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Todd, this is an important post. In fact, I'm going to do some PR for the PR around it b/c I couldn't have said it better myself.

These are tough times Todd but I agree that we can't go losing our minds and being paranoid because of what "may" happen. It's tough to strike a balance though.

Todd:
Bravo! You have just given the industry (and me) brilliant language to use for those clients whose anxiety about their economic status clouds their reason -- not recognizing that leveraging a downturn can be the most effective way to improve market share and give competitors who are cutting back, a run for their money. But it takes courage and good judgment to take a 'pinged' budget and figure out strategies that will give companies that extra edge.

Great post. With social media as important and influential as it is today, cutting PR out of your company is not a good idea.

Todd:

How short the corporate memories are of that Harvard study, which received a lot of attention when it appeared. Knee-jerk reaction to a topsy-turvy stock market does nobody any good. You did not hold back emotionally, as clearly this was a bombshell for you, but you rallied superbly. Hopefully your message will be heard and others will carry it as well.

Good post Todd.

What I find a bit ironic is that the specific advice given in the Sequoia presentation should stand regardless of economic conditions.

With respect to marketing (on slide 47), they advised, "measure and cut what's not working". That's a smart practice anytime. I am confident that overall investments in social media and PR will bring a better return (and for a lower investment), than other marketing expenditures which are more expensive and more difficult to justify.

You make a strong case, Todd. At my PR agency, we're well aware of the possibility of hearing that same speech from clients trying to "plan ahead" for an economic crisis at their company and eliminating agency PR because they feel it's the first thing that needs to go. I'd like to hope most recognize the value of utilizing an agency...but I might have to steal some of your reasons why agency PR should be the last to go if I'm faced with that situation :)

Todd,

Interesting read and compelling argument. I may be new to the field, but after going through 10 weeks of a social media-heavy PR writing course, the benefits of implementing social media are abundant, and not to mention cheaper than the average campaign. I'll keep up with your blog, for sure.

Todd,
Terrific post! I would add under #5 that a solid PR program also works to make PR materials -- news releases, byliners, media pick-up -- part of the marketing collateral package that sales reps use when making a sale. There is no PR in a vacuum -- brand awareness building supports sales.
ahg3

And what if your company never has had a PR agency?
Would it be advised to get one?

The problem with PR agencies is how to measure their efforts.
Online advertising is easy to measure.
Traffic generated by blog posts is also easy to measure.

How do you measure the PR agency effectiveness? You have to have a ROI as the company needs to cut costs to survive.

I totally agree with the reasons behind maintaining PR and marketing in a time when it is easy to cut back on what is perceived as non-essential.

And obviously agencies are likely to feel this the hardest, but I don't think agency work always beats in-house marketing and PR in every instance - it's about using the best internal or external resource to provide the best results in each individual case.

I'm an in-house specialist who concentrates on social media and community engagement, but I use a mix of in-house resources and external agencies to try and balance the most effective range of skills and working practices for the best use of my budget and resources. That even means mixing external and internal resources within specific individual projects, but so far it's been a great way to invest in the areas where external expertise is needed, whilst also making best use of internal skills.

And by using the best of both worlds, I'm able to justify the spend on external resources far more easily, and with far less challenges than if I'd simply shipped everything externally.

Hi,

The thinking on this thought would be one that is obviousely contrarian and therefore fashionable right now in the era of social media. However, do you think that a business needs to focus on succeeding in the market than to manage what the free blogger comes up with as a thought process and spend time and resources in responding to him?

Are you *Sure*

For me, numbers one and two are the most important to note. Number one because it is a way for you to show measurable value for your clients, and maybe even save them money. In the current economic environment, any way you can relate positively to the bottom line will put you in the driver's seat.

Number two is important because, as Todd states, a speedy, pertinent response is critical in today's media environment for both positive and negative coverage. A common argument is that a PR agency simply wears its client's brand, while an in-house PR person LIVES that brand. I disagree. I think a great PR firm can certainly be (and SHOULD be) just as compelling a brand ambassador as anyone on the in-house side.

I'm frustrated by the very thought. Sure, if cash flow falls into negative territory, hard decisions must be made across the organization. But at this point in time, investing in marketing/PR demands the same long-term common sense that savvy investors employ to hold and buy when times are rough. Because that's what good PR/marketing is -- an investment that should help insulate against economic shocks and market slumps.

My thought: Any PR agency worth its salt should start compiling facts and figures about how its PR program (and PR in general) can help its clients in this recession. Then, proactively sitting down with CEOs/CMOs to discuss how the agency is going to help them in this crisis and maximize the existing PR budget.

We need to be proactive about keeping our clients instead of waiting for them to come to us with budget cuts or worse, cutting off the entire PR program altogether.

Good PR firms have personal relationships, which open doors

Great piece Todd. As many have said before, the ones that will survive will be the ones that think laterally, creatively and place an emphasis on strong PR and marketing, overtaking hesistant competitors. Agree with Amys comment also. We need to be ahead of the game when discussing how we intend to support clients through the difficult times.

Great post. You're 100% on target. Cost-cutting is NEVER prudent. (Too many stressed-out execs don't seem to understand the difference between trimming the fat and chopping off limbs.)

Fact #1: "Brands that increase (marketing) during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

Fact #2: Marketing and PR's ROI is measurable. If no one on the client side is measuring it, however, it becomes an expense rather than a valuable piece of the business.

Execs who haven't figured out how to connect the dots between Marketing/PR and ROI shouldn't be in their jobs.

The most obvious thing about a company that shrinks its PR and Marketing budgets during a financial crisis is a company that was merely running through the motions of funding marketing and PR activities when the business landscape was good. In other words, while you may have been kicking ass, these folks were on cruise control. Sad.

Some companies get it and others don't. Eh.

Again, great post (and comments).

Bravo! I'm impressed with how you've crafted the "distributed talent" argument and shown what someone should expect for $150K. Not sure it will be enough to keep folks from ducking and running, but it's the finest argument I've seen.

Britton Manasco
Illuminating the Future

I just spent time at a startup that was totally burned by an agency. They promised big, charged $15,000 and then delivered nothing. This was one of the big name agencies, mind you, with all the 2.0 buzz. My experience is they charge you $15k per month, throw a bunch of 24 year olds who can barely write at your project, then let you talk to the bigwigs in dribs and drabs and mainly when you are about to bolt. The smartest thing a company should do during a downturn is fire its PR agency and give the CEO of a course in how to be media savvy -- the Jason Calacanis way. Any CEO who feels that PR should be farmed out clearly just doesn't get it.

Here in Ireland the government has unfortunately set a poor example and slashed its own PR budget to a point of non-existance. This has spread like wildfire through the public sector but also the private sector. However, 15,000 pensioners and 10,000 students marched through Dublin yesterday in protest at the government's 'poor communication' when explaining budget cuts...
I work in a consultancy and we're going under.

Todd, while I agree that PR is the last thing to be cut, I disagree with the cost of an in-person vs. pr agency. You mentioned:
"A good PR agency will do “all of the above” and will spread the work across FIVE people, including a senior strategist who can offer experienced counsel; two or more media bulldogs; and, a dedicated industry researcher – for about $150,000."

This equates to about $12,500 a month. While the current economic climate may dictate agencies consider accounts with this budget, many will not. So instead of an experienced agency, you may have to select a "smaller boutique" or freelancers who may not bring to the table the experience and resources that an agency like SHIFT can bring.

Furthermore, out of pocket (OOP) expenses are usually tacked on ABOVE the "retainer" amount. Assuming a 10% OOP, this would be $13,750/month or $165K annually.

In the end, it depends on the company. Some will do better with a kicka** in-house person. Some will do better with an outside agency.

As usual, a great post Todd!

I like the way that you broke down the reasons especially the benefit of having an agency as opposed to an in-house PR team.

The problem is, as some of the other comments have pointed out, is that many agencies promise big, charge a lot and don't deliver. While this isn't representative of all agencies, it sucks that the few sometimes ruin it (or at least leave a bad taste) for the rest.

Keep up the good work! I liked the Facebook app for CC you posted about.