Time-based versus value-based billing model in PR. In dialogue with Chris Dobson, Speyside Corporate Relations
- 12 Septembrie 2016 |
- Dana Oancea
In today’s PR industry, the preeminent billing method is based on hours spent. Despite the grey areas of this model, only few agencies have succeeded with an alternative model or are prepared to try the value-based billing. Alternatives to hourly billing are still niche strategies for agencies that like to differentiate themselves from the crowd. PR Romania has talked with Chris Dobson, President of Speyside Corporate Relations, about how innovation of billing models in PR could look like.
Chris, the #FuturePRoof report reminds us: Too little innovation around billing models in our industry. So why are we so locked in the actual billing system?
As we know, the intangible nature of reputation and relationships has often led many to question the true role or value of the PR sector. Both are extremely difficult to quantify in good times – it’s much easier, perhaps, in bad. We’ve become locked into a series of billing and evaluation models that probably had very limited value way back when, never mind now. That said, innovative agencies, and indeed clients, do seem to be waking up to this and are beginning to invest more in data and processes that track productivity, results and impact, not just time spent. I think it’s as simple as this lack of a universally-accepted and easily adopted alternative.
An hourly billing system that rewards stuff over strategy, pushes employees to work more hours and costs the client more money seems inequitable for all parties. But if that’s the case, why are we still using it? Is there anything right with this pricing method?
I couldn’t agree more. Personally, I’ve always shied away from this system as it often leads to endless debates over how long a piece of work should reasonably take. It certainly has its place – particularly, for example, in high-intensity crisis work. But increasingly I think it’s an anachronism and can negatively impact the creativity and quality of work. But solving the problem is a two-way responsibility between clients and consultancies – trust and transparency are crucial.
There has always been a difference between how PR people are valuing their services and what the client thinks the services are worth. Which billing method could best reconcile different judgements about value?
Our Achilles heel I think has always been insufficient research around corporate campaigns. In the political world, no one would dream of launching a campaign without in-depth research, both before and after – yet the corporate world is often constrained by insufficient budget for research. Yes it is hard to isolate the impact of PR on stakeholder perceptions and behaviour, but clients and consultancies must invest in this direction, in my view. Measuring the impact of our work is essential to show its true worth, and to ensure a grown-up debate about fees and billing strategies.
Why do you think so many agencies and clients still hesitate to engage in the conversation about value-based alternatives?
Personally, I’ve never bought the idea that clients buy time, whether we’re talking lawyers, accountants or PR consultants. Clients buy output and results, ultimately, as we all know. Time has been an accepted but flawed way of calculating fees because the industry has yet to find a better universal solution. I think many agencies are wary of losing out if they proactively engage alternative approaches, but this seems short-sighted to me. We have a number of clients who want to adopt a ‘shared-risk’ approach – and this is fine, as long as we are sharing both risk and reward – although sometimes it does throw up compliance challenges. Particularly in the public policy space, consultancies’ work can be game-changing for clients, so often this approach is much more lucrative.
Could better measurement systems move forward the debate about the alternative billing?
Absolutely, as I’ve mentioned. But so too could declaring available budget (or at least guidelines) in advance of any pitch. That way, there is complete transparency on pricing, responses are pitched at the right level and both sides know price is not the determining factor. Measurement systems are of course essential, but given how important reputation is, I think agencies and clients have become too hung up on price generally. Agencies are often asked to invest to unreasonable levels in pitches (‘write me a strategy by next week…’) – an approach which hurts both sides. Once appointed, establishing a clear framework of work, KPIs and expectations under a fixed budget can be much more straightforward.
What do you see as the future of the alternative pricing systems?
Well, as above, I think a sensible approach to sharing both risk and reward can be found in most relationships – but only if the partnership is a stable one. Clients with a track record of changing agencies every 5 minutes cannot expect an easy negotiation on price and terms – but if they commit to an agency then I think such an approach is justified. In the current climate in particular, good agencies are constantly striving to link everything they do to their clients’ commercial objectives. There’s no reason at all why an agency shouldn’t benefit not only from hitting its own KPIs but also when the client hits its own – sharing the success is one way of integrating an agency fully, building loyalty and performance and, hopefully, a sustainable and successful partnership.
Chris Dobson began his career in the London agency world within a private consultancy specializing in C-suite issues management consultancy. In 1999, he relocated to Central Europe, where he was based variously in Budapest, Belgrade, Bucharest, Istanbul, Moscow and Warsaw, playing a key role in establishing and growing Mmd, the largest emerging markets corporate communications consultancy of the times.
Chris became CEO of Mmd in 2009, steering it through its sale to Huntsworth plc, where he became a Board member of the international agency created by the merger of Mmd with two Huntsworth stable mates. In 2011, he departed for Edelman, the world’s largest PR firm, where he joined the EMEA leadership team, directly managing a cluster of EMEA markets and personally establishing the firm’s ground-up office in Istanbul.
Chris joined Speyside in January 2016 both to consolidate our growing regional position within Latin America and to build on our client-led growth into other markets, most notably Central Europe, Eurasia and sub-Saharan Africa.
Interview by Dana Oancea. Copyright PR Romania.