Measuring Up

Hiring freezes send shivers down clients’ spine

The other day, I was reading in a PR industry trade that one of the largest public advertising holding companies has finally lifted its 18 month hiring freeze. I guess either business has come back (at least a little) for this mammoth marketing services company, or it finally decided that it just can’t maintain a complete hold on bringing in new talent forever.

This definitely brought back memories (mostly negative) of my days at J. Walter Thompson. I remember that we had an “unofficial” hiring freeze for about a six month period. While, no official edict had come down from the corporate decision makers in the UK, all senior executives understood very well that any new hires had to be approved in triplicate form by the top brass, or there would be hell to pay. This reality meant that a typical hire could take a long time to be approved (in some cases four to five months). So, the effect caused many firms within the global network to either just give in and find ways to maximize current talent (as they had lost the stomach for fighting against the system), or become ultra creative to work with outside talent, but not officially hire them. This often included fudging the use of consultants/freelancers or even offering people jobs, but being very creative in how their salaries were hidden within a larger cost structure.

Of course, the only ones that really felt the collateral damage with these across the board freezes, were clients. Think about it. Let’s say there are over 200 individual marketing services companies in a typical advertising holding company. I guarantee that even in the worst of times, at least five, ten or even 20 of those companies are doing just fine because their businesses ran counter cyclical to the masses. As a businessman, I understand the need to cut costs and protect the larger entity as a whole, but the 5-10 percent of firms who still need to hire because business is coming through the door, can’t when this mandate is set. So, what happens? Clients are promised x, y and z in terms of quality and quantity of talent to service their account. And, you can bet your bottom dollar that some of that is sacrificed because as much as the agency rants and raves to higher level management sitting in their ivory towers, the resources needed, simply can’t be allocated. A secondary evil that then transpires is that very good account and creative leaders and managers within those well to do agencies start walking out the door. They are frustrated beyond belief and have had quite enough with the big agency model. Sometimes the domino effect ensues because the delicate agency balance between having really great talent to service new business and top accounts diminishes once the anger and frustration spreads.

Any way you slice it, across the board hiring freezes are just dumb policies. This whole topic is kind of ironic considering that agencies are only in business to service clients in the highest way. So, the big, public holding companies (without saying it) actually advocate doing the opposite during bad times through these poorly created mandates. 

Big, bureaucratic policies like these, which have no room for flexibility to meet the most basic client needs (and demands), represent some reasons why we started Peppercom in the first place. When times are bad, it’s understood that sometimes resources need to be let go and adding staff just can’t happen. But, most independent firms are smart and would never just implement something so inflexible as a cast in stone hiring freeze. Instead, it’s about understanding which marketing or communications areas clients need the most professional help in. Then, if necessary, these smaller agencies make trade-offs or just plain invest their own money to ensure that clients are being served they way they promised to. Profit levels are often sacrificed when this happens, but that’s understood. The public agencies can do no such thing because they are under the constant pressure of their investors.

I’m not a public holding company basher (at least, not usually). It’s just that this practice has been happening for so long and just hasn’t changed. You’d think someone at the top would get it (finally). But, I guess not.   

How “privileged” is your client/agency communication?

There’s an interesting legal trial taking place which digs deep into an important issue involving public relations agencies and their clients. For as long as I can remember, clients, agencies and lawyers have questioned whether communications between client and PR agency would be deemed privileged information (as it is between lawyer and client) when challenged in a legal setting.

This current case is an interesting one because it brings this very issue to a head. Reyes is the former CEO of Brocade Communications Systems, who was convicted and then sentenced to 21 months in prison for backdating options a decade ago during the dot com days. His sentence was then thrown out in an appeals court because it was proven that the prosecution had knowingly made false statements during closing arguments.

Now, the case is being prosecuted again. But, this time, Reyes’ former PR firm, Sitrick & Company, is on the hot seat as prosecutors have subpoenaed client files held by the firm. These documents could provide damning information which would hurt Reyes’ case. It becomes a little confusing because Reyes now has new attorneys for this second trial. These attorneys (Cooley Godward Kronish) are claiming that the PR agency client files should be protected by the attorney client privileged code because the agency worked so closely with Reyes’ former attorneys (from Skadden Arps) during the first trial. They argue that they jointly created a responsive PR strategy and executional approach to combat the negative assault by the Justice Department. The government (prosecution) counters that Sitrick performed the sort of “standard public relations work” for which there is no attorney client privilege. 

Yikes. This is a very sticky issue that certainly has no black and white answer because there isn’t a real legal precedent to follow here.

We’ve dealt with topics like this over the years. To ensure that we don’t end up swimming in subpoenas and legal costs (like the agency in this trial is,) our strategy is usually straight forward if we’re about to enter into a crisis situation. Normally, we’ll be actually retained by the attorney representing the client so that our firm will be under the same privileged and confidential arrangement as the law firm is with its client.  So, technically, the law firm is then our client.

Of course, it isn’t always this easy. Many times we’ve represented a client for years. And, crisis situations which involve legal matters just sprout up out of nowhere. In these cases, it’s hard and many times inefficient, to simply change official representation during these chaotic times. And often, no one really knows if our communications will lead to the type of scary situation that Sitrick & Company is now involved in.

Anyway, this is a good article to read. And, one that certainly has me thinking about how we can prepare better for issues like this that could easily arise.

A decade of measurement successes and failures...

Once again, Katie Paine is leading the thought leadership charge on the topic of measurement. She's asking for those in the marketing/PR field to offer up what they believe are the best and worst measurement concepts in the last decade.
 
I'm a guy who believes in measurement. So, here's my two cents on the good bad and ugly of what’s been created and discussed over the last 10 years. (in reverse order, of course):
 
The Ugly
1) Advertising equivalency is as strong as ever - In many PR camps, this is still the case. This concept which began in the stone ages (earned media publicity is compared to the advertising equivalency in space, inches and/or amount of broadcast time), will just never die. It provides zero value. Yet, it costs a lot to analyze. And in the end, marketers have a measurement report that tells them absolutely nothing about how successful their program is. Way to go, industry...
 
2)  Using technology for technology sake - I've watched one vendor after another sprout up with these "magical" offerings. In many cases, these companies have created algorithms, software architecture and lots of complex metrics formulas that are just too damn hard to understand. Sure, some can push data to you in a moment's time. Others can provide scores and analytics of vast digital and media points that could never have been retrieved before. The problem though, is that if we can't really understand what's behind the score, metric or analysis, then how do we know what's being fed to us is even correct?
 
There are too many technologies that can't be verified to provide accurate outputs or outcomes and that scares me.
 
3) The human touch - On this same note, technology has begun to replace the inefficiencies of human labor. In many ways, that's really positive. Where it took hundreds of man hours to collect and tabulate data for a particular media or digital metrics program before, now the right software formulas can do the same work in a half hour. That's amazing… except, let's not forget the value that our professional analysis and insights provide.
 
There isn't a measurement system in existence that can offer up strategic and prescriptive strategies and tactics to tackle the problems or opportunities that became apparent through computerized number crunching. We are moving too quickly into a world where human analysis is being replaced by intelligent software. That is a disaster waiting to happen as we deal with the most pressing corporate topics like reputation and sales. 
 
The Bad
1) One standard to measure all - Much like the consumer technology world is still trying to create one PDA that will do everything for the customer, our PR industry continues to search for one standard that can measure any media, event, trade show, digital program, etc. Maybe we'll find this golden standard. But, I don't understand why that "Holy Grail" is deemed so important.
 
Rather, I think what is critical is that specific metrics are tailored for each client and every campaign based on its individual needs. Might we lose something in cost and efficiency by having various standards? Yes. But, as long as the standard is accurate and clearly measures something that matters, who cares.
 
2) Information overload - We still receive far too many reports, graphs, analysis and reams of wasted paper from measurement specialists. Sorry to be so direct on this. But, I think that many companies providing these reports feel that the more data they hand over, the more value it will seem like they are providing. Very few are actually marketers or public relations professionals though. If they were, they'd also understand how little we care about quantity versus quality.
 
The Good
1) Real time metrics can lead to immediate action – It’s exciting to see that almost any issue, campaign or disaster can be monitored in real time now. This means that as data is pushed to our desk tops, we can immediately make actionable decisions to try and change opinions, push out our messages and/or contain a negative situation. Of course, this leads to an entirely new set of challenges. But, it’s great to see how linked metrics and real time campaigns are now. This will only become that much more powerful.
 
2) Better products make us more sophisticated – There’s no doubt that a number of great offerings exist out there today. I won’t start naming them, but we now have the ability to benchmark competitive programs at a very sophisticated level. Digital analytical tools allow us to figure out exactly who our programs are reaching and what impact they may be having. And, through the integration of creative graphical offerings with back end software, we can provide immensely appealing dashboards which allow clients to see their program’s achievements at a glance.

3) The industry has brought outsiders in...and that's good – Let’s face it. Marketers/PR practitioners are very good at what they do. One of these strengths isn’t the ability to provide real analytical tools and research methodologies that measure campaigns. I think that the industry has done a very good job of reaching outside the profession to bring in those who are professional researchers, statisticians, and just big thinkers. This was a must need to ensure that our offerings are accurate and dig deep into business insights. 

Overall, our industry still has a long way to go. If you have any thoughts on this topic, please fire away.

The Achilles Heel of Public Relations

Our industry group, the Public Relations Society of America, has formed a committee of high level thinkers

to solve one nagging pain point that continues to hurt our industry: develop a true industry-wide measurement standard. (PRSA Seeks To Establish Industry Wide Measurement Standards)

This is no easy task. In fact, many professionals in our industry have tackled this very challenge before with little to no consensus resulting from their efforts. More to the point, it’s safe to say that no two firms today conduct measurement that leverages the same verifiable and consistent standard.

I applaud the PRSA and especially this committee for its efforts. From what I see, their key strategy is right on target. Everything they will develop revolves around shifting the conversation away from the volume of media clips, social media activity and advertising equivalency value to outcomes that measure and show how PR drives business performance. I also love the fact that they are offering up specific economic models to do this (i.e. regression analysis and also isolating the effects of PR campaigns by isolating statistics, are two examples). No doubt, this will teach many PR practitioners that a true quantitative ROI on their campaigns can be measured and understood. This isn’t rocket science, after all.

Yes. I have a good feeling that this group (comprised of some very talented measurement professionals like Katie Paine) will provide us with a standard that the industry can be proud of.

What still concerns me (though) is that our industry is ill prepared for real metrics because of two realities that have nothing to do with creating a respectable industry standard:

1) Almost always (in my experience,) prospects talk big about wanting the agency they hire to measure a soon to be created/implemented campaign. But, once that business is actually won, it’s rare that a true metrics program is ever crafted at the onset of the relationship. Measurement isn’t that hard. But, it takes a number of meetings and some work to tailor a system/formula/process that should fit each individual client. Both client and agency have responsibility to make sure that this happens. In my experience, it’s typically the client who is so rushed (or excited) to begin the program, that measurement often just gets pushed aside.

2) Measuring true business outcomes can never actually happen unless the right mechanisms are in put in place to track and collect data and then conduct the precise type of analysis that is needed, (i.e. what sales leads data actually resulted from this campaign?). It’s not that difficult to arrange for this to transpire. But, if nothing materializes, then the end metrics result can only be the analysis of outputs (such as PR clips, and social media activity.) I simply don’t see too many companies spending time to create these valuable mechanisms. And, that’s a shame.

Kudos to this committee. But in my estimation, we’ve still got a lot of education that needs to take place.

“You’re not an artist. You solve problems.”

Those are the words Sterling Cooper’s Don Draper exclaimed to his young copy writer protégé, Peggy Olson. To anyone who isn’t a fan, I’m referring to AMC’s smash hit television series ‘Mad Men’. Draper is the lead character and creative director of this fictional early 60s ad agency. But, the meaning behind this phrase is oh so real.

Here’s a little background on it. Two episodes ago, Peggy was given the challenging assignment to create a breakthrough ad campaign that would entice the female masses to purchase a new concept— diet cola. The opening of this episode begins with Peggy and her colleagues (all men) watching a clip of Ann Margaret’s 1963 sexy performance of ‘Bye, Bye, Birdie.' While all the men are enraptured with raw sexual excitement as they watch Ann flirt shamelessly with the camera, Peggy is visibly offended at the office dynamics.

Fast forward to the next important part. Peggy is pretty much forced into trying to utilize the likeness of this famous movie scene into her creative campaign. She tells her boss (Don Draper) that this would only offend woman (showing her obvious disdain for the idea,) instead of achieving the opposite goal of appealing to calorie conscious females everywhere. As she’s about to suggest another, more cerebral, possibly less offbeat strategy, Draper interrupts her with an oldie but a goodie in the advertising world, “It will work because men want her and women want to be her.” He then reminds her of the headline above. (You’re not an artist. You solve problems.)

So, what’s my point (you may be asking)? This show is wonderful to me because it’s truly grounded in the real issues/challenges that agencies go through each and every week. It’s fascinating that the styles and specifics might have changed in 40 years, but the same annoying dilemmas remain the same.

I’ve worked at two very large ad agencies. In both cases, I’ve met many creative executives who just could not figure out that they are really supposed to be problem solvers. Instead, their prima donna, egotistical attitudes turn what should be results driven campaigns into “I need to dazzle the client with the most breathtaking creative possible.” Many times, the allure of big awards and celebrity status within the ad industry get the best of them. And, the worst part about it as that some of them are so stubborn that they just won’t back down… even if the strategy doesn’t follow a clear and concise strategy of where the campaign should be.

One clear memory I have is when a top creative at my former agency developed this hip, very stylish (almost outlandish) annual report for an insurance company client. The problem was that this insurance company was/is incredibly conservative and even dull. The senior account person in charge of the business begged the creative director to change the strategy to come across as smart and seasoned versus hip because that’s what the client wanted and (more importantly) that’s what would resonate with this company’s investors. But, the creative director would have nothing of the kind. I think his words to the account person were, “I hate this type of boring creative concept. Insurance companies need to change their images with more provocative advertising. No one wants to see this tired look anymore.”

This battle soon became a war that I had to step into to calm everyone down.  And, it was all because a creative director wanted to march to his own beat, not having a care in the world about what problems he should be solving (versus creating.)

In this case, is Draper right? Who knows… there is a lot of gray in every creative campaign. But, his simple strategy seems to make sense (at least for those times.) The key point here (though) is that Peggy completely loses her focus around what might be best for the client (vis a vis a good strategy that can solve problems.) And instead, her only thought is about personal preferences (in this case that the svelte and sexy 60s star is offending her senses.)

This show is just chock full of real situations that continue to happen in the 21st century agency world. I’ll save my next case in point (about the Madison Square Garden account) for another post later this week.

Lots of talk, but some things never change

Katie Paine is somewhat of a measurement guru in our industry. This post  (Assessing the Assessors at AMEC's Summit) from her is well written and a must read for those interested in the latest PR measurement trends. Unfortunately, it also clearly shows that our industry still doesn't "get it."

I wasn't at this conference (thankfully). But, these informal survey findings are appalling. When the question is raised to 150 public relations executives: Do you still measure the value of your media relations programs by comparing results to that of advertising value equivalencies? Amazingly, 150 people raised their hand to say yes. Ugh.

For those reading this post who aren't in the industry, it means that these executives still use an ancient, worthless means to gauge the return on this part of their public relations programs. An example would be comparing a full page positive feature article that a company obtained in Business Week, to the cost of a full page ad in that same publication. If the ad costs $75,000. Then, the article ROI is deemed to be worth that as well.

Unfortunately, I liken this to comparing apples to broccoli. Yes, they both are in the greater fruit and vegetable category. But, take that away, and there is nothing else relevant between the two. An advertisement tells the world "we are great," and is also viewed through that same commercial lens by anyone who reads it. A full page article supporting that same company, infers that a third party, high end national media publication (such as Business Week) believes the organization is doing something very right. I'm not biased against advertising. But, it's just a simple fact that the article is more credible, believable and typically provides immensely more value in building a reputation, enhancing investor opportunities or generating leads than the ad.

My real question here is: Why is this still happening?

Over the last 10 years, I've heard from no fewer than 100 clients that they hate this antiquated measurement approach. And, they want something that is more verifiable to support important programs. Yet, according to the responses at this summit, many of these same folks say that their clients continue to push them or mandate this atrocious means of measurement.

So, one of two causes is having this effect (in my mind). Either the corporate world still doesn't understand just how wrong this is (possibly because we haven't educated them enough,) or they simply don't care. It's hard to create general stereotypes for an entire segment of the industry (and I'm glad to say that most of our clients actually want real metrics), but I'll offer up my two cents.

In this bad economy, I think many just don't care about measuring accurately to understand real ROI. They might claim the opposite, but the reality is they just need some end numbers or stats that can be pushed up to the senior powers at large which show major benefits for the costs of the program. And, one thing is almost always true. When comparing PR apples to advertising broccoli, the apples almost always win. That's because all an agency has to do is churn out a large quantity of media hits to typically drive the supposed $$$ value well above what the actual cost of the program is to the company.

With jobs on the line and so much fear out there, it's hard to blame some for doing this. That said, our industry is always fighting for greater respect among the C-suite. It's hard to argue for that, when a large chunk of the industry is still stuck in the 20th Century measurement world.

Respect and value our time and the end result will be better

The debate rages on in our industry about whether agencies should have fixed monthly retainers or bill real time of staff for client engagements. With all due respect to PR Week, I think the publication really got it wrong in its latest analysis. And unfortunately, it’s public viewpoint acknowledging that fixed, month to month retainers are the way to go, only serves to hurt our industry by bringing us back to the "Dark Ages." It’s ironic because PR Week is one of the few objective guiding lights whose mission has always been to show the business world just how strategic and important our work is. But, in this instance, the argument conflicts with its mandate.

Here’s the article: "Are fixed monthly retainers the best billing option for PR agencies." In full disclosure, you’ll see that the article is actually a debate between my partner Steve Cody and another agency president, Sean Cassidy. Sean strongly advocates monthly retainers. Steve argues against it. And, PR Week wrongly agrees with Sean. For the record, I’m not writing this post to stand behind Steve. As a matter of fact, Steve and I often disagree on many issues within our industry. This has nothing to do with loyalty and everything to do with the fact that I vehemently disagree with Mr. Cassidy (and PR Week). Now, let me explain why.

This really all begins by understanding what clients are actually paying for (conceptually). We believe that our clients are compensating us for all the valuable time we devote (strategically, creatively and implementation) to generate results. In essence, our professional staff’s time is our product. Knowing that this is the case, when we tell a client that it will cost $20,000 this month to do all of that to generate the results that we all agreed upon, that isn’t some arbitrary number that was made up out of thin air. It’s truly based on how much time we believe it will take for the team to accomplish the goal. If we follow Sean’s train of thought, then that same $20,000 has nothing to do with the professional time the team will need and has everything to do with a lump sum of money that will support whatever it takes to generate the same said results.

This means that if it takes the team $45,000 or $62,000 in time for that month to generate those results, so be it. Because Mr. Cassidy’s view is that it’s all about settling on a fixed amount of fee to be as flexible as possible for the client, the agency could end up losing serious fees every single month because the client has been conditioned to believe that he/she is only paying for results, not for the professional time that is needed to obtain results.

Does the client really give a damn?

I’ve been participating at the Counselor’s Academy Conference these last few days. A hundred or so small, medium and large PR agency CEOs come here to listen, learn, debate and network about the latest/greatest happenings within our industry.

One session that I sat in on was of particular interest. The main focus was on specialization. More specifically, a number of very smart large agency leaders led a panel discussion on the virtues of creating new  , supplemental marketing capabilities or industry practice areas. The thought here is that by adding deeper capabilities in a new or timely specialty (like digital, environmental or public affairs capabilities), agencies will be that much stronger in competing for business and providing clients much more focused strategy and service around a particular need in these challenging times.

There’s nothing new about the specialization trend. It just makes more sense than ever now because of the increasingly complex and confusing means by which customers, employees, prospects, shareholders and other constituents receive information and news that shape their opinions and decisions. For example, a group or division of specialists who truly understand how to influence a particular segment or audience (like mothers) through social media, would be of huge value to a particular company (like those who create baby products) trying to find the right way to reach that audience successfully.

We discussed how specialization can work well in agencies, what can’t happen  or failure will be the result and what specialty areas are most important to clients these days. The conversation was great until it veered off into what I call “agencies only looking inward.” And, that tends to happen a lot.

Someone raised the question of how agencies should present and promote these specialty services/capabilities to clients knowing that the client or prospect is really only familiar with the agency’s core name or brand. Since many agencies are creating sub brands to describe their digital, green, employee communications or other services/practices, this could get mighty confusing when parties from each are presenting capabilities to prospects/clients. For example, how should the digital group’s sub brand (and the people within) of the agency be positioned among the current healthcare division of Agency X, which has the long standing client relation. Not a bad question… but we spent entirely too long (a good 20 minutes) debating possible solutions. And, there’s where the problem lies.

Because the answer is: The client doesn’t really give a damn. Yes, that is true. Most clients only get lost when agencies start offering up too much information on them. And, it goes downhill real quickly when multiple brands are introduced as a way of showing how diverse, experienced and smart an agency is. You see, clients have real problems. And, these days, most just care about how any particular agency is going to eliminate those pain points.

In the midst of the conversation, I finally raised my hand and pretty much said just that. I also offered that it’s more about just showing the clients how deep your expertise, knowledge and results (for other clients) are in that particular specialty, not how you wrap the new service brand into a nice pretty package. I went as far as to say that those agencies that excel at showing the three variables highlighted above, but have yet to figure out branding around their offering, will still fare better than their competitors who do.

In the end, it has to be all about the client anyways. All of our talk on how we sub brand and make our specialty areas real is all inward thinking. It isn’t always easy, but when clients see that all the resources, skill sets and expertise are aimed at solely figuring out communications solutions to their challenges, you’ll have a happy client.

The science of PR?

A client asked me today if the discipline of PR is considered an art or science. I paused for a few seconds before responding. I'd never really thought about it before.

I told her that public relations is more of an art than a science. But, I now wonder if the actual answer to this question is: When it's done right, it can truly be considered both.

My initial thought (and point of view) was that because no one can guarantee if a specific product, service, corporate story or entire campaign will be of interest to reporters or any other target audience, it's really difficult to prove that science is involved.

Plus, there are always so many outside (hard to plan) factors that come into play in our campaigns that impact success or failure. For example, try generating a lot of broadcast coverage for a client's great growth story announcement on the same day that a major scandal rocks the White House. Any and all interest will immediately vanish as the networks and cable channels use every resource to cover the ‘more important’ news of the day.

No, factors like breaking controversial news coming to bear, personal preference of stories or even other problems that could be impacting a client's larger reputation make it hard to predict with any scientific odds as to whether the media, digital world or larger public relations campaign will pick up traction. This is because, our world is so focused on subjective, human nature (how well do we tell our stories and will they resonate with key constituents?).

Where the science should come in is how we can leverage real facts, statistics and truths to create impressions and persuade audiences that our story should be believed. The other clearly scientific part of our work is our ability to measure results. The right measurement approach is not arbitrary or subjective at all. Just the same way an accountant would measure the results of how well a company fared financially in any given year, PR professionals can provide real numbers on how well particular components of a campaign worked. Just as importantly, we can show whether a campaign or program demonstrates objective outcomes that are worthy of the investment put in.

So, what do you think now? Art or science? I'm still stuck in the middle, believing it can be both. Now, I'm going to call my client to change the answer...

Some things will never change

Keith O’Brien of PR Week wrote an interesting editorial this week. His editorial premise is that the current Wall Street fallout reinforces the need for PR practitioners to understand business/finance better. He feels that PR people should take business classes, or contemplate pursuing MBAs more often. This will greatly help how they (we) consult clients and are perceived by their business leaders on critical issues such as this. I agree with him.

My partner (Steve) wrote about this on his blog shortly afterwards echoing Keith’s main points. Steve feels that PR executives will never be respected by business leaders unless they can truly understand their clients’ business. He feels that those who only understand how to build stories with business media versus also really understanding the business details behind the story, are at a serious disadvantage. I completely agree with Steve as well. That’s been our strategy for many years and I can’t see us ever changing.

Here’s the rub though:  A good percentage of our industry just don’t care. And that’s because many of their clients don’t really need them to care (or change.) Both points are sad, but are part of our industry’s reality. I don’t think that will ever change.