Flexibility Rules in PR Compensation

There is no place for Jim Young at my shop. Who? He is hands down my favorite character from the must-see movie Boiler Room about the ugly underside of chop shop stock brokerages.

Here are a couple of quotes from Jim – expertly played by Ben Affleck – as he attempts to woo a few twenty-somethings to join the firm as broker trainees:

“You become an employee of this firm, you will make your first million within three years. I'm gonna repeat that - you will make a million dollars….You want details? Fine. I drive a Ferrari, 355 Cabriolet, What's up? I have a ridiculous house in the South Fork. I have every toy you could possibly imagine. And best of all kids, I am liquid…They say money can't buy happiness? Look at the smile on my face. Ear to ear, baby.”

As the great recession marches on, public relations, digital marketing, advertising and social media agencies of all sizes get frothy at the hint of new business. Clients know it and they are extracting lots of freebies from firms desperate for consideration. Fair enough…it’s reflects the current market environment.

What is unfortunate is the whipping that typically continues when it is time to negotiate compensation for the selected firm. “We are looking for an agency to invest in our success,” was a comment thrown my way recently. Or, how about this one: “With your track record I am sure you would be more than happy with a pay for performance relationship.”

Fair compensation for a public relations agency has long been and remains a work in progress. In fact, I have found the traditional monthly retainer model fails both the client and the agency.

From the client’s perspective, they assume all of the risk. No strategic counsel. No creative thinking. No results. Too bad…the agency still gets paid in full.

The flip side is a PR shop desperate to manage scope creep while demanding unsustainable work levels from its staff.

What are the two client complaints most often heard about PR consultancies: inexperienced mid and junior-level staff and employee turnover. Hello…that is a direct result of the retainer model.

At Strategic Communications Group (Strategic), the lone conclusion we have reached is the importance of flexibility in the structure of compensation. Our suggested methodology is a time and materials relationship with a monthly ceiling, based on an agreed upon scope of work and performance metrics.

However, we often work in a project environment and are comfortable structuring shared success relationships. What is most important to us is that the process of defining compensation be collaborative and that the client demonstrates a commitment to the success of the program.

When you make “great work for great clients” your benchmark and stand firm in a desire to earn a fair profit, then the financial structure of the relationship tends to work out. Sorry, Jim Young. There’s no room for you at Strategic.

The Sunny Side of Madoff

Although he turned out to be a liar, cheat, thief, con-artist, swindler and all around charlatan, Bernie Madoff does present an impressive list of admirable qualities.

OK…let’s put aside for a moment the Ponzi scheme that cheated wealthy individuals, charities, non-profits and a myriad of other investors out of billions of dollars. Rather, focus on the fact that for decades Madoff successfully convinced the best and brightest to put their trust (and cash) in his hands.


Here is my list of Madoff attributes that every corporate marketer and sales representative should aspire to emulate:

1. Get access to the inner circle. The number one rule in sales is to connect with decision-makers who have money. Madoff navigated his way into country clubs, business groups, fundraisers and other professional settings where he cultivated relationships with those with wealth and power.

2. Create an eco-system of champions. It wasn’t merely Madoff pushing his fund. He was able to build an extensive network of money managers and investment advisors who directed their clients into his clutches. This channel strategy brought Madoff the scalability and reach needed to fuel the Ponzi scheme’s thirst for new capital.

3. Build a perception of desirability. This was the brilliance of Madoff’s pitch. A prospective client was informed there was simply no opportunity for them to participate in the program because it was in such high demand. A week or so later a call was placed to inform the target that Madoff would make an exception just for them. Of course, they had to wire the money right away.

Before you express outrage, please understand that in no way do I condone Madoff’s illegal actions or make light of the pain he caused his investors. His life in prison is well deserved.
However, his deftness as a marketer and in sales should be recognized.

Plus, my mom always taught me to look for the good in everyone. It has always been said Hitler was a wonderful dancer, right?

A Fog-less CSC

Computer Sciences Corporation has long stood shoulder-to-shoulder with the top Beltway bandits. In fact, the company has been recognized as a player in government IT, outsourcing and managed services for the 20 years I have been active in the Washington, DC technology community.

The past 36 months has seen quite a shift for CSC – the company’s hip, new corporate brand. In late 2005, CSC was being actively shopped as an acquisition target with a myriad of private equity firms and government contractors in the hunt.

The market tanked. A deal never got done. So, CSC’s board turned to plan B: bring in a new leadership team and invest in the growth of the business.

From the content of VP and Chief Development Officer Randy Phillips’ presentation to the Association for Corporate Growth (ACG) National Capital Chapter it appears things are humming along at CSC. The company relocated its headquarters to Falls Church, Virginia. It has put its cash to work as a buyer. And it invested up and down the organization in marketing and sales.

As a result, CSC now stands as the world’s largest independent IT company with a diverse customer portfolio across government and commercial enterprise markets. Moreover, the stock has remained steady even as the major exchanges cratered.

Here is a recap from Randy’s presentation entitled “The Fog has Lifted:”

--CSC has 92,000 employees working in 90 countries. The company just celebrated its 50th anniversary.

--Business is split: 35 percent public sector (about $6.7B), 26 percent business solutions and services (fastest growing segment), and 38 percent managed services.

--Created CSC Ventures as an internal capital funding organization to spur innovation among its employees.

--Company has a “Damn Fine Acquisition” methodology. “D” stands for desirability, “F” is for feasibility, and “A” is for availability. Challenge in the current M&A environment is the still unrealistic expectation of entrepreneurs regarding valuation. Many still believe that a 10 to 15X EBITDA is defensible in the current economic environment.

--CSC’s strategic priorities moving forward include:

1. Expand public sector business
2. Scale business solutions
3. Focus outsourcing in growth segments of the market
4. Improve competitiveness in core geographies
5. Push offshore
6. Streamline organization for value delivery

Nightmare on My Street

Here is something personal I rarely advertise: I am a fanatic when it comes to slasher movies. Friday the 13th…Halloween…Texas Chainsaw Massacre…I dig them all. I’ll even watch those low budget productions with their B actors and gobs of fake blood.

The big screen is where I try to leave the psychos though. That’s because I subscribe to the guiding principle that my professional experience is more rewarding and pleasant when I engage with well-adjusted, grounded and passionate business executives. Life moves too quickly and the requirements of a running a PR consultancy are too complex to get distracted by the dramatic tendencies of loonies.

Make no mistake, we are surrounded by the unstable. I was reminded of this fact yesterday after reading two entertaining blog posts. Buck Banks of NewmanPR details a run-in with an attention-crazed employee candidate who thought nothing of denigrating the very company where she sought employment. And Beth Harte weighs in with her condemnation of social media leeches based on her recent experience at several industry conferences.


So, in the spirit of Jason Vorhees, Michael Myers and Freddie Krueger, here is my list of the five most common business psychos: (Photo courtesy of Slasherfilm.com)

1. The Super Needy Psycho: this person needs…or should I say demands…constant positive reinforcement and hand holding or their work quickly veers off path. I’m not your therapist, spouse or best friend. It’s up to each of us to find our source of professional motivation.

2. The Angry at the World Psycho: Business can be unfair. We don’t win every deal. Clients, partners and co-workers can betray us. A competitor can misrepresent their capabilities. As my colleague Jeff Majka has been known to say, “It is what it is.”

3. The Don’t Hold Me Accountable Psycho: Regardless of what happens, any misstep or failure is never their fault. They weren’t set up for success. They didn’t have the resources. The market changed. Blah…blah…blah.

4. The I’m Going to Take, Take, Take Psycho: I tend to hear from these people when they need something, such as help with a job search or free advice on a product launch. Yet, when they are in a position to retain Strategic Communications Group’s (Strategic) services it becomes surprisingly difficult to reach them.

5. The Watch Your Back Psycho: Last year a principal at a somewhat competitive PR shop who felt slighted by someone at Strategic sent me a long-winded, rambling Email about how it was now their mission to steal away all of our clients. Here’s a missive from that message:

But I will extend you one last favor. Here’s advance notice: We are about to launch an entirely new brand – for project oriented and budget-sensitive clients, including “mid-market tech companies.” We will pitch totally integrated service beyond anything you could dream about. We’ll pitch a fee structure that will be highly profitable for us and virtually impossible for a competitor to fight. Look for a release and a marketing campaign to launch maybe before year end or near the end of the year. You may not even know it is NAME OF AGENCY DELETED. But you’ll figure it out when this brand starts picking off your clients.

My advice to the comfortably sane is to steer clear of these psycho types in business dealings. Don’t work with them. Don’t have them as clients. Don’t partner up. Fail to do so and you may find yourself the unfortunate star of your own slasher flick.

Will Premium Content Cross the Last Mile?

The last mile in social media has proven to be a long one.

Several weeks back I published a blog post entitled the Three Phases of Social Media Maturation that generated significant interest. It attracted more than 2,000 readers in a week with nearly 25 re-tweets and a set of excellent comments.

The post overviewed a set of lessons learned we’ve picked up at Strategic Communications Group (Strategic) in the execution of social media campaigns on behalf of global leaders like Microsoft, British Telecom (BT), BearingPoint and Sun Microsystems, as well as emerging growth companies such as GovDelivery and Epok.

The initial two phases focus on defining program goals, establishing an editorial content strategy, publishing on a consistent schedule, and promoting in targeted social networks and online communities. When successful, the result is the attraction of a loyal, thriving and expanding community of readers and followers.

The third phase – what a client of ours at Microsoft referred to as the last mile – involves tapping this community of followers to identify business leads and opportunities. Of course, the tactics employed must remain consistent with the tenets of appropriate social network participation. This means no spamming or shameless self promotion. Rather, the mission is to motivate the right targets to raise their hand and express the desire for a more meaningful business dialogue.

It’s during the last mile that the return on investment (ROI) of a social media campaign becomes real and measurable. This is why the frustration meter at Strategic is on the rise. We’ve had success in enterprise sales support and, when coupled with competitive intelligence gathering, we are set to deliver on deal capture programs for multi-million dollar procurements a client may be pursuing.

Yet, the area of straight lead generation remains a work in progress. We’ve employed a number of approaches -- including an e-book offer, survey requests and wiki collaboration -- with marginal return. Perhaps the give-away hasn’t been compelling? Or the survey participation required too much time? We are still thinking this through.

We are also now evaluating how to effectively incorporate premium content into the editorial strategy of our social media campaigns. Tech blog extraordinaire GigaOm has given us a model to emulate. Their recent introduction of a $79 a year subscription service called GigaOm Pro creates a potentially lucrative new revenue source, without negatively impacting the loyalty of the blog’s readership base.

For Strategic’s clients, we do not anticipate publishing premium content via our social media efforts for direct revenue generation. Rather, the offer of high-value case studies, white papers, customer interviews, etc could be the tactic that helps us cross that last mile.

The Changing Journalistic Guard

Things often get chippy when there is a changing of the guard. It happens in sports. In happens in politics. And it happens in business.

The graying generation and the wunderkinds point fingers and cry foul about how the other side simply doesn’t get it.

There is a whole lot of finger pointing right now in the world of technology reporting. The New York Times’ Damon Darlin fired off this weekend in an article entitled Get the Tech Scuttlebutt! (It Might Even Be True.) Darlin contends that well read blogs like TechCrunch, Gawker and Gizmodo dance around the tenets of good journalism for the sake of speed in reporting and attraction of audience.

In the article Darlin quotes TechCrunch’s Michael Arrington as explaining, “Getting it right is expensive…Getting it first is cheap.”

Darlin’s lesson to readers: don’t trust the content of even the most respected and well-read blogs. Of course, the implication is that the market should embrace newspapers like the New York Times, regardless of the viability of their business model.

Arrington was quick to shout back with a rebuttal entitled The Morality and Effectiveness of Process Journalism. In addition to dissecting the flaws in Darlin’s reporting, Arrington presents his case for TechCrunch’s approach to content development. (Michael Arrington photo courtesy of LA Times.)



















“We don’t believe that readers need to be presented with the sausage all the time,” he writes. “Sometimes it’s both entertaining and informative to see that Sausage being made, too. The key is to be transparent at all times.”

My take is that in the near-term there will continue to be a distinct and equally important place in the information chain for mainstream media and industry blogs. However, the shift in influence to blogs, social networks and online communities will continue to accelerate.

This changing of the journalistic guard will set in motion an important chain of events:

1. Market demands will drive traditional media outlets and industry blogs closer together in their content development and reporting methodologies. Journalists will increasingly become more lenient in their adherence to the peer-reviewed editorial process, while tier-one bloggers will add a level of diligence to retain credibility.

2. There will be consolidation as publishers acquire blogs that have attracted a strong and loyal following. Ultimately, a content hierarchy will be established in which news reporting and analysis is presented by a publisher in different formats across multiple media. This is somewhat comparable to how Disney produces and broadcasts sports entertainment on its ABC and ESPN properties.

3. As acquired industry blogs further evolve their content methodology under corporate ownership, the gossip and rumor reporting void will be filled by upstart bloggers who see an opportunity to attract attention and readership.

Of Love and Support

My mom was diagnosed with breast cancer at the age of 32. She beat it and now more than three decades later cherishes every day with friends and family.

Barbra Marcus Kolton wasn’t as lucky. A lifelong friend and one-time significant other, she passed in January 2001 days after celebrating her 30th birthday.

Strategic Communications Group’s (Strategic) work in the healthcare space can be measured in months, yet I’ve already developed an understanding of the importance of gallows humor. Our efforts are focused in the areas of chronic disease management and radiation oncology. The patients are sick and, in some instances, they don’t get better.

A constant that defines those in healthcare is an unwavering respect and honor of the value of life. We see it in our clients who toil for more than merely capital gain. And we see it in their patients who in the midst of a difficult time make it a priority to share their stories for the benefit of others.

This spirit was on display this past Saturday at the Susan G. Komen Race for the Cure in Washington, DC. I joined my family and a group of Strategic colleagues to participate in the event and show our support for the women struggling, living and overcoming this disease.

In the grand scheme, our contribution of time and money was modest. We were there though. I thought about my mom and about Barbra.

(Photos of the Hausmans: Marc, Hilary, Hunter and Landen)

Corporate Budgets Must Reflect the Shift in Influence

If musical artist Don Henley were to craft an anthem for today’s journalist it would very well be titled the “End of the Influence.”

That’s because the shift in impact on awareness and credibility from traditional sources such as the news media, columnists and pundits to online communities and social networks continues to accelerate.

The numbers prove this out. Advertising revenue for newspapers has cratered due to dwindling readership and interest. Broadcast and radio are experiencing a similar crush.

In comparison, the time spent by business users and consumers in social media channels has made a stunning leap. According to research shop Nielsen Online, total minutes spent on Facebook in April 2009 grew nearly 700 percent from a year ago. Twitter saw its user time on the site skyrocket by more 3,700 percent. Even MySpace, which realized a 31 percent decline in user time, still logged an impressive 83 million minutes of use in April.

For corporate marketers the take-away from this realignment of user interest and engagement is clear. It’s absolutely paramount to adjust budget allocations to focus on the channels of increasing influence. You have to fish where the fish are, right?

A recent forecast from Forrester Research indicates this trend is well underway. The analyst firm anticipates a 34 percent compound annual growth rate in social media spending during the next five years with a jump from $716 million this year to more than $3 billion in 2014.

In no way am I proposing that organizations eliminate their spend on traditional advertising and public relations outreach. Quite the contrary as these tactics continue to serve an essential role in the marketing mix.

Rather, it is clearly time to strike a better balance in budget based on where key audiences reside. The numbers tell all…they’re in social networks.

Math Muddies the Social Media Waters

Can a mathematical equation serve as the foundation of a value proposition to a prospective client?

A few years back Strategic Communications Group (Strategic) represented an innovative developer of software that helped companies make better decisions about where to direct their marketing spend. The core of MarketSwitch’s optimization product was a patented, mathematical process that allowed users to create interactive “what if” scenarios.

MarketSwitch’s CEO was one of those rare executives who had true public relations rock star potential. He was smart, well-spoken, opinionated and passionate about the company and its product. Yet, he had this unfortunate habit in an interview of digressing into a discussion of the math behind the technology, peppering his comments with phrases like “n-th potential.”

You could almost feel the air of interest squeeze out of the room as the English-degreed journalist struggled to follow. As a result, our media relations efforts on MarketSwitch’s behalf typically faltered at the point of interview.

Last week I came across a well thought and carefully crafted blog post from Jay Deragon that presents the return on investment (ROI) from a social media program. The conclusion is compelling: for a time investment of roughly $26,000 an individual can develop, manage and leverage their engagement in social networks and related promotion of thought leadership content.

Deragon even makes the all important leap of comparing this cost and anticipated ROI in terms of lead generation and sales to other marketing tactics, such as advertising, collateral materials and direct mail. It’s no surprise that social media stands tall in its ability to deliver tremendous value and return.

As someone whose professional charge is to market and sell social media and digital communications services to corporate buyers, you’d think I would be shilling Deragon’s blog post to every client and prospect on my radar. Not so fast.

Like MarketSwitch’s n-th potential, Deragon bases his social media analysis and ROI assessment on a statistical equation called Net Present Value (NPV). While I am confident this would be of great interest to the corporate finance department, social media investments tend to made by marketers and corporate communications professionals.







It’s best to keep the business case for the incorporation of social media into the marketing mix clear and concise: generate leads, support the sales cycle, improve search engine optimization (SEO), and enhance executive visibility and thought leadership. (NPV equation source: British Computer College.)

Let’s leave NPV to the accountants.