Hold the Line on PR Compensation

I spent nearly four months carefully cultivating a new client opportunity.

All signs pointed positive. The lead came from a trusted relationship. The prospect competes in a fast growth segment of the market. The CEO invested time with us throughout the process. I qualified the opportunity on budget – twice.

The CEO personally called with the good news. “You are the agency for us,” he explained. “There’s just one thing I need your help on. One of your competitors offered to reduce their fees by half to represent us. We’d like you to do the same as an investment in the relationship.”

Ouch! That opportunity blew up.

Admittedly, we did consider the rate cut to secure this promising piece of business. It is a sluggish market and clients know it.

Ultimately, we held our ground on our requested compensation and, as a result, the prospect elected to retain a different firm.

This recent experience reflects what continues to transpire across the spectrum of marketing, communications, advertising and public relations firms. Clients are squeezing margins while demanding a comprehensive set of services.

It’s gotten so dire that industry rag Advertising Age recently implored firms not to “cave” when it comes to negotiating the financial terms of a relationship.

This is no criticism of clients and their desire to achieve the most favorable conditions in a vendor relationship. Their responsibility is to their own profitability and financial well being.

It’s up to us as service providers to hold the line on fair compensation. We collectively complain about feeling undervalued, yet then roll back the prices like a Wal-Mart Supercenter.

Ad firms and PR shops need to demonstrate flexibility during a difficult economy. However, it’s equally important to recognize the terms that create an unprofitable piece of business and then have the will to walk away.