circles. Some say it provides accountability and results; others warn that it’s a bad option for both clients and PR firms.

Which do you believe is better – pay-for-placement or retainers? Please comment below.