Payment-by-results PR: Jury’s still out

pr,We’ve had an interesting debate today at GREEN about the pros and cons of offering payment-by-results (PBR) PR.
The debate has been interesting, because we really didn’t reach any firm conclusion on the pros and cons. However, we do know of two agencies which offer this service – one is doing very well (mainly because we suspect they quickly convert PBR clients to retained clients on a fixed monthly) while the other is struggling.
So what is PBR? Basically for every column inch generated by a PR company the client pays a success fee. So, for instance, GREEN in one month might generates £40,000 worth of coverage in national, regional and trade press then the client agrees to pay us 33% of that value. In other words at the end of the month we are at liberty to issue an invoice for £13,000.
Fantastic! So then, how do we value the client’s three-minute slot on BBC Radio 4, or The One Show on BBC TV, or a five minute piece of ITV? All of which we have achieved for clients in the past. That’s worth… erm thousands?
However, if the client gets tough we agree a 25% rate which means £10,000 fee for us. If the client is unhappy with that then perhaps we can reset the matrix.
Okay, so we say we will charge £200 for every £1,000 of coverage generated. On this model, and based on the above scenario, where we have generated £40,000 worth of coverage in a month that would justify us issuing an invoice to the client £8,000.
Oh Dear! Still too rich for the client? Okay we cut a deal and we say £150 for every £1,000 of coverage generated. Monthly fee: £6,000. Still too much? Okay let’s say £100 for every £1,000 generated. Monthly fee: £4,000.
Damn! The client only has a budget of £3,500 a month – which is probably what we would have agreed as a monthly retained fee anyway.
The reality is that communications consultancies do work on payment by results even for a client on a retained monthly fee – because if they don’t deliver they get sacked. What do you think?


The world backs Barack Obama

As The Economist points out all democratic systems have their quirks, and America's is no exception. The electoral college is a 200-year-old institution. According to its rules, Americans do not vote directly for their presidents. Instead they cast a ballot to decide who wins their state's electoral-college votes.
Stuart Bruce put me on to this. According to The Economist the number of these votes in the electoral college is fixed by the number of people the state sends to Congress, which in turn is based on its population. All states have a minimum of three votes and there are 538 electoral-college votes up for grabs in total. The presidential candidate who secures the most electoral-college votes ends up in the White House.
Critics of the electoral-college system say it can produce a president who has lost the popular vote, as happened in 2000. They also complain that the winner-takes-all system employed by most states leads candidates to focus on a small number of "swing states" and ignore more reliably partisan ones.
There have consequently been many attempts to reform the electoral-college system - over 700 so far - though until now nobody has suggested that the entire world be included.
Now The Economist has. If we could all vote McCain would be toast and Obama will be in power come November 5. Check it out.
Interestingly the only nations in favour of McCain are Macedonia and Georgia.