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Thursday, May 05, 2005

What's commoditizing PR agencies

Sun Microsystems’ use of dynamic bidding as one element of its recent agency search process has put the PR agency industry in a tizzy.

PR Week just published an article, “Dynamic Bidding: PR's race for respect heads south with dynamic bidding,” where PR agency heads bemoan the involvement of procurement in the agency selection process and say it will commoditize the industry.

“As more companies like Sun turn to dynamic bidding during agency reviews, many PR pros argue that the process turns the industry into a commodity,” reported Andrew Gordon in the May 2 issue.

Oh, puhlease…procurement’s involvement can’t turn you into a commodity. But there is something that can – and has for many pr agencies. Here’s my letter to the editor about the topic.

To: Letters Editor, PR Week

As the firm that managed the Sun agency review, I must say that PR agencies should be worried about being seen as commodities – but not because of dynamic bidding, as Andrew Gordon’s May 2 article contends.

A major obstacle for public relations agencies is their own marketing and business models. If you line up most agencies’ value propositions, marketing materials, staffing approaches, and services, it’s difficult to distinguish how they differ. As brands become more similar, purchase decisions become more heavily weighted toward low price – and this fact applies to all business categories whether it’s office supplies or public relations services.

When internal PR execs understand the differentiated business value an agency can provide, they will go to bat with procurement to make sure that the agency is hired – regardless of cost. In absence of understanding that value, all bets are off.

A case in point: the agencies Sun selected (Bite, MWW) had especially clear and unique value propositions that made the hiring decision easy and defensible – even though these agencies were not the lowest bidders.

Lois Kelly
Partner, Foghound
Providence, RI


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