One fur all: PR consultancy response to economic woe

There’s been a theme building to blog postings from PR industry leaders this week as economic fears build. Yesterday’s edition of PR Week called on the industry to make sure that it was in good shape. Editor Danny Rogers questioned whether upbeat talk means that the industry is in self-denial. It’s not.

PR consultancies are incredibly simple businesses: typically there is only one source of income (clients) and two principal costs (people and overheads). The ratios are broadly standard from business to business. For every pound of client income, the largest amount will be paid to staff, then a good chunk needs to cover overheads, then there should be some profit or investment.

Assuming a consultancy is trading healthily then if the going gets tough responsible managers will know exactly how to respond. Agency side pessimism doesn’t help anyone. It is self servicing and doesn’t inspire confidence in teams or clients at a time when it is most needed. This is not a time to be introspective. It’s a time for innovation and excellence.

In a presentation posted by Edelman’s European boss David Brain, Sequoia Capital highlights the four key tenets (slide 21) to trading a business through a difficult economic period.

Manage what you can control - stick to the basic ratios and your client relationships. Likewise trying to manage what you can’t control is a sure path to destruction
Focus on quality – invest in the best people to deliver superb work and demonstrate value
Lower risk – take a conservative approach to investment, negotiate costs down wherever possible and get your finance team to review every incoming cost
Reduce debt – keep a hawk-eye view of your debtor book and reduce bank debt

Steve Earl has pulled together a cracking list of practical tips along these themes for PR account teams. Read his list and take note.

1. Work harder
2. Stick to clients like glue
3. Review activities and tailor
4. Understand broader marketing
5. Dress better
6. Move fast
7. Understand the billing process like it's your best friend
8. Sharpen your work
9. Consider it part of your training
10. Show no fear

Client delivery and business development has to be the lifeblood of any organisation in the current market to avoid going backwards. Yes of course we’ve probably all seen some clients review budgets, but Q4 2008 will still see growth. Business development remains strong, fuelled in part by a wave of PR buyers that are seeking to invest in digital programmes as they fufill their own counter-recession agendas. The timing of our digital PR eBook has been spot on.

Herein lies the solution to talk of financial doom: innovate, recalibrate and reskill as necessary. Developments in digital means that the industry now has access to techniques and tools to firmly demonstrate business value unlike ever before.

Fur coat confidence (with thanks to Dame Stephanie Shirley) is the only way forward.

Also posted on www.rainierpr.co.uk