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Monthly Retainers VS. Pay For Placement for Public Relations Services

Written by: Scott Lorenz

Article Overview: Most Public Relations firms require a "retainer" as opposed to "hourly fees" or "pay-for-placement." The logic of the retainer arrmangement is discussed in detail.

Monthly Retainers VS. Pay For Placement for Public Relations Services



Potential clients will on occasion request an alternative payment arrangement other than the typical retainer fee arrangement most PR firms including Westwind Communications require.

I could discuss all day the various payment options offered for PR services such as "pay for placement," "hourly fee" or "retainer fee". In a nut shell, the retainer fee allows the client to have a fixed budget amount for PR each month and it allows my firm to rely on a steady cash flow. The work goes up and down depending upon their needs. Clients will also appreciate the logic of this concept as the billing process is simplified for both parties.

For example, let's say we get a placement in the Chicago Tribune - what's that worth? What about a photo? You would think that should demand more money right? How much more? What about a one line quote in the Wall Street Journal? What's that worth? What happens if a newspaper in Singapore and Australia runs that quote right out of the journal? What's that worth? What happens if some CEO sees it and calls the client for a speaking gig? Does the PR firm get a piece of that speaking fee? Why not?

What's the value of a TV interview in the home of a self published author on WBZ in Boston that includes his book cover, photo and link to his web site and the book trailer on YouTube? What happens if that leads to a movie deal? Would my firm be entitled to a piece of that? Or, does the fee for pay-for-placement relate to the ad rate for the air time and space for the web site? To an author the piece may sell a few hundred books. For a surgeon promoting a new medical technique it could result in hundreds of surgeries at $5000 apiece. In that case the worth or value of the TV story is dramatically higher.

Several of my legal related PR placements resulted in multi million dollar settlements for my lawyer clients when the opposing party saw the story on the local TV news. Once they knew we were prepared to continue to do battle in "the court of public opinion" they settled. Should I have gotten a piece of the lawsuit settlement? Why not? Do you see the dilemma?

The short answer is "Pay-for-Placement" is a bad deal for everyone and the firms that do it won't be around for long. Furthermore, there is no way a client wants to review that detail every month and frankly it would cost us hundreds or thousands of dollars per month to prepare a bill with such a breakdown. The very thought of doing it that way is rather terrifying!

There are other reasons we believe it's in our mutual interest to use retainer fees over other billing methods. Usually people who want such a deal have had a bad experience with a PR firm that did nothing or they don't have enough money in the first place and they're trying to generate sales from the PR to pay for the PR. Finding out the reason for asking for a non-retainer deal is essential to formulating an equitable arrangement.

The real issue is the futile attempt to place a "value" on PR placement on a monthly basis. Nobody knows the value with certainty because the benefit may come down the road in the form of new business, speaking gigs, consulting deals, TV shows, book deals or even more publicity. Trying to measure its value every month is like trying to place a future value on a baby in a bassinet... it cannot be done.

Another issue is about trust. Can the PR firm deliver the PR that is proposed? Can they be trusted to deliver media placements? I believe that past results are a predictor of future results, especially when it comes to PR. There need be no leap of faith if a PR firm has a track record of success with placements.

Furthermore, with some PR projects there is just no way to assess how the media and public is going to respond. We could go through a lot of expense to create a PR strategy, press materials and pitch it to an audience that is just not interested. Or, the media tells us that this is the tenth book on the same subject they've seen in the past two weeks. Or, there's a problem with the credentials of the author, founder, CEO etc. that were not disclosed to the PR firm in advance. These revelations could tank a PR effort and cost the PR firm money instead of making money.

Additionally even with PR, people may not respond by buying a book, donating to a cause, ordering the product or servce. In fact there have been authors on Oprah and Good Morning America who have not sold any books!

The bottom line: We'll stick to a retainer fee basis, and my clients get to keep profits from their sales. Fair enough?

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Article Tags: pay for placement, pr firm, pro con, public relations firms, public relations services, retainers



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