Bait and Switch - What should be done?

One of my businesses recently lost out in a pitch to one of the ‘large’ agencies. The pitch had been a drawn out affair with lots of agencies in the fray. In the end it came down to a final two and we lost. I should say now that I hate losing so that needs to be factored in to the equation here. What annoyed me was that we lost out to a blatant bait and switch. It transpires that the winning agency brought a ton of people in to the pitch, of which only two junior people were ever going to work on the business.

I know that there are reasons why agencies do this. The best one is that the people who are good at pitching are not always the best at the work and vice versa. Other reasons are that the demands made in the pitch are rarely what a client wants once the work really starts. PLus there's the fact that the right people are either away or busy with existing client work. That said I do believe we need higher ethical standards on this issue. The client I mentioned is already annoyed to find that their new team is totally different to the one that pitched. Much as I’m skeptical about the ability of our industry to enforce codes of conduct and ethical standards I feel something needs to be done.

One way to solve this is to make resource planning a key part of all pitches so that the client can see in black and white what resources will be applied for the budget. The content here could then be an integral part of the initial contract. Another way to solve this would be for an organization like the Council of PR here in the US or the PRCA in the UK to promote a code of conduct on this issue and for them to set out rules their members agree to abide by.

Am I alone in finding the bait and switch issue frustrating? Personally I feel it does our industry no credit and only serves to re-enforce the image that PR is a less than ethical business.

Huntsworth and Media Square stick to their knitting

So Huntsworth is selling its non-PR businesses to Media Square in a move that makes both firms more interesting. Huntsworth inherited a collection of non-PR businesses when it merged with Incepta, not to mention a pile of debt. In selling to Media Square it becomes a more streamlined business with little or no debt, which has to music to the ears of the investors. For Media Square they get a business that reaches around the world and has good scale. What's striking is that this move goes counter to the way the larger comms Groups have tackled things. If WPP had been Huntsworth they would likely have merged with Media Square just to build a larger group that offered a full spectrum of marcomms services. These businesses have chosen a different path which I have to applaud. I'm delighted to see the management of these businesses stick with what they believe they know and do best.

Of course this does all mean that Huntsworth now really has to show that its non-PR businesses were holding it back and equally Media Square has to show that its competence in the marketing services area can be applied to the businesses that have of late struggled under the Incepta/Huntsworth umbrella. Time will tell I guess.

Measurement - Does anyone really care?

One thing is clear to me right now; measurement has failed to get on the PR agenda. Just read the main stories in the PR trades. Not one of them talks about measurement. Sure it shows up on RFPs, sure clients want to talk about how well things are going and they even want charts showing what a great job is being done for the money. But the sad truth is that PR measurement still doesn't command a meaningful part of most company's budgets. Some simple, albeit unscientific, research reveals that out of the five clients I asked not one does measurement in the same way (actually not all bother to measure). Furthermore none of those that do measure have a well defined budget for measurement when planning programs.

A broader look at measurement shows that many people do use firms like Biz360 or Carma but even then from what I can tell the PR staff tend to pay little or no attention to the results these services provide unless of course they think it will help with some internal presentation to justify the funding of the department. We shouldn't blame our clients for the sorry state of affairs here. After all, how much effort do most agencies put in to being measured? We are the ones who make moey from doing PR so we are the ones who should make sure our clients use tools to make sure that what we do is actually worth the money.

My own view on this is that we need an industry standard form of measurement in the way the ad industry has. This means we need to know what we are to measure, how often we measure it etc. We also need to start to establish an agreed way to invest in measurement. This could be either a certain percentage of fees applied, or a minimum expenditure. I for one would love to see such measurement be carried out in such a way that work done in PR could measured alongside work done in other areas of marketing so that we can finally start to see just how PR stacks up against other forms of marketing.

The current thinking on measurement seems to be to let everyone just do their own thing. Let’s face it this isn’t working. Now I know some PR people don’t want measurement because: a) they’ll have to do some work for the fees they charge otherwise they’ll be found out; b) funds applied to measurement will likely be taken out of the money they would otherwise have been given to run programs, host lunches etc.; and c) they argue that PR is to hard to measure accurately anyway, so why bother? My response to these people is if we don’t adopt measurement then we can expect PR to lag disciplines like advertising for many years to come.

I’d love to see publications like PR Week, O’Dwyer’s as well as organizations like the Council of PR Firms take these issues on and really move the needle. Anyone else want to see this happen?

Profit share or risk avoidance?

Today's Wall Street Journal carries a piece on how small advertising agencies are taking a share of their client's revenues for product and services they create the ads for. This will sound familiar to those in the tech agency world who were surrounded by startups in the late 90s all waving stock certificates in return for services. There were of course some significant winners such as Niehaus Ryan Wong that got founder stock in Yahoo!. Sadly it turned out that even that couldn't save the firm and it went under in early 2002 as the full effect of the downturn in the tech sector hit.

If the advertising industry wants to take this path then I wish them luck. I for one hope the PR industry stays well clear of this murky business. While at one level it sounds great we need to remember we are PR people not VCs. These programs are divisive and rarely profitable. They are a cheap way for a client to get marketing support while the agencies shoulder the risk.

I do wonder whether this news piece came from it being a slow news day or because Chris Lawton, that wrote it, has been inundated by firms all saying they are doing this. I truly hope it was a slow news day.

Fingers crossed for Interpublic

Michael Roth, CEO of Interpublic, has 14 days left to file accounts or risk the delisting of the business by the NYSE. This follows a string of accounting scandals and a government probe. Only a few days ago Interpublic had to announce it was firing staff that had presumably been fixing the numbers. The delisting of Interpublic would of course be terrible news for the business and would likely result in the scenario Business Week probed this week - namely a break up of the Group. That could mean brands such as Weber Shandwick, MWW and Golin Harris going on the block. Presumably WPP or Omnicom would snap them up at relatively low prices.

I for one wish this wasn't the case. As a competitor I hardly want these businesses to do well. However, I have to say that no industry wants accounting scandals and government probes into one of its major players. Such things tend to scare away investors that help fund our businesses not to mention people that may be thinking of working in the PR industry. So while having my fingers crossed is unlikely to do much I do rather hope Michael meets his deadline for all our sakes.

BRIC and Brands

A lot has been written about the incredible rate of development of the Chinese and Indian economies. Less has put down on paper concerning Brazil and Russia. In large part this seems sensible as the fundamentals of these two economies are less impressive…at least at this stage. What is clear is that these four countries, which account for over 40% of the world's population, are the economies to watch. What is less clear is what that means for world brands.

Every year Business Week in conjunction with Interbrand produces a list of the top 100 brands in the world by value. Every year, for what seems an age, this list has been topped by Coca Cola, Microsoft, IBM and GE. Indeed the top ten has hardly changed in recent years. Aside from the leaders I already mentioned the likes of Intel, Disney and McDonalds are also permanent fixtures it seems. What some analysis of the top 10 and even the top 100 shows is that America dominates. In the top 10, for example, eight are American. In the top 100 around 60 are from the US of A. These statistics seem pretty constant from the data Interbrand shares. This raises an interesting question: "Is China the next super power or simply the place where Coca Cola et al will employ the most people?"

That's a tough question to answer in part because as the world's top brands expand, they inevitably have to look at ways to reduce cost and complexity AND at how to tap new markets. This naturally draws them to places like China and India where educated work forces at relatively low cost are abundant and where potential new customers exist... by the million. So I guess in short the answer is: forget the “or,” how about “yes and “yes.”

What is very clear is that as the BRIC markets open up and as their educated work forces become middle class these countries will have huge economic power. Does that mean we will see a sudden shift, with a raft of new Chinese, Brazilian, Indian and Russian brands taking the world by storm? I very much doubt it. Toyota and Nokia are the only non-American firms to gain a regular place in the top ten in the last decade and this didn't happen overnight. Instead it seems more likely that Coca Cola, IBM and GE will remain among the world’s top brands.

That may seem a little dull but I believe it will be important legacy for the US. America has become used to being the world economic and military super power. All the statistics say that position is set to change in the next thirty years with China and India overtaking the US thanks in part to the sheer size of their populations. But when the super power torch is handed to one of these countries as it inevitably will be, it will likely be done so with American brands still dominating the world economy. That’s a conundrum the new super powers will have fun figuring out.

What a difference a year makes

Last summer PR companies were still scratching their heads trying to figure out how to deal with the emergence of blogs and wikis as forms of communication. Debates raged on whether separate groups should be formed within agencies or if we should even be forming new types of agencies. A year later may of those debates still continue. Some small firms do exist solely to serve this market but they are mostly one or two person outfits. As yet there are few real consultancies in the space, though I did note earlier this week that Magnet has set itself up to focus on comms like this (they have a broader remit than blogs and wikis it should be said). I am keen to see how this venture does in the next six months. If they do well perhaps we'll see a rush to emulate this approach.

One observation I will make is that a year ago when agencies pitched for new clients blogs were mentioned but only in passing and then not in every case. Today 99% of pitches have a section devoted to blogs and how the prospective clients should deal with them. This is something of a silent revolution. I wonder how far this revolution will have taken us in another twelve months? Will we have blog budgets? Will we have blog tours be as common as press tours?