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The PR Agency Model Is Dead?

on March 7 | in Agencies | by | with 7 Comments

Arun Sudhaman (53 Posts)

As ever, the onset of Report Card season brings with it plenty of insight into agency performance and progress. Perhaps the most striking trend I have observed so far is the number of PR firms that are aiming to blow up their traditional model, in favour of a structure that better recognises the expertise required in today’s restless communications landscape.

The most prominent example of this trend is GolinHarris, which began deploying its ‘g4’ model more than two years ago. At the time, I recall that industry reaction was tinged with a certain amount of scepticism. To judge by Golin’s growth since then, and my meetings over the past month, plenty of those sceptics appear to have been won over.

Many, of course, would claim that their own restructuring has not been influenced by the Golin model. That may well be true, but the emerging consensus around roles looks a lot like the g4 approach, which divides people into strategists, creatives, media connectors and account handling ‘catalysts’.

At Bite, for example, the agency is working towards a structure that recognises four types of skills – insight, ideas, content and community. Change is also underway at Octopus Group, while Fishburn Hedges has announced a restructuring that groups people across strategy, digital, creative and client advisory.

These agencies are not alone; indeed, it is difficult to find a firm that is not subjecting its structure to some much-needed examination. Last week, I witnessed an internal meeting at Ketchum where CEO Rob Flaherty exhorted his troops to build around insight and creative, noting that “we can’t afford to just be the great firm that we’ve been”, adding that change is imperative. Towards the end of 2013, meanwhile, we revealed that Edelman is considering its own retooling. As we have noted before, the big networks face a unique set of challenges; for them, the risk of a transformative new strategy may well outweigh the perceived benefits.

Regardless, change is clearly in the air, towards the type of model that reflects both the specialist expertise required and the importance of selling those skills effectively. The days when an agency account handler functioned as planner, creative and media liaison appear to be numbered. Flaherty noted that client servicing execs might decline in number, but their skills will require sharpening, a point echoed by Bite Europe MD Kath Easthope.

As for clients themselves, they were not one of the challenges cited when I asked GolinHarris CEO Fred Cook to break down the problems his firm has encountered during its g4 journey. “They get it almost immediately,” said Cook. “If you’re working in the marketing arena — ad agencies have similar set ups. When you talk to them about the rationale and show them the people, they get excited.”

Other agencies said similar things. Instead, the challenges that Cook pointed too were largely internal. Size, he said, was one. “Agencies a lot larger – it’s almost impossible for them to change, given the number of employees, offices and practices. Agencies smaller don’t have the resources – you can’t populate the model if you’re not big enough.”

Thus, most of the firms where change is well underway tend to be local heavyweights. Even for them, though, other issues persist. Both Cook and Easthope noted that insight was the hardest area to staff. Planners have been around the PR world for several years now, but funding them remains an ongoing issue, particularly among clients who are used to paying for nothing but implementation.

With that in mind, many are trying to turn insight into products, rather than selling the services within billable hours.”You need actual products and outputs rather than fees,” said Easthope.

As Cook puts it, if agencies are serious about changing their model, they must be similarly serious about changing the underlying financial structure. “We’re trying to move away from selling hours, and move to selling products — an insight or an idea,” says Cook. “As an industry, we need to change that too.”

The financial implications indicate what is, perhaps, the biggest challenge of all — ensuring that the change is more than just cosmetic, that the agency’s culture can cope with the scale of the shift. It may explain why, earlier this week, GolinHarris hired Caroline Dettman from Edelman, to introduce a level of accountability to the g4 model that Cook says had previously been lacking.

Announcing a grand sweeping change is one thing, making it work another altogether. As companies rethink how they engage with their customers and other stakeholders, it seems clear that the PR agency model is ripe for disruption. This kind of fundamental change, though, is hardly simple — likened by one agency boss to “fixing the airplane while trying to fly it.”

While there is certainly enough evidence to suggest that firms recognise the need for change, the actual commitment to genuine transformation requires strategy, leadership, courage and — most likely — a fair amount of investment too. “It has not been easy,” said Cook, admitting that he underestimated the level of difficulty. Ultimately, though, that should only make it a more meaningful differentiator for the firms that stay the course.

  • Richard Fogg

    Great analysis and I’d add CCgroup to the list of agencies at an advanced state of model re-evaluation. In all the discussion around agency structure evolution, it feels as though one of the issues glossed over (probably unintentionally) is the reaction of team members to this change.

    When embarking on our own programme we conducted a great deal of research – interviewing PR, digital and ad agencies, talking to clients, prospects and team members. Some of the most interesting insight came the recruiters we’ve built relationships with over the past few years. It would appear that a reasonable proportion of staff at agencies that are mid- or post-implementation are struggling with the new structures – some have lost a sense of career trajectory, others feel ‘pushed’ into a specialism and a few feel isolated.

    The result is increased levels of turnover and a general sense of unease and uncertainty in some quarters. Whichever way you look at it, that’s not good for business.

    To my mind, the biggest challenge we all face in this endeavor is one of meaningful, two-way communication. As our industry goes through its very public evolution, we’d do well to remember that the most important audience is internal.

  • Arun Sudhaman

    Perhaps that turnover and unease are just two of the costs the industry has to face up to if it wants to adapt for the better?

  • mynameisearl

    “Perhaps that turnover and unease are just two of the costs the industry has to face up to if it wants to adapt for the better?” Precisely.

    The more I look at realignment around insight, ideas, content and deliver or whatever you want to call it, the more I think this is what we should have been better aligned to as an industry for a long time, and a step in the right direction rather than the answer to the disruptive challenge in itself.

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