As the PR industry embraces Web 2.0, PR suppliers fail to keep pace

March 15, 2010
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More than anything, Web 2.0 is about lowering the costs of doing business while delivering better results, more quickly than what could be achieved in the paper-and-pencil or even Excel world of yesterday.

We’re all about that here at Gregory FCA. Our social media services leverage the power of Web 2.0 to let our clients direct their own narrative, own and develop their digital channels, and deliver their message directly to online target audiences. This helps them win visibility, sell more products or services, and establish thought leadership.

So why aren’t our PR suppliers keeping up with the industry’s commitment to innovation? Why aren’t they helping to reduce our costs, and in turn, those of our clients?

At the beginning of the year, a number of suppliers unilaterally increased fees at a time when innovation should be lowering the cost of doing business.

Some vendors did it more egregiously than others. Last week, on a call I had with one national provider of PR services to the industry, Gregory FCA insiders listened as the vendor’s management team explained a recent 35-percent rate increase.

It wasn’t based on better service or greater value. Rather, the vendor claimed that the rate they once charged was simply too low, and that because of their mistake, Gregory FCA has to swallow a one-third rate increase. I told them point blank that they are risking offending the very people who pay their bills, Gregory FCA’s nationwide clients.

I was then told that their so-called pricing flaw is now Gregory FCA’s problem to explain to clients — clients that have built their budgets based on past pricing. The vendor’s faulty logic was made even more infuriating by the fact that it took this supplier two weeks to return our call, and the fact that they recently changed the way their product is distributed, vastly reducing its value.

It got me thinking. If my clients are asking us to do more with less and if we have been able to do so through innovation and the power of the Web, then it’s time that suppliers to the PR industry start working with agencies to reduce their costs, and not annually increase fees as if it’s the go-go years of the tech or real estate bubbles. Here’s a game plan for how to accomplish just that.

1. Public companies should embrace social media. Social media can be used effectively for distribution of non-material information. But for years, the paid wire services have benefited from the conventional wisdom that wire-distributed press releases are the only way to disseminate information. Compounding matters, public companies have been forced by rule and legacy to disclose material information over the wires. Social media, including the company’s own blog, should now be the medium of choice for disclosure of non-material information, thereby reducing the reporting costs of public companies and better serving their investors and customers.

2. Work directly with the media to cut middlemen. Now that more media is being archived online, it’s time for the PR industry to work with the media to establish protocols for buying the licensing and content rights directly and efficiently through the Internet. This would not only slash costs but it also generate additional revenue for media by expanding the market for these clips. I have written before about the need for media to find new revenue sources. Reprints and broadcast clips are both avenues to explore, but pricing has to fall for the market to expand, which means delivery and distribution must become efficient.

3. Limit the influence suppliers have over the industry at the trade level. Too many of our professional organizations depend on suppliers for sponsorship and financial support. Consequently, these organizations are hamstrung to take bolder positions against companies that provide services to the PR industry. This cozy relationship thwarts innovation and provides too great of an incentive for maintaining the status quo.

4. Create our own buying groups. In an increasingly Web 2.0 world, there is no rationale for continued supplier rate increases. Vendors are increasing their prices simply because they can. But by banding together through purchasing groups, PR agencies can gain power over pricing, ultimately better serving our clients and reducing their costs of doing business. This should be a prime objective of our professional organizations, an even higher priority than networking cocktail parties or contrived award ceremonies.

5. No longer accept mediocrity from our suppliers. If the past year has proven anything it’s that our clients are demanding better service, better value, and greater cost controls. Our suppliers have been slow to feel that pressure. Instead, many have cut service while increasing costs. It has to stop. Only those suppliers who listen to our needs and improve both the cost and service equations should win our support.

Across the board, we should demand better performance and inspired innovation in order to achieve greater results for our clients.

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