Marketing Communications and Public
Strategies for the 2004 Economy

By Jon Boroshok

As 2004 begins, it's surprising how many companies are still paying the price for following bad counsel and strategic planning during the late 1990s. Entrepreneurs and venture capitalists vaguely understood that a strong marketing communications (marcom) and public relations campaign is needed to create awareness, build brands, and drive sales, but too many were ignorant when it came to deciding how to select the right agency or PR resource to maximize the return in investment.  

A startup or early-stage company that has a strategic or technological edge but a thin PR budget can communicate effectively if their agency is innovative, resourceful, tech savvy, and not wasteful.

Unfortunately, many companies and investors weren't quite sure how to select such an agency. Using a rationale that paralleled the old adage, "nobody ever got fired for picking IBM," companies were often advised by VCs and investors to retain a large, "brand name" PR agency with a posh downtown address. They often wound up paying for the name of a CEO who didn't work directly on their account, and typically hadn't contacted a reporter about a client in years. Many of these larger agencies were simply "friends" of the VCs, with referral and finder's fees - and possible conflicts of interest - being the rule rather than the exception.

Back in the "irrational exuberance" of 1999-2000, the large agencies found new ways to hype, oversell and overvalue their services. They pushed bloated, expensive retainer packages stressing their own "brand" rather than tangible results, expertise, or efficiencies. Investors were dazzled by big names rather than value, and clients wound up footing the bill for the training of very junior practitioners.

As economic recovery kicks into gear, truly competitive companies have begun looking "outside the box" for better value from PR and other marcom agencies and service providers.

They are also questioning why the agency that commanded a $20,000 retainer 18 months ago is suddenly offering the same services at fire sale prices. Are the agencies using less experienced staff now, or were their rates over-inflated then? All too often, staffers performing the actual account work tend to be young and inexperienced, because that's where the agency's profit margin is based.

Clients can now get more for less by eliminating many traditional agency inefficiencies such as downtown offices with expensive views, rigid 12-month retainers, the marking up out-of-pocket expenses and outside vendors, and under-qualified junior agency staff.

Economically-astute companies have started outsourcing marketing communications to battle-tested veterans who can pick up the slack and provide services on a smaller, flexible scale, often on a project-basis. Experienced marcom professionals bring core competencies that enable them to do a better job in less time, thereby reducing costs and maximizing results. These smaller ("boutique") agencies, virtual PR teams, and individual practitioners are a growing alternative for companies of all sizes, particularly those with monthly marcom budgets of less than $6,000. Like their clients, these outsources have to work smarter, faster, and cheaper.

Is retaining the services of a large agency really a prudent investment, particularly in industries like tech and the life sciences, where every marketing communications decision can affect millions of dollars?

Working on a project basis often clashes with the business model of a large agency. There are many overhead costs that must be passed along to the client, and large agencies need steady retainers to make sure financial goals and obligations are met.

Alternative marcom providers find ways to efficiently service smaller clients and produce results. For many clients, outsourced and project-based marketing communications has an economic rationale even in a strong economy. It makes sense to find a marcom outsource that will work on a project basis, or adapt to a flexible, needs-based budget that allows clients to pay for services on an "as-used" basis. It allows companies to do more short-term activities without a large commitment. If a project proves successful, it can lead to longer-term relationships. Projects are a great "test drive" for both the agency and the client - a way to see if they enjoy working together.

Advice for companies looking for a Public Relations / Marcom resource:

• Make sure that your agency or practitioner has a conceptual understanding of your company, the technology, and your marketplace, but don't look for a clone of yourself. Can they communicate effectively with your target audiences? The account team's business acumen and life experience will compliment your pedigree.

• Location, location, location is out! Are you paying for the view from your agency CEO's office instead of results? A prestigious address does not make an agency do better work or increase the chances of media coverage.
• Agencies love to drop names of contacts, but these may not be the right reporters, editors, and analysts for your company. With downsizing and media mergers, journalists change jobs and beats frequently. Experienced PR pros develop new relationships as needed.
• Look at their clip book, but don't be too impressed, especially by clips for big name clients. See what they've accomplished for clients that are about your size and budget. The people showing you past results should be the same people who will do the actual work on your account.
• Make sure you have complete access to the agency CEO. Your day-to-day contact should be on at least the same "level" you are. For example, if you are a VP, your direct contact should be at least a VP too. Watch out for agencies that artificially elevate the titles of inexperienced staffers.
• Big agencies pay big money for top business development specialists that you may only see until you sign the contract. Once a smaller or midsize client is signed, they will be paying part of that overhead, but none of those people will work on the account. Before signing, meet the entire account team, and ensure that the agency won't use bait and switch tactics by including the roster in the contract.
• Your needs and budget may vary from month to month. Your agency should be able to work with a flexible budget. Most agencies and outsources will require prepayment of monthly or project fees.
• You can find marcom alternatives through networking, referrals, online searches (use key words such as PR, tech PR, outsourced PR, marcom, etc.), or look at press releases from similar-sized tech companies in industries related to yours. Agencies that advertise or attend trade association meetings will recoup those costs in their fees.
• Chemistry counts - you'll have regular contact with your agency. Nobody will ever provide a bad reference, so trust your gut instinct. Marketing communications is an investment. Selecting a source that matches your company's culture/personality is likely to give you the best return.
• Outsourced providers are a limited resource, often working simultaneously for several clients. Make sure they have the bandwidth to take on additional work for your account and can meet your deadlines.