Given the lack of publicly available information on the topic - it’s perhaps no surprise that, when it comes to looking into just how much a PR agency costs, figures vary wildly.
What makes this doubly interesting is that the three-way relationship between the agency fee, the agency output and the desired outcome of the client isn’t always a straightforward linear correlation.
Put another way, I’ve seen £40k a month PR campaigns nose-dive spectacularly into the ground – and not for the lack of willingness or resource. While at the other end of the spectrum, I’ve seen £7k press launches and £3-4k a month fixed retainer projects, delivered profitably, for the benefit of all – with the outcomes far exceeding the expectations of both the agency and the client.
So how to make sense of all of this? And, specifically, as a prospective client, how can you begin to get a clearer idea of just how much you need to invest in a PR campaign, in order to deliver results?
In other words, how can you better understand what represents the best value for money for you?
Types of PR agencies
To understand what your PR campaign or project fee is actually buying, first you need to gain a solid understanding of the types of agencies out there. For now, it’s important to simply understand that PR agencies and their focus can broadly be split in two ways:
- By media type – typically agencies are either consumer focused, business-to-business focused or investor focused. You then get sub splits that break down into areas such as crisis communications, lobbying, public affairs and so forth.
- By geography – either focusing on really local stuff, national stuff or international campaigns. This geographic focus is typically driven by the third aspect – namely, whether they are a generalist or sector specialist – in other words, whether they work for a whole spectrum of clients throughout their media type or whether they specialise in a particular area or industry – be it manufacturing, energy, fast moving consumer goods (FMCG), pharmaceuticals and so on.
The point here, therefore, is that in order to understand an agency’s perceived worth – their value to you – you must first understand and appreciate where they’ve chosen to place their focus.
There’s one further aspect that ties back into understanding the agency that you’ve hired.
Carefully consider what drives and motivates that team. Are they independent or part of a wider group? How does their risk profile stack up against that of you and your business? Understand and recognise the impact that this will have on both the account team assigned to work on your campaign and ultimately the results that the campaign itself generates.
Financial cost of hiring a PR agency
This cost is by far the easiest to measure. It takes the form of either a monthly or project campaign fee, plus any additional agency operating expenses, as agreed and set out in the contract.
Both monthly and the project campaign fee depend on 3 factors:
Every PR agency offers a bunch of services. When you do some research you’ll find everything from copy-editing and media interview training to messaging workshops and senior board counsel. Naturally, these services have different price tags attached to them. You’ll probably discuss your needs with an agency and identify the suitable services. Part of your agency cost will be based on the number and type of services that you require.
When you’re hiring an agency you’re essentially buying their time as well as their expertise. Based on the services you’ve agreed, the agency picks the best people to form your core account team and estimates the time they will require to complete the tasks you’ve agreed on. Agencies usually estimate the time required by days so your PR cost will change based on the number of days the agency will be dedicating to your PR campaign.
3. Account team
Different public relations and marketing specialists have different values as much as different services have different costs. Think about how you hire in-house. A Marketing Director will cost you much more than a Marketing Assistant. If you want to simply produce some press releases, a more junior team member will be able to handle those, but if you want to solve some serious communications problems, this will require more involvement from the senior PR team, naturally, increasing the costs.
Monthly fee vs project-based costs
The main difference between agencies that work on a monthly retainer compared to project campaign-based agencies is the time they expect to spend with their clients.
When you’re working on a specific project with a clear timeline you will try to earn the most you can from this one project. There’s nothing wrong with that. It’s understandable. That’s how business works. However, if your working relationship is based on a retainer, you’re planning long-term. This allows agencies to be more flexible with their fees. Think of it a bit like a season ticket – per game, season ticket holders get a discount over the price at the gate on match day. The same logic applies to agency services.
Other agency fees
Your monthly / project fee is usually invoiced at the start of the project or at the start of each month. Further operational expenses may subsequently be billed either at the end of each calendar month / calendar quarter, or at project end, with a clear breakdown of how those additional expenses have been accrued. Some agencies, in line with agency best practice, charge an additional small percentage by way of a handling fee on expenses, dependent on the size of the numbers involved or the nature of the relationship.
The strategic PR cost
It’s one that’s not typically thought about by many prospective purchasers until the campaign gets started. The cost here involves your time. Or specifically, the time taken by whoever has been assigned to manage the agency relationship – acting as the primary point of contact between the two teams and the person to whom the agency will naturally gravitate to remove roadblocks and campaign obstacles.
Note here that the person assigned to manage the agency need not be the same person who hired the agency in the first place – although they do need to have a clear understanding of the aims and objectives that the agency is delivering against and they do need to command the respect of the internal team – including senior executives. This internal account management need not be overly burdensome or a time drag. Indeed, when undertaken effectively, it’s realistic to expect the time spent managing an agency to be kept firmly in check – although it’s also worth noting that this time is directly influenced by the level of trust and responsibility that you afford your agency partner.
Candidly, most sub £10k a month campaigns can be managed by an internal point of contact without requiring more than one day per week of time – and some, when the agency/client partnership relationship is in full swing, can go even lower. Whatever the case, the point here is to take this time into account – since does form a key part of the wider PR agency investment.
So it’s all of these aspects – the agency type, the actual costs and the time involved - that really determine what your campaign or project fee is actually buying – and the results the partnership will generate.
Whatever route you choose to go down, understand all of these core aspects and recognise the impact that this will have on the fee structure and level of investment that you’ll need to make in order to drive campaign success.
One final thought. I’m sure you’ll have noticed that I’ve not yet shared with you our own agency day rate and fee structure? Well, for full transparency, and by way of an example of how our own cost and fee structure works, I’ve outlined some initial guidance below.
How much does it cost to hire Tamarindo?
Short answer? At Tamarindo we operate on a composite agency day rate that is reviewed and revised annually. The day rate includes a good mix of team time and because of that, the results that we can collectively deliver as an agency will be far greater than you’d first think.
Our agency day rate throughout 2017 is £1,350 and, realistically, you’ll need a minimum consistent commitment of at least three to four days a month to enable us to deliver effectively against a well briefed and highly targeted campaign. That said, a typical Tamarindo client usually commits to anywhere between 5 and 15 agency days each and every month – and it isn’t unheard of for some key campaigns, with major strategic objectives, to push north of this, as and when required.
Over the coming months, we’re going to be diving into a lot more depth when it comes to our own pricing model. We think that’s a pretty unusual step for a PR agency of any size but, as we outlined above, we do – I do – firmly believe that the agency purchasing landscape continues to change. And with it, so too does the buying process.