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Ensuring both your client and your firm find mutual value in a working relationship requires trust, respect, diligence and, of course, money. This presentation from 2007 provides an overview of best practices public relations consulting firms (and other consulting firms, for that matter) can use to help safeguard the fiduciary interests of both company and client. Sample budgeting templates as well as aggregate industry data on billing practices are included.
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Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
1© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
The Catevo Group
Best Practices in Charging for PR Services
(or, how to get what you want without calling in the lawyers)
Roger M. Friedensen, APRVice President
The Catevo GroupSeptember 28, 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
2© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
Consider this . . .
“Armageddon is upon us: The PR industry has been commoditized in the years following the turn of the millennium economic downturn. Many organizations’ senior-most people . . . have been replaced by junior employees . . . who can’t provide the high-level counseling required to keep the industry afloat. Thus, the counseling services that could and should be provided by PR agencies have been cannibalized by the likes of McKinsey, where executives can command higher prices without question.” (PR News, Aug. 13, 2007)
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
3© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
So I Was Thinking . . .
“Best Practices in Charging for PR Services”
“Best Practices in Collecting for PR Services”
“Best Practices in Making PR Profitable”
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
4© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
Square One
Competition, confusion and credibility (as always) “Thanks a lot, Sam . . .” Procurement and purchasing rule today (and for the
foreseeable future) A cautionary tale
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
5© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
What Are Some Folks Doing?
Ninety percent of firms:– Have some or all clients on retainer
– Bill a flat rate for some services (at least sometimes) Media training, crisis plan development, message
development sessions, simple news releases and “bundled services” are most frequently billed at a flat rate
When billing by project, 63% bill the quoted fee rather than actual hours worked
Source: WORLDCOM Billing and Finances Survey 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
6© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
Percent markups for out-of-pocket expenses most likely for print and audiovisual services
One-third bill internal account team meetings While six percent had profits of 25% or more, 23% had
profits of 10% or less Over 80% spend 40–69% of gross income on salaries Two-thirds spend 20–39% of gross income on operating
expenses Although a third of firms do not raise rates annually,
half plan to do so in 2007Source: WORLDCOM Billing and Finances Survey 2007
What Are Some Folks Doing?
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
7© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
59%
47%
65%
80%
73%
21%
36%
23%
17%
10%
0% 20% 40% 60% 80% 100%
Give clients/prospects awritten/published rate sheet
Have a minimum project fee
Bill for travel time
Bill flat rates for some services
Bill all/some clients using a retainer
Sometimes Always
Billing Practices
Source: WORLDCOM Billing and Finances Survey 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
8© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
Billing Practices
32%
27%
51%
48%
43%
54%
15%
23%
27%
25%
5%
5%
0% 20% 40% 60% 80% 100%
Mark up out-of-pocket expenses using aflat fee
Bill a flat rate for operating expenses(added to invoice)
Value bill for work over and above actualhours worked
Do proposals on speculation
Mark up out-of-pocket expenses by aspecific percent of cost
Discount billing rates for non-profit clients
Sometimes Always
Source: WORLDCOM Billing and Finances Survey 2007
Source: WORLDCOM Billing and Finances Survey 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
9© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
So What Can We Do?
Redefine our focus – emphasize our margins (read: profitability) no matter the billing model
Fight fire with fire – become one with procurement– Increase efficiency – Enforce quality (it’s not just about control)– Learn the language – Employ financial planning tools
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
10© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
CLIENT DATE
PROJECT Catevo Revenue
REVENUE
Monthly Rate # of Months
Retainer Revenue -$
FIXED FEE REVENUE Amount
Fixed Project Fee
Creative Service Fee
Market Research Fee
Total Flat Fee Revenue -$
HOURLY RATE REVENUE Billing Rates Total Hours
Project Lead - -$
- -$
- -$
Sr. Associate - -$
Jr. Associate - -$
- -$
- -$
- -$ Total Hourly Rate Revenue - -$
Ave Bill Rate #DIV/0!
TOTAL FEE REVENUE -$
Reimbursable Revenue (e.g Media Placement)
Reimbursable Revenue (e.g Marked Up Items)
Reimbursable Expense (e.g Media Costs)
Reimbursable Expense (e.g. Items to be Marked Up)
NET REIMBURSABLE REVENUE -$
TOTAL REVENUE -$ Total Income
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
11© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
PROJECT COSTS
BILLABLE PERSONNEL COSTS Billable NBD Proposal/Contract Prep Project Delivery Total Cost Rates Total Cost
Project Lead - - - $65.00 $0
- - - $0
- - $0
Sr. Associate - $55.00 $0
Jr. Associate - $45.00 $0
Management (Supervision) - $65.00 $0
- $0
- $0Total Personnel Costs - - - - -$ Catevo People Costs
Ave. Cost #DIV/0!
NON-BILLABLE PERSONNEL COSTS Non-Billable NBD Proposal/Contract Prep Project Delivery Total Cost Rates Total Cost
Project Lead - $65.00 $0
- $0
- $0
Sr. Associate - $55.00 $0
Jr. Associate - $45.00 $0
Management (Supervision) - $65.00 $0
- $0
- $0Total Personnel Costs - - - - -$ Catevo People Costs
Ave. Cost #DIV/0!
OUTSOURCE & OTHER COSTS Total Cost
Total Outsource & Other Costs -$ Outsource & Other Costs
GROSS PROFIT #DIV/0! -$ Gross Profit
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
12© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
So What Can We Do?
Redefine “PR services”– Make room for new friends (and billing codes)– Hiring, training, acquisition, mergers, alliances, etc.– Explore interplay between PR and other disciplines
Supply chain optimization Logistics Interactive Business development
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
13© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
So What Can We Do?
Focus on the Five C’s: – C-suite– Capabilities– Creativity – Comprehensive financial planning– Client relationships
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
14© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION
The Catevo Group
Thank You!
Roger M. Friedensen, APRVice President, Integrated [email protected]