Posts Tagged ‘time’

The Fees Debate – Time, Value or Performance?

09.03.10

What’s the “best” fee structure system for public relations agencies?

A little while after starting my consulting career at Thornley Fallis Communications, I had an interesting conversation with Terry Fallis about the pros and cons of the different ways agencies charge fees. Several months later, I had a similar conversation with Joe Thornley as I continued to try to get my head around it.

Both conversations ended, after a while, with the same question from each: “do you have a better system?”

I don’t. I’m not an “expert” on this topic. So, while I’ve thought about the ups and downs of several systems, this is one post that I really hope sparks your thoughts and contributions.

Time-based

The time-based fees model calculates the cost of an activity using an hourly rate and multiplying that by the time needed to conduct an activity.

There are some obvious advantages to this system:

  • Accountability is built into the system – the client pays for the time expended. The agency can’t just stick its finger in the air and pick a cost to charge;
  • Agencies can generally provide fairly close estimates as to the actual budget needed for an activity;
  • There’s less risk to the agency from scope creep – if the client asks for more, they pay more;
  • If an activity takes less time than expected, the client pays less;
  • When on a retainer, the client is assured that consistent effort is expended on their behalf each month.

However, I can see some disadvantages:

  • There’s no reward for efficiency – if you’ve budgeted three hours to draft a news release and it only takes 90 minutes, there’s no incentive to stop working at that point (of course, you would hope that the client would recognize that efficiency and reward the agency with loyalty over time);
  • If something unexpected happens and an activity takes longer than expected, the agency may have to have an awkward conversation with the client to increase the budget, or may have to write-down some of their time;
  • This mechanism can often understate the value of the services the agency provides;
  • Some activities, especially time-consuming ones (and social media, in particular, is time-consuming), can be difficult to justify on a per-hour basis.

Value-based

The other main alternative is a value-based system. You want your agency to prepare a news release? That’ll be X thousand dollars. You want media training? That’ll be Y thousand.

The advantages to this system:

  • Certainty for both sides on the budget, which makes accounting easier on both ends;
  • Efficiency is rewarded – if you can produce a high-quality product in a shorter amount of time than expected, the mark-up is greater;
  • For the agency, it offers the potential to mark-up work considerably;
  • The client pays for the value of what’s produced. Perhaps your media training may only take a morning to conduct, but its value is such that you can charge for more than four hours’ work.

The disadvantages to value-based billing:

  • If the work takes longer than expected, the agency is stuck footing the bill;
  • From a client perspective, they may pay for a high mark-up on agency work.

Performance-based

Some agencies may charge clients based on a percentage of the “value obtained” over a period. For example, if you achieve media coverage valued at $50,000, you might charge 10 per cent of that value ($5,000). 

Advantages of this approach:

  • Clients pay for what they receive – if you don’t deliver results, they don’t pay;
  • While any good agency encourages best practices, they are perhaps most essential in this system – without well-conducted campaigns, you won’t see results and you won’t get paid;
  • The system inherently rewards good results.

Disadvantages:

  • The systems available for calculating the “value” of media coverage (e.g. ad equivalency) are woefully inadequate and arbitrary;
  • Both client and agency have zero certainty on the budget;
  • The system has no means for measuring the value of social media or digital activities – it is primarily focused on traditional media relations.

As I said earlier, I’m not an expert on these systems. I’ve done some reading around them and I’ve talked to a few experienced practitioners, but I would love to hear your thoughts on this topic, especially if you’ve been in the agency business for a while.

What do you think – is there an optimal way for agencies to charge fees?

Posted in: communications, pr, public relations

Tags: , , , ,

9Comments

Blogging vs. Twitter – Commitment and Effort – Another Perspective

09.02.04

I recently received an excellent comment on my recent post Blogging vs. Twitter: A Different Kind of Commitment from Doc Kane (@dockane on Twitter), principal of Chicago-based Roscommon – a marketing, communications and PR professional writing services agency. Thoughtful and insightful, I thought it really drove the discussion forward.

His view: the difference between blogging and Twitter isn’t commitment, it’s effort.

With Doc’s permission, I’m re-publishing his comment here, as a post, for your input. What do you think?

I think there are a few simple reasons why we’re seeing businesses jump into Twitter much more readily than they have blogging, and in my opinion, those reasons are mainly related to the effort required to create a blog; a lack of management’s awareness about how to create and maintain one; and the simplicity and effectiveness of Twitter as a communications tool.  Unlike many other forms of new technology, one does not need to be a tech whiz to get up and running on Twitter – and this is a huge advantage over blogging.

Blogs are a lot of work.  To really pull it off consistently one has to have a strategy, enough content to write consistently AND the desire to even do it. But before even starting with a blog, blogging itself needs to first be recognized as valuable by upper management (which I think is still not even close to being a reality), controllable by middle management (in terms of helping/guiding the company blogger) and executable by staff willing/able to do it. And this, I think is where everything stalls. . .before it ever even gets started. . .

In my opinion, the perceived TIME it takes to create a blog isn’t a factor…it’s the EFFORT.

A blog requires major planning and concept development on the part of the writer. So the immediate perception of blogging then, isn’t. . “Ugh, this is going to be time-consuming” (ALL work is time-consuming). . .it’s “Ugh, this is going to take a lot of EFFORT”.  And effort here, is the key. This is particularly true of course, when the assignment to create a blog falls on an employee who could really care less about what they’re writing about.  Trying to be passionate about a company or product that’s not your own, or that you’re not completely in love with, is not easy for any salaried writer/marketer/comms person.  Where you see the difference is with blogs written by consultants and business owners.  The reason is because they have a passion for, and a vested interest in, getting the word out.  They have to blog even if it takes a lot of effort! The salaried writer hardly shares that same spirit or necessity.

So essentially, it becomes a big pain in the butt for everyone involved, making it easier to just shelve the idea until it becomes “necessary”. . .or something comes along that’s simpler:  like Twitter.

When people ask me to explain to them what Twitter is, I tell them it’s like “public texting.”  They get it right away. Okay, so now imagine you’re a manager, and you tell your colleague you want them to hang out on Twitter for a while and text people.  Do you think they’ll be more open to that than all the work that comes with creating a blog post?  You bet. One can sit down and rattle off Tweets to different people machine-gun style, one after another, without much thought. . .or at least until they really get strapped for characters, or are trying paste a link, etc. Not so with a blog:  think, write, edit, give to boss, re-edit, post in CMS, catch typo, re-edit, etc.

Then factor in the time to train, and the software and IT costs, and you’re looking a behemoth of a project just to have an employee create what many still think is a series of ego pieces.  Blogging’s early function as public diaries for quirky personalities still haunts the platform to this day. CEOs don’t dig public diaries.  Especially when they’re public companies.

So, in my opinion. . .it’s the hassle-factor and a lack of knowledge, not the time-factor that keeps the blogging at bay.  Video/Podcasting?  Good luck.  Ask someone to upload a video to any video sharing service and they’ll look at you like you’re nuts!

Isn’t that something IT does?????

Posted in: Twitter, blogging, trends

Tags: , , , ,

21Comments

Blogging vs. Twitter: A Different Kind of Commitment

09.02.02

Talking with Michael O’Connor Clarke the other day, we both commented on a trend we’ve both observed recently:

Corporations seem to be much more willing to sign-up for Twitter than they are to set up blogs.

We’re seeing companies big and small signing up for Twitter; from Ford, General Motors, Southwest Airlines and Dell to smaller companies like Natura Mattresses and Freshbooks (check out this list of organizations on Twitter).

This isn’t always intuitive. While some companies see the inherent value and potential in communicating directly with their customers, many others are are afraid of it. It’s unpredictable, it’s often not on the topics that you want to talk about and, well, it’s something new for many organizations. So, something must be making the difference.

Of course, we have to remember that social media as a genre of tools is much more advanced, high-profile and, to an extent, accepted than it was a few years ago when blogging first broke. However, that hasn’t helped podcasting become mainstream news the way that Twitter has over the last few months.

Is something else making the difference?

Commitment

Is Twitter less of a time commitment than blogging?

As with so many things, it depends.

If you, or your organization, uses Twitter extensively, it may not be less of a time commitment than blogging. However, it certainly is a different type of commitment.

Writing a blog post takes a solid block of time – you need to set aside anywhere from 20 minutes to a couple of hours for the process, depending on the kind of post you’re writing. Many of my posts here take upwards of 90 minutes to pull together. That can turn blogging into a big black hole for your time.

Twitter is a different kind of commitment. Each post takes just little time. That can give Twitter the appearance of requiring much less of a commitment than writing a “traditional” blog.

In reality that’s not necessarily the case. Many people post multiple times per day. What’s more, as a company representative on Twitter, you need to put a little more thought into what you write. That can make it just as time consuming over the course of a day as blogging. 

Still, is the perception that Twitter takes less of a time commitment leading to companies engaging more readily through it?

What’s your take?

Posted in: Twitter, blogging, trends

Tags: , , ,

43Comments