Using specialist external PR.  Can you afford to, or not? 

published 2003

To save money and increase effectiveness, today’s corporate communication departments are following the trend of complementing core internal competencies with specialist external PR skills.

What’s holding back some organisations from benefiting from this trend is a lack of knowledge about how and how much external PR consultants charge. Here’s an overview of how a PR consultancy or agency charges and what bang you should get for your buck.

Time-based charges

Paying for PR is no different in principle to using an accountant, lawyer, a professional photographer or even a contract person from a temp agency.  You will be charged an hourly rate appropriate to the skill and experience of the person(s) used plus any material expenses.

With PR there are a number of ways of structuring budgets for external consultants:

• The consultancy works simply on an agreed hourly basis to complete the specified task.  This suits when there is a need for a modest amount of irregular work.  It is a good way to develop a relationship when the organisation is new to using PR as it allows both parties to ‘find their way’.
• The consultancy charges an agreed set project fee.  This suits when there is a specified project or task that can be agreed beforehand. It is also a good way to ‘try out’ PR without making a long-term commitment.
• The consultancy is paid a monthly retainer to provide an ongoing service based on clearly agreed tasks.  This is appropriate when the organisation has a clearly identified ongoing need for resources or when the organisation has previous experience with external PR. 

Hourly rates vary according to the size of consultancy - as they do among accountants and law firms.  Generally the larger the consultancy the higher the fees. And, of course, the more senior the person the higher the hourly rate.

Hourly rates will also likely vary for virtually every person - or at the very minimum at certain levels - within a consultancy.

Out-of pockets/disbursements

This covers a range of costs, including postage, telephones, couriers, or taxis, incurred by the consultancy on behalf of the client.

Normally these costs are a minor part of the budget for any task undertaken. 

They can usually be accurately estimated in advance. Many consultancies recharge them at cost - some charge a nominal handling fee.

Production or Rebillables

These are significant items where a third party has been engaged by the consultancy to undertake an additional service for a client - a major printing job, a video, an event or function.

In such instances the consultancy can often add value to the client by introducing a range of suppliers beyond those normally known to the client.  Often these can provide a competitive price and more capability. 

So what are some of the issues to bear in mind about the costs of using outside consultancies?

• Costs of using PR are no different to other professional services. Even ad agencies mainly charge on a fee basis these days!
• The client has control of costs - through deciding whether an hourly rate, project fee or retainer is best.
• Don’t focus on ‘raw’ hourly rates.  It’s the average hourly rate of the team that is important.   On a properly structured team the highest hourly rate should get ‘averaged’ by the lower rates.
• Some organisations think nothing about paying $5000 a month for temporary PA and secretarial staff but will baulk at the cost of using external PR support.
• Think in terms of what your budget will buy e.g $15,000 will buy 85 hours (or the equivalent of nearly three weeks full time work) of a PR person/team at a cost of $175 per hour.  You can get a lot of work done with this time commitment.
• Deciding how to balance taking on more internal resources versus hiring a consultancy is interesting.  At $8,000 per month an organisation is buying around 45 hours a month (@$175 average) with the ability to tap into a whole range of people within the consultancy.  And without concerns about 4 weeks holiday a year, superannuation and payroll tax costs!   

This brief article should demonstrate that access to a PR consultancy is well within the reach of most organisations. 

Footnote:

Grant Common, the Editor of PR Influences, specialises in helping organisations manage PR agency relations and selection processes.

You may have an interest in, or obtain value from, these articles:

1) How stronger management is the key to better PR agency relationships

2) How better briefs and RFP's contribute to improved PR outcomes

3) How Australian PR agency selection processes are changing