Startups are a breed apart from other companies. They are the unicorns of the business world. They also believe in unicorns. Big ones, like the American Dream, which says that if you work hard, and aren’t afraid to take a risk, you may just make it big.
Performance-based PR is also a unicorn, one with zero basis in reality worth mentioning. That’s why I sometimes use it for startups that hire my PR agency.
What exactly do I mean?
Well, for starters, performance-based PR is a unicorn in that it doesn’t truly exist. PR involves a great deal of intellectual groundwork, creative strategy, and a lot of prospective pitching – all before one media placement will be made.
To support this amount (and quality) of effort, there must necessarily be a significant amount of up-front work, which is impossible to do on a 100% commission-based model. So, you see, a true performance-based model and PR are mutually exclusive. Like unicorns and reality.
But that doesn’t mean there aren’t ways a PR firm can use performance-based pricing to help reduce a startup’s up-front investment (also known as risk) while ensuring an even greater ROI.
Some firms use a hybrid performance-based PR approach that lowers a monthly retainer by as much as 50% in favor of bonuses tied to actual media placements – not click-throughs or net new customers. Sorry, this isn’t SEM or a Facebook boost; but then when did an ad on Google ever land you on CNN or in the Wall Street Journal?
So while performance-based PR unicorns don’t exist in reality, they do exist in the world of startups, which is by necessity a mix of reality and fantasy. After all, it takes a certain leap of faith to see new products, markets and revenue where none before may have existed. Did anybody see Twitter coming ten years ago, Uber seven years ago or Snapchat five years ago? Unicorns all!
I have come across a few PR agencies in the past that claim to use a pay-for-performance model and without exception they all used a blended monthly retainer with bonuses tied to actual media placements.
For those not in the know, here is how a typical performance-based PR model works:
- Monthly retainer due up front
- Discovery of potential newsworthy ideas
- Identification of potential media outlets and individual reporters and creation of media list
- Creation of press release, which is either included in the monthly retainer or priced separately
- Creation of news pitch in a variety of formats: phone, email and tweets
- Media pitching campaign execution, which includes emails, tweets and phone calls
- Review of pitching campaign and stickiness of primary message; pivot message as needed
- Coordination of interviews, follow-up items and eventual publication
- Media placement invoicing upon publication
- Monthly reporting
- Repeat process for 3-12 months as needed
The thing to remember about investing in PR for your startup is that it’s all about balancing risk versus reward. Will lowering your up-front investment help you reach your business goals? Plus, will the returns in the form of media placements, clicks and customer acquisition justify the potentially higher total investment a performance-based approach may cost? After all, most hybrid PR models are designed to lower up-front risk but also reward the PR agency for taking on the added risk.
Some startups prefer to manage risk more carefully by capping the total PR investment by paying a predictable monthly retainer month. Others, however, prefer to minimize their startup expense burn rate as much as possible by lowering monthly retainers in hopes of a) reducing up-front exposure to a potentially bad investment and b) incentivizing a PR firm to get even more publicity because the economic model rewards success.
You should investigate all options as you look to hire a PR agency for your startup. Last time I checked there are still very few performance-based PR agencies in operation and zero 100% pay-for-performance PR agencies (at least not any competent ones).
Got any questions? Ping me at dave at davemanzer dot com. Or feel free to leave a comment below.
About Dave Manzer: In 2009, Dave Manzer founded Swyft, an Austin PR & digital marketing agency for startups and fast-growth businesses. His team specializes in highly integrated PR & inbound marketing strategies that help B2B tech companies around the world reach their goals in brand awareness and revenue growth. If you have any PR questions about your startup or small biz, feel free to tweet him at @davemanzer or email him at firstname.lastname@example.org.