I am not one to be brashly competitive, but when I hear from executives that are being under-served and overcharged by large PR agencies, I can’t help but tighten the laces on my racing shoes. The truth is that for most businesses, a smaller agency can produce twice the results at half the price.
Long gone are the days when a start-up company needed the Edelman or Ogilvy name to appear on its road show deck to impress investors that it is working with “the best” (and at 30k per month, plus hourly fees over and above a cap, plus a 10% mark-up on all expenses). Likewise, many established, mid-sized companies that dabbled with the biggies have also pulled back, finding true partnerships with smaller agencies.
Yet many mismatches remain in the marketplace. In my opinion, no company or division needs a global public relations firm on its team unless it is substantially more than a $1 billion-a-year business. Even then, a large agency is not the only option.
Think about the culture of a large agency, which is run like a large company. It is full of very smart, seasoned people who have ascended into management, leaving junior account reps to deliver the daily value to the clients. This is where mediocre writing, naive pitches to reporters, and jaw-dropping client maltreatment come into play.
In a large agency, as in a large company, these shortcomings are overcome by the volume of good work that is done by others. The result? Average. However, the waste and average results of this model are not so welcome in smaller organizations, where every dollar spent on talent must be optimized for maximum effect.
To make matters worse, a lost $10k retainer is a rounding error in a large agency, where the largest clients are the bread, the butter, and the dessert. Waggener Edstrom, which employs roughly 500 people, is one of Microsoft’s PR agencies and grew its revenues to $100 million because of that. I have never met anyone at that company who doesn’t work on the Microsoft account, with the exception of one senior vice president in Lake Oswego who doesn’t work on any accounts (although my sample population is skewed toward the Seattle area).
This example is not meant to degrade WaggEd in any way, instead, it’s meant to point out that they are well-suited for a multi-billion dollar company like Microsoft. Not so for the vast majority of companies seeking PR expertise.
A smaller firm can get a lot done without that overhead. Every person is wholly invested in their clients’ success, because their livelihoods are directly tied to retaining every client. Small firms tend not to hire mediocre talent, and can’t afford to mitigate it if they did. Small firms know what it means to be lean and mean, and that quickly translates into an account service ethos.
Finally, the economy is tightening. Now is not the time to waste precious marketing or PR resources. I suspect that much of the griping I’m hearing from corporate execs engaged with large agencies is backlogged discontent, surfacing now in anticipation of belt-tightening. Maybe the economic uncertainty will cause another healthy shakeout in the industry, much like the one that occurred in the wake of the dot-com bust.