As Covid-19 changes so much about our world, one thing remains constant: the debate about whether clients should clearly declare their budgets to agencies. As Nicky Regazzoni, co-founder of virtual PR agency The PR Network says: Refusing to cite a budget is not a ‘pandemic thing’, caused by client concerns about the future. It’s always been a problem.” We add fuel to the debate, giving both sides the chance to vent, and explore how much difference the pandemic is making.
Should clients always give agencies a clear budget?
It shows respect to be clear
Nicky Regazzoni, The PR Network: “Smaller firms often genuinely aren’t sure what they need to spend, which is understandable. However, they’ll know if they can spend £1m, £100k or £10k. Quite another matter is larger prospects who want you to show your hand first. This is not okay!
“After receiving yet another brief in September with no budget attached and a woolly ‘tell us what ‘it’ costs, then we’ll tell you what we can spend’, I decided to run a poll on LinkedIn. I asked my peers whether they always ask for a budget before preparing a response.
“The poll closed after a week with 200 respondents, 80 comments and over 8,500 views. 86% said they do insist on a budget with 14% saying they don’t.
“The post stirred up a hell of a debate and the comments suggested it’s a blurry picture. Only one respondent was adamant that they would never expect or require a budget, as there are too many variables and it is impossible to ‘price’ PR. Others said they would still provide a quote without a budget, as prospects often haven’t identified themselves what they can invest.
I suspect in reality, whilst being given a set budget and a clear brief is the Holy Grail, as an industry we are too often compromising ourselves and going for business without a budget.
There were many brilliant comments and insights, both from agency leaders I’d tagged in the post and the broader community. In-house comms heads also weighed in. Reassuringly, they to a wo/man felt that it was unfair and disrespectful to refuse to provide a budget. Here’s how I summed up the issue on LinkedIn.”
Sharing a budget shows openness
Mark Pinsent, managing director, Europe of communications consultancy The Hoffman Agency: “It’s a major gripe of mine when prospects refuse to share a budget as part of a brief. In fact, it’s becoming a non-negotiable part of the new business process for us and we’ll happily turn opportunities away where an indication of the budget isn’t given. A willingness to share the budget demonstrates open and transparent communication, which bodes well for the future relationship, as well as a desire to work together to create a programme which is ambitious within the available resources. From the prospect’s perspective, it also provides a level playing field upon which to evaluate responses, which is surely beneficial? It’s actually ridiculous that we even need to be making this point, and I’d love it if all agencies adopted a similar ‘no budget, no budging’ approach to the new business process.”
The agency must work out its own budget first
Deborah Saw, adviser to boards and former co-founder and chair of agency Newgate Communications: “Of course, the ideal situation is to receive a well-constructed brief with clear objectives and a budget or budgetary range. But there are many companies that do not employ an experienced communications professional who do realise they need external PR advice, but have no idea how much such advice costs and how much effort goes into a successful campaign or programme.
“A pitch is often won way before the presentation when you meet with the prospect, ask searching questions about their business, demonstrate the team’s strengths, and convince them that they want to work with you. It’s at this point you must be clear about how much your services will cost. I don’t believe it makes business sense to reject an opportunity out of hand because the prospect is uncertain at the brief stage. But if they don’t appreciate that you know what works and what success costs, walk away.”
Budget is a factor, not the factor
Peter Jacob, senior integration officer at global firm Interpublic Group (IPG)/Middle East Communications Network (MCN): “A clear budget or baseline indication is always preferable, the fact is we don’t always get one and shouldn’t always expect one. The budget should be just one of the selection criteria used to evaluate a new business opportunity not the criteria. It’s not always the client being secretive or obstructive. Sometimes they may just not know or be prepared to commit it to email or, quite reasonably, they may just want to see what the options are. If I’m shopping for an item of clothing I don’t walk into a shop and declare my intended budget. Many a time I’ve spent more or less than I thought depending on the comfort (a tailored pitch that fits the business objectives), quality of materials (great ideas, strategy and thinking), an item is on sale (a commercially strong/well-structured bid) and my impression of the sales staff (I want to work with that team).”
View from a client
Zoe Melarkey, director of communications at estate agents Purple Bricks, explains why it isn’t always easy for clients to define a budget.
“First things first, of course you need to give a PR agency a budget. Having been agency-side, I know it’s a big bugbear. I can’t think of anything else you’d buy – house, car, shoes, holiday – where you don’t have a budget in mind. No one would dream of asking a media-buying agency to come up with a campaign, without giving a clear view of what they want to spend. And they shouldn’t ask PR agencies to either. I even have a sneaky suspicion that sometimes a refusal to set a clear budget stems from the misconception that PR should cost next to nothing – ‘it’s only writing a press release and talking to journalists, isn’t it?’.
“But there are some good reasons why clients don’t always find pinpointing a budget so straightforward.
“Firstly, PR budgets often come out of a bigger marketing pot. PR might be one element of a wider, integrated campaign and we’re pitching for spend against other channels. A campaign will have a finite total budget – but the exact split between areas will only be agreed, once all the ideas are in. Often the amount initially allocated to PR might be small – for example 5% – but, if we present a corker of an idea that will elevate the whole campaign, we can make the case for a bigger piece of the pie.
“A similar scenario is that we’ll know what our overall PR annual budget is – but not necessarily what we want to spend on each individual activity. For example, I might envisage spending 10% of my total budget on a launch – but if the agency responds with a brilliant, much bigger campaign that will tick all our KPIs for the next 90 days, of course I’d adjust my spend accordingly.
“Finally, bear in mind that the job of an in-house PR is to get the best from their agency – it’s our job to unleash your creativity. There’s often a real concern that setting a tight, inflexible budget will constrain and remove the freedom to ‘dream big’. You have to remember that we don’t know what we’re buying until we hear your ideas! Again, like shopping, sometimes you can find the money if you just ‘have to have it!’
“So, like so much in life, it’s a really about compromise and conversation: give budget ‘guard rails’, a good guide to what you plan to spend and what outcomes you need to achieve in return. But also keep having an honest and ongoing dialogue – sharing the fact that you might be able find more budget if you’re really blown away.”
The pandemic affect
Clients are more open
James Taylor PR consultant at agency Roaring Mouse Public Relations: “Are clients being as open about budgets now? Yes, and more so than before. New clients still want to explore what's possible at different fee levels, and Covid has driven greater transparency around the factors affecting budgets at our existing clients.
“Some of our clients reduced budgets when Covid hit. They were frank around the reasons for doing so and the prospects for returning to more 'normal' levels. Clients are facing just as much uncertainty as we do right now, particularly if they are exposed to sectors such as hospitality or raising venture capital funding.
“Whilst we are optimistic for growth in 2021, it's impossible to predict what that will look like. Where before we could forecast six to 12 months out with some confidence, that timeframe is now two to three months. We are having to be smarter, leaner and more flexible, so we can roll with reality.”
Clients expect more tangible results
Francesca Baker, content marketer: “Budgets are being cut all over the place, and PR is no exception. People want to know they are spending their money wisely. I've seen an increase in clients wanting really tangible results – how many pieces of coverage can they expect? What's the reach? Who will see it? PR has always struggled with showing a return on investment – now is the time to up the game and make sure we have excellent measurement and reporting in place.”
Money is always a thorny issue, agencies obviously need to know how much they have to play with, but it isn’t always easy for a client to define a budget in advance. And like everything else at the moment, the pandemic is making things even more complicated.
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