The ruthless application of common sense or 'how to run a PR firm' #2

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I wrote the first version of this in 2011 when I was running Edelman Europe and had GMs who ran PR businesses reporting to me, who asked the quite reasonable question; “how do you expect us to run this thing”? As many will subsequently attest, I do actually follow these tips myself. Time has moved on and life for the poor manager of a PR business or agency has not got any simpler, so this version is longer and updated. But I hope the practical essence of it remains.

No great books on business management have been written by PR people.
We are traditionally crap at it. We rise to the top or ownership of PR agencies by being good at PR not management. Then we find we have an office, with people, clients and a budget. And that’s when the wheels come off. Which is a shame, because running a PR business is just about the ruthless application of common sense and is a far simpler thing (intellectually at least) than formulating advice for a client in a crisis or finding a creative way of giving a tired brand some interest and competitive differentiation.

I have run practices, offices and regions for three of the biggest global PR
firms and two small independent companies in both EMEA and Asia Pacific
and the wheels have indeed come off once or twice. They probably will
again, but if they do it will not be because I made the mistake of
thinking PR firms have a complicated business model.

PR agencies are simple businesses. They have inside them
often difficult people doing some (occasionally) clever things, but they
are simple businesses.

Here are my refreshed top tips for running one.

Our basic business model is very simple and has not changed that much for many years. And yet the amount of time devoted by managers of PR businesses as small as 20 people to their ‘business strategy’ would make you think they were running Google. If you have done an MBA or studied business at school, then keep that learning for understanding your clients’ business and don’t torture your colleagues with it or worse, bore your clients.

It is now harder than ever to be a ‘full-service agency’. For example can you cover health and within that can you handle health professional, consumer wellness, nutrition, hospital marketing, digital health and market access communications? And you might have media relations and generalist PR people, but can you offer planning, search, analytic and creative services? Sometimes your best definition (for planning purposes at least) is to be clear about what your agency is not going to do. And usually ‘less is more’.

There are few things in this world quite so parochial as a Londoner or a New Yorker. Most have lived in one city or country all their life and are fluent in just English. But many (at least in the big agencies) are equipped with a ‘G’ (global) in their title, which means that you are probably paying for part of their salary though they will often feel you owe them tribute. At the very least, they will have developed global products and services (many that work in just UK or US) which they will send you in the form of a 70 page corporate-colours PowerPoint. If you are running a small network office then part of your long-term career success will be predicated on your ability to filter the nuggets and gems from this tide of slides and quietly ignore the crap.

When you are looking to extend your businesses offer, follow what your clients want and your employees like to do and are good at. It’s expensive, time consuming and risky trying to create demand for a service clients have not asked for and then expensive and time consuming again trying to staff it with new people. Occasionally, you have to take a bigger leap, but mostly grow quietly and insidiously like a deadly virus!

Everyone knows you have to hire the best people. Many then forget that the best people want to grow and get on themselves. What they don’t want is to be double-guessed or under-mined or kept back. If you can’t trust your people to do the right thing or you constantly check on them, then you either hired the wrong people or you are that terrible boss you read about on Buzzfeed and your business won’t grow, your people already hate you and you may be heading for a heart attack.

HR people can be wonderful, but in their rush to make your business fair and consistent, beware they don’t make it safe and comfortable for the mediocre.

Every year refresh your business with as many new intakes as you can. As you put pressure on from the top, they will create pressure from below. Oh and try and makes sure that not all of them are urban, middle class media studies graduates.

When it comes to the business of your business, this is rule number one, two and three. No-one can run a business if they have no visibility of future revenues. A business of over 20 clients should be able to predict revenue to within 5% a month out and to within 10% three months out. Six months is guesswork, so be a good guesser too. Big account wins or losses on the horizon will give you occasional big variables, but don’t let that be an excuse for the rest of the business.

Keep track of your predictions vs actuals on both the one month and three month horizons. Best to know if you are a financial optimist or pessimist. Optimists tend not to make a profit; pessimists tend not to grow as fast as they could.

In every market in every region I have worked in, no matter what the size of business, over a period of time and putting in all real staff costs and owner dividends, this is the median and appropriate ratio. It is the key one to manage because it is the biggest and it is the one that relates most directly to the quality of your offer and your fair remuneration of employees.

If you are making a P&L profit over time there should be cash in the bank. If not you have a problem.

Your clients do it to you. Do it it to your suppliers. Incentivize your finance team; with the right motivation they will save you thousands. Whatever you do, don’t just add 10% or the rate of inflation to each cost line from the previous year.

Not every month, not when you start up, not after you lose your biggest client, but if your business is stable and growing you should be making an appropriate margin. If you are not; then you are an NGO.

What we do has value. Clients should pay for it and we have every right to earn an appropriate profit from it. Get better at asking for it.

Don’t be just OK at everything.

We tell our clients to be thought leaders; we need to take our own medicine.

Obviously it will help to market your agency, but advice from someone who writes, speaks and is in the media spotlight themselves sounds different.

And in most markets the most famous PR industry spokespeople are often ‘old-school’ or, worse, just publicists or ex hacks. Thinking professionals with a point of view need to stand up for all of us. Otherwise journalists will continue to refer to what we do as ‘spin’ and ‘dark arts’ and we will deserve it.

The numbers look great, the clients seem happy, the staff appear to enjoy being here, but you just can’t shake that feeling that something is wrong. “Just because you’re paranoid doesn’t mean people are not out to get you”. Learn to recognise and read your own instincts.

Most big decisions about your business are part hunch. No-one has all the information. Indecision kills as many agencies as wrong decisions.

But when you do make a business mistake; don’t keep making it. Kill it. Remember the pain. Admit you messed up and reverse or find a better plan fast.

And if your staff don’t include minorities; working class or people NOT from a big city you are also stuffing up.

Strictly speaking, An agency wishing to cover the tech industry now has to cover enterprise, consumer, B2B and start-up clients. It perhaps has to have a sector capability; health-tech, financial tech or mobile tech. It could be asked for subject specialism; say ‘big data’ or the ‘gig economy’. And a multi-stakeholder client program may of course need PA or crisis capabilities as well as analyst or financial media relations. That consumer brand campaign should these days have planning (needing a planner), a great idea (needing a CD) and then a content creation, media relations and paid media outreach (that could be 12 people). This is happening on big clients in the big PR centres. We now have individual PR agency offices of 1000+ people. 500+ is not unusual. More and more clients are experiencing this level of specialist capability. Assuming the culture that sits between all these specialists is half decent, then the offer becomes highly effective and highly valued by the client. If big agencies use their scale properly, they should have a better, specialized offer. If big agencies use their scale properly, they should be able to offer a greater variety of careers and training and keep their better people longer. Happily for small agencies, very few big agencies are using their scale properly. Watch this space.

Young agencies grow fast. You go from one to six employees in year one and you have 600% growth. But rapid growth does not invalidate all the other normal rules of creating a great agency. In your rush to handle growth don’t build an ugly agency.

Most of what you need to know is published by these companies. You just need to take the time to learn. Or if not you, ensure someone in your agency does.

Hopefully you do. If you don’t then plagiarize and apply and develop your own. Most of the big agencies, as well as the better smaller ones, helpfully publish much of their approach or ‘methodology’ online. Bloggers and hi-profile PR folk do as well. Personally I don’t think you can claim to be in PR these days unless you can help clients manage their brand or reputation across these channels effectively.

And then you must keep up because this stuff changes fast. Mary is great for the overview but there are many others. Oh….and your clients and smarter employees are reading these studies by the way.

http://www.kpcb.com/internet-trends

And as communications has moved online, so the tools to manage it have too. The good news is most of this stuff is cheap to subscribe to. And with it you can do things like:

Automate repetitive tasks
Manage projects
Map networks and influencers
Manage your SEO and keyword reporting
See what your target audience are interested in in your category
Build online newsrooms
Test your digital content
Create simple info-graphics
Manage your paid campaigns
Curate your clients’ digital content
Produce and share social media dashboards

There are many helpful lists of these things out there (https://prstack.co/#/ )

Assign someone to be in charge of this and train your people. Again, smart employees and clients are already expecting this.

The old skill is still the key skill.

Fake news is real and present danger for the PR industry. Paul Holmes described it as an ‘existential threat’ ( https://www.holmesreport.com/long-reads/article/fake-news-is-an-existential-threat-to-pr-s-future-(part-1-of-2) ) To date of course, mainstream media have been in the spotlight. That could change if agencies and clients are not careful and ethical.

Again there is a lot out there to help guide you in creating training and guidelines for your people. My strong suggestion is every agency should run sessions on this.

PR budgets are no longer too small to research consumers or even opinion formers and influencers. Online tools abound to help supplement the tried and trusted telephone call to your own network. Here are some lists:

https://www.entrepreneur.com/article/222389

http://au.pcmag.com/cloud-services/40101/guide/the-best-online-survey-tools-of-2017

https://blog.hubspot.com/marketing/market-research-tools-resources

Some of this stuff is actually free; most is now very reasonably priced. And don’t forget all the data available from the big social platforms for free.

If your strategy is not based on an audience insight at least partly gleaned from empirical research then check your pension contributions are up to date.

In most markets, the ‘fees’ paid to ‘creative’ agencies by CMOs are about 14 times those paid to the entire PR industry.

And yet CMOs are now more interested in our approach than they ever have been because traditional paid channels are collapsing and the power of indirect communications and influencers is more recognised and valued now than ever.

But those PR agencies that want to access these fees beyond our traditional tactical role of amplification and brand issues management need to appreciate how to manage the creative process better than we have in the past.

PR agencies tend to be service focused. The best creative agencies are idea focused. There is a big difference. Creativity and big ideas for brands have to be built on great planning which is built on great insights. That’s a big team and big commitment right there.

And then you need professional ideas people. You might get lucky with amateurs or part timers every now and again, but the generation of ideas is done better and more consistently by people for whom that is their passion and their main job.

And managing creative talent is a deck in and of itself.

At its core, what we do is imagine how people will react to messages or actions. There are no business disciplines I know that are as creative as ours. Don’t let process and the rational aspects of running an agency crush your imagination or those that work for you.

The retainer fee is a blessing and a curse.

But as we offer more and more specialised services like paid, SEO, planning and creative on top of the old favourites like crisis and audits, you need to ‘productize them’ or clients will try and wrap it in to the base fee.

Define the problem you are addressing
Describe the process you will address it with and if necessary the clients you have done this for before
Detail the outputs the client will receive
Price it
Don’t start doing it until they agree to pay for it

Review your retainer contracts to ensure they do not include ruinous catch-all scope of work descriptions.

Legal firms have many clients in the same category and this is seen as specialism and is therefore a benefit. Agencies have two clients in the same sector and it is conflict and people start screaming and calling their lawyers. As you get bigger the problem gets bigger and more constraining. I only have two tips; radical transparency and recognise you can’t win them all and sometimes you just have to walk away from business.

This has never been a fashionable view. Client work is where we all started and from where we believe we get our authority and, often, satisfaction. But humans can’t scale. And once your business does, you need to lead the business more than do fee paying work with clients. Don’t lose touch with clients, don’t stop selling, don’t stop managing the most important client relationships, but don’t be the main fee earner. And if you can’t let go of this, then hire a CEO.

If you lost you lost. Price and relationships were part of the equation and you did not manage them as well as others did. Don’t make excuses. Work hard to find out why the other firm were better than you and do better next time.

Service quality and therefore client retention and growth will put more on your top line than pitching ever will.

No there isn’t. The math does not make sense.

Managers will often tell you that staff left because someone else doubled their salary; often the same firm that apparently win pitches by undercutting you.

When you hear this you have a management problem not a competitor problem.

One big P&L and an ‘everyone is in it together’ approach: a number of smaller P&Ls so individual teams are motivated and effort rewarded: shadow P&Ls for creative, planning or digital; a central services unit funded by taxes on all the P&Ls.

They all work and they all don’t work at different times and with different people.

Pick the least worst and then spend all your effort on the culture and morale.

You know who they are. Your team know who they are.

…at least not outside of the creative department

No pessimists (outside the crisis team). It’s still a people business and your clients and best teams don’t want the oxygen sucked from their bodies either

As you get bigger the temptation is spend less time with clients and teams. You don’t always have to bill and you don’t always have to write the releases or strategy papers but you do have to have your finger on the pulse of key clients and key staff. Just hang out with them a bit more.

My old boss Richard Edelman believed we all had to ‘live in colour’.

By that he meant that we would be better consultants and client people if we were interesting and to be interesting, we had to participate in sport, NGOs, culture, media, society whatever. We had to have an outside life, because if we succumbed to working all the daylight hours in the office and then going straight home we would become boring and clients would not want to work with us and staff would not want to work for us.

Don’t be boring.

When I worked for Tim Sutton of Weber Shandwick, he always schooled us that burdening him with bad news at the weekend, when his ability to do anything about it was limited and the stress it would cause is maximised, was career limiting. “Tell me bad news on a Monday because Monday’s are shit anyway so you are not spoiling anything and I can deal with it because I am in work mode”. Even in todays’ 24/7 work environment, you don’t need to send emails at 2am or cc the entire office on your issue (that enormous crisis apart of course). If you do, you are spreading unnecessary stress amongst your colleagues and just signaling that you are a panic merchant and probably not a great person to have in an already stressful enough business.