Businesses shunning PR retainers, paying for results

Succeeding in small business

June 22, 1992|By Jane Applegate | Jane Applegate,Los Angeles Times Syndicate

With business owners squeezing every penny, many are hiring public relations companies that charge clients only for results, rather than those that charge a retainer.

These pay-for-placement public relations firms often find themselves at odds with traditional PR firms that work on a monthly retainer as law or accounting practices do. PR people who work on retainers question the integrity of pay-for-results firms, saying that is like paying a professional, such as a psychiatrist, only if you are cured.

Proponents of pay-for-placement say business owners get better value because they are charged only when a story is placed.

"The pay-for-play sales pitch sounds attractive, but the major difference is they'll get your story printed in places you've never heard of," said William MacDonald, founder and president of Compensation Resource Group Inc. in Pasadena, Calif.

Mr. MacDonald has used both kinds of firms to promote his executive compensation and benefits consulting firm, which has offices in Boston, Atlanta, Houston, Phoenix, San Francisco and La Jolla, Calif.

Stories about his firm were placed in a few trade magazines before Mr. MacDonald ended his relationship with the pay-for-placement company and retained Richard Roper, a veteran Santa Monica, Calif., PR man who specializes in representing financially oriented companies.

"Almost instantly, Dick found a hot topic, and CFO [chief financial officer] magazine picked up our story," Mr. MacDonald said. "We had over 500 phone calls from that one story."

Mr. Roper said he objects to pay-for-placement public relations because clients don't always know what kind of publicity is best for their companies.

"It may be that the type of article a client wants is not really in his or her best interest," Mr. Roper said. "A PR firm working on a pay-for-play basis isn't likely to say this to a client."

He and other traditional PR people also contend that pay-for-placement firms might be tempted to bribe or otherwise influence a reporter if a straight pitch fails.

Bob Cullinan, media director for Primetime, a pay-for-placement firm in Sausalito, Calif., said his firm never pays anyone to get a story covered.

"I've never even bought a reporter a cup of coffee," said Mr. Cullinan, a former television reporter who works with about 10 former news people at Primetime.

Also, he said, Primetime frequently refuses to accept clients or honor a client's request if it is not deemed to be in the client's best interest.

"One client wants to be on David Letterman's show, but David would pan-fry him if he showed up," Mr. Cullinan said. "Another client wants to be on 'Lifestyles of the Rich and Famous,' but he happens to work for a very frugal company."

Primetime charges clients a start-up fee, a portion of which is applied to pay for any successful placements. If nothing happens in 180 days, the start-up money is refunded. Lucas Film's THX sound division, the Sharper Image catalog company and Koss Corp., makers of stereo speakers, are among Primetime's clients.

So what does Primetime charge to get your story on national television or into a local newspaper? The price depends on the reach, circulation and prestige of the medium.

For example, Primetime recently charged a client $4,500 for a 10-second segment within a feature on the ABC nightly news. But if the client's goal is to get a 250-word story into the San Jose Mercury News, it would cost $1,845.

"We don't guarantee placement," Mr. Cullinan said. "We guarantee you won't get a bill until you get one."

Traditional PR firms charge a retainer for a small business that can run from $2,000 to $10,000 a month, depending on the work.

The Century City, Calif.-based Pollack PR Marketing Group offers a PR Starter Package for $1,250. The package includes two hours of agency time, tips on how to pitch a story and a customized media list.

Stefan Pollack, manager of the firm's small-business group, said the kit is designed to jump-start or boost a business.

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