This guide to the future of PR agencies includes profiles of two forward-thinking consultancies, analysis of the four biggest challenges that agencies face, and discussion of six recommended survival strategies. This article is part of our special Future of Measurement issue.
Marketing technology and social media are doing to PR agencies what Airbnb did to the hotel industry. Because technology enables customers to get closer to whoever or whatever they are doing business with, and vice versa, the entire marketing world has been upended. Unilever has slashed its ad budget by 30%, and is cutting in half the number of agencies it works with. Even WPP CEO Martin Sorrell—the advertising version of Warren Buffet—admitted that, “In the last year or so, growth has become even more difficult to find,” as he watched his company stock price plummet. The comment is even more interesting since WPP invested heavily in PR firms a decade ago.
Granted, a lot of those ad dollars are moving into content marketing and even earned media , but the traditional concept of hiring an agency just to “get more press” or “get me social media” is in flux, as clients want to see measurable monetary returns for their efforts. PR agencies must adapt or die.
The result is a blossoming of new takes on the agency relationships that upend the traditional model.
Two New PR Agencies Poised for the Future
Consider, for example, Jackie Price, the long time PR agency vet and the original inspiration for this post. Recently we caught up and kvetched about how most agencies talk the “measurement game,” but have so little knowledge of how their clients’ businesses work that they can’t deliver on anything more meaningful than “reach” and “good placements.”
Her new company is called End Game. You can tell from the descriptor on the website that it’s not your father’s PR agency: “End Game is a partnership of growth-obsessed data scientists, analysts, and marketing problem-solvers who deliver measurable business impact.” Their services don’t even mention creative.
Price’s perspective on her business perfectly sums up the future of PR agencies:
Communications has to contribute to business growth in a measurable way. This requires a data-driven approach in which the entire purpose of communications is to impact business KPIs, not win creative awards or check the boxes on marketing metrics that are often disconnected from revenue goals.
Communications teams have to think much bigger about the value and role communications can play inside a business. Communications sits right in the middle of a company’s most valuable assets: customers and prospective customers. We are in the perfect place to leverage data, technology, and analysis to discover what people think, want, feel, say, and do – and why.
Which is why she believes the opportunities for communicators are huge, even extending into product development and service innovation, because they are in constant two-way communication with customers. She says, “Communication is the center of the universe for customer-led organizations.”
Laura Browne is another great example. She realized that after decades of pitching B2B clients, 90% of the people she was pitching simply weren’t ready for an agency. They had very little data on their customers’ awareness and preference levels and were making assumptions—and appointing agencies—on gut instinct.
Her new consultancy, Covalent Bonds, starts every assignment with “Assumption Testing” research. (In the interest of full disclosure, I work with Laura regularly. She knows the questions that need to be asked and I know how to get the answers.)
Not that research is anything new to PR agencies, but presenting it as an upfront necessity before there’s any discussion of creative or strategy is a rarity today. Most agencies don’t push their clients to hand over data, and the clients certainly don’t volunteer it. Which is why most research and evaluation programs begin with a handicap. No wonder we’re overdue for some industry disruption.
The Four Biggest Challenges for the Future of PR Agencies
1. 65% of media relations doesn’t matter, so why bother?
In a world where distrust in the media grows every day, you have to wonder about why so many PR people are spending so much time trying to get their clients into it. People trust “people like them,” certain influential individuals, and media outlets that appeal to their own view of the world. And social media makes it very easy to target those individuals.
So, all the effort that PR people put into “moving the needle” in targeted media outlets may not matter one whit. Because a carefully placed word from a trusted friend can wipe out in a second all the good PR you’ve been working for.
2. Pure PR agencies will vanish.
The traditional media-focused PR agency is the Model A of the profession. Still, it’s amazing how many still think along the lines of spray-and-pray. When trust in media is at an all-time low, you need a bigger tool kit than a press release and a media list—especially when the line between propaganda and PR is blurring more with each news cycle. The reality is that any agency that hasn’t acquired social media, SEO, and content marketing skills just doesn’t have the tools to compete in today’s environment.
3. Talent acquisition will be harder and more expensive.
Uber isn’t the only service business that’s having trouble attracting and keeping talent. It’s not just superstars like Laura and Jackie who, when they reach the end of their patience for the agency grind, can head out to form their own consultancies. Millennials, in particular, won’t be far behind.
• First off, they have a hard time lying for a living. According to Sydney Finkelstein, the Steven Roth Professor of Management and Director of the Leadership Center at Tuck School of Business, Dartmouth College:
“Any firm with the temerity to lie to millennials, whether directly or indirectly, runs the risk of falling foul of its customer base and compromising its corporate image. The only thing that millennials care about more than mission is transparency, integrity, and accountability. If you tell millennials that you will do something, they expect you to do it, as opposed to earlier generations who may have understood that saying something and doing something are not always the same… millennials are much more literal. You better back up the talk with the walk.”
Walking the talk may be hard for many agencies to do.
• Then there’s the issue of autonomy. Millennials are a notoriously independent bunch, and constant deference to clients’ whims may be hard for many of them.
• Finally, I can’t tell you how many millennials I talk to that ‘want to make a difference,” i.e., work with a company that has the potential to make change in the world. There is no doubt that agencies can effect change. But the ones that aren’t so discerning about the clients with which they work may have a hard time keeping these high-minded employees.
4. The agency/client relationship won’t last long if it isn’t more communal than exchange.
As you may recall from Grunig’s relationship theory, in an exchange relationship one party gives benefits to the other only because the other has provided benefits in the past or is expected to do so in the future. For instance, I pay your fee, you give me services whenever I demand them.
In contrast, a communal relationship is one in which both parties provide benefits to the other because they are concerned for the welfare of the other, even when they get nothing in return. That’s not to say that exchange relationships don’t last, they just require both sides to have a common definition and perception of the “benefits” that are being exchanged.
The problem with exchange relationships (and I would argue that far too many agency/client relationships are perceived this way by the client), is that they can be terminated with little fuss. Which means as soon as a crisis hits, market share drops, or profits fall, it’s over. Witness the spectacular collapse and fall-out of global PR giant Bell-Pottinger for evidence of how quickly trust, and client lists, can erode.
Six Survival Strategies for the PR Agencies of the Future
So, if I wanted to be the Airbnb of PR, what would I do? First off, I’d follow the leads of Laura Browne and Jackie Price, who we heard from above. And then:
1. Hire more business grads.
I’m sure that in most agencies, the founders and senior leaders have a very good idea of (a) what drives business success for their clients, and (b) how to run their own company. Unfortunately, that knowledge isn’t passed down or prioritized to junior staff. So the concepts of market share, increased profits, and even ROI are a foreign language that most never learn. The solution is to prioritize business knowledge over people pleasing in the hiring process.
2. Get really, really good at SEO.
PR can be great for SEO, and high search rankings are the key to success for many businesses. Unfortunately, few agencies know anything about search, never mind how to measure it.
3. Make it easier for your stakeholders to be heard.
For years, organizations have been spending far more time and money talking at their stakeholders than listening to them. That has to change. In the future, successful organizations (and their agencies) will have to become better at listening.
Agencies and clients can learn a lesson from the Airbnbs of this new economy. For any organization to survive they have to rethink their processes to make it easier for customers and prospects to find them, to do business with them, and to get help from them. A new role for agencies should be to assist in that process.
One place to start is to make it easier for clients to know the likes and dislikes of target audiences. Combine regular, ongoing, survey research (not annoying little Foresee surveys) with consumer behavior data to really understand the causes behind the data. Remember that the customer or employee that feels “heard” is always happier.
4. Use ethics and CSR to be proactive in weathering the next crisis.
The one thing that every organization fears is a reputational crisis. Most of them are caused by the greed and stupidity of senior leadership, so there’s little that PR can do beyond fighting the fires at hand. However, a good PR agency would help build the company an unbreachable wall around its reputation. It would be built on strong ethics, good deeds, and a strong external and internal awareness of its commitment to caring for its people, its community, and its customers.
5. Think long and hard about thought leadership.
Agencies jumped on the celebrity influencer bandwagon because celebrities were easier to bribe than journalists. But it turns out that many celebrities weren’t all that influential at driving sales or market share, never mind at reporting who was paying them for what.
The reality is that influencers are important, but it has to be the right influencers. In the B2B space, for instance, an articulate engineer from down the hall can be far more influential than a CEO. The successful agency of the future will not churn out a white paper and pretend that an engineer wrote it. Rather, it will have a robust coaching and speaker training program to enable the engineer to speak and write in her/his own voice.
6. Learn from the Russians.
As much as it pains me to say it, we can learn a lot about influence from the Russian 2016 U.S. election scandal. The precise targeting of vulnerable audiences, the event organizing, and the gradual spread of fictional stories designed to spread fear. NATO and military psy-ops folk have known for years that these tactics are used by the Russians across Eastern Europe. The fact that they could be used with such spectacular success in the U.S., however, was a big surprise, and still inconceivable to some. But now that it has happened, agencies need to learn all they can about the process, tools, and tactics. The better to help and/or inoculate their clients.