founder

By definition, hypergrowth companies are outliers. Hypergrowth is defined by a compound annual growth rate (CAGR) of 40%. Companies grow that fast by pouring on the gas and reinvesting every dollar back into the company – usually, in the earliest stages, the reinvestment is heavily based on product and talent. Slack is a great example of this; it had a $1.1 billion valuation before ever hiring a CMO. When marketing and PR become a priority, and that’s when the question of how much hypergrowth companies should spend on PR starts to circle, and it’s difficult because hypergrowth companies can’t use baselines of slow-moving Fortune 500 companies or even those in the pre-IPO stage.

PR and Marketing Spends: Rules of Thumb

You know that adage, “Dress like the job you want?” Hypergrowth companies need to spend on the valuation they want. In 2023, because many companies invested heavily (marketing budgets went up 13% on average) in branding and marketing during the pandemic, VC-backed business valuations rose considerably in the wake of the pandemic, 68.5% in some verticals. Marketing and PR investments are just that: investments. Wouldn’t you spend $5 million to make a billion?

We are thoroughly out of the pandemic and are now managing uncertainty. But for ambitious companies, this presents a true opportunity. Especially if you’re looking to creep into market share, according to Christine Moorman, at Duke University’s Fuqua School of Business:

“Companies tend to cut back on marketing in periods of economic uncertainty,” said Christine Moorman, the T. Austin Finch, Sr. Professor of Business Administration at Duke University’s Fuqua School of Business. “This general tendency should be tempered with an understanding of the cost of reaching consumers and what competitors are doing. Inflation may be a chance to leap ahead if others pull back.”

Average Companies Have Average Spends

The 2023 CMO Report reflects this changed environment:

-The average marketing budget was 10.6% of the overall budget and 9.2% of revenues.

-For companies with $10-$15 million in revenue, the average spend was 15.5% of revenues.

-For companies under $10 million in revenue, the average spend was 19% of revenues.

-For startups, the average marketing spend was 11% of revenue.

So the question is – are you average? If you’re in hypergrowth, you are decidedly NOT average. Hypergrowth companies aren’t average and are often in dogfights for additional funding or customer acquisition against better-funded competitors. So, there’s no question that hypergrowth companies need a hypergrowth PR budget that reflects their ambitions. It’s unreasonable to think you can stagnate your budget but grow revenues aggressively.

 

Hypergrowth: What’s PR Worth To YOU?

Unlike other initiatives, it has cross-functional importance. This is important because, in a moment, we’ll discuss how hypergrowth companies can make their marketing and PR budgets go further.

Before we do, a note about marketing spend distribution: most companies lump PR into their marketing budgets, and all companies face the dilemma of marketing budget balance. Again, this takes some introspection into your goals, audience, and competition. But one thing about PR is that it has a very long shelf life. Whether you do a publicity stunt, a Super Bowl ad, or a social media post, the impression is seconds long, and then it’s gone. But PR tends to have a very long shelf life. We’ve seen clients continue to get traffic to their sites for years after posting a piece of content. In addition, it’s still the most trusted form of marketing. According to the Edelman Trust Barometer, 65% of consumers trust earned media more than any other form of marketing. PR is an investment like buying a house, whereas marketing is like renting.

Ask yourself, “How will we use and activate PR?” 

Will PR help you secure top talent?
Will PR help you secure capital?
Will PR give potential customers confidence in the company?
Will PR support low customer acquisition (CAC) and high word of mouth?
Will PR increase loyalty and reduce churn?
Will PR support culture and purpose?

PR is cross-functional, so it stands to reason that PR’s budget should be cross-functional as well. If you’re using PR as a recruitment tool, then-candidate marketing or internal comms could help increase the budget. Product development and PR can collaborate on low CAC, so there’s an opportunity to mix those budgets as well.

Be sure that your overall marketing budget matches your ambitions. If you’re growing at 40% CAGR, your budget should match, and remember that today’s marketing and PR investments are tomorrow’s returns. You may need to increase your marketing and PR budget by more than 40% to achieve 40% CAGR; once you’re on that track, perhaps you pull it back to match your growth, and once you’re publicly traded, your budgets may more closely match the average CMO projection.

What Should the Hypergrowth PR Budget Include?

Your hypergrowth PR budget scope should reflect your priorities for your business and how you will use and activate PR. Typically, when I speak to hypergrowth companies, I immediately assess whether the following PR tactics will work for them:

Thought Leadership
Word of Mouth Activations or Stunts
Media Relations 
Corporate Awards Programs 

Plus, any company investing in its reputation should do crisis PR planning.

That’s not to say these are the only PR tactics that will work for a hypergrowth company, but these are the immediate things that come to mind. Different hypergrowth strategies will dictate how each of these will be executed.

If you’d like some specific examples of budgets across a variety of ranges that worked for hypergrowth companies we’ve worked for, we can share what we’ve seen work throughout our executive-level experiences, contact us, we’d be happy to talk about effective strategies based on your goal.

With 2023 in the rearview mirror, the collective attention of B2B tech companies turns to 2024. While the Fed is looking to drop rates in 2024, and that may help out startups looking for venture capital, there are still many strategies that companies need to consider to thrive in 2024. As businesses embrace what may well be the first “normal” year of business since the pandemic, companies are reckoning with a rapidly changing regulatory, trade, and infrastructure atmosphere. But hyper-growth CEOs know the key to staying the course during high growth periods is controlling what you can. One of the most valuable assets a B2B tech company can control is reputation. From our perspective, there are several growth strategies for B2B tech that improve reputation.

Emerging Technologies: a Reputational Growth Opportunity

Emerging technologies, harnessed appropriately, can improve customer acquisition, customer satisfaction, and customer loyalty. The world is embracing a dizzying array of technologies right now, including AI. And while AI promises next-generation productivity, the world is also collectively suspicious; this is often the case for emerging industries, but Ai faces unique PR challenges. Embracing emerging technologies presents many growth and reputation advantages as well. Of course, simply using new technologies like AI isn’t a PR story; what could be a PR story is industry leadership around the use of AI, defining parameters that are brand-consistent as they apply to AI. Taking the lead on trust-based initiatives is a reputational win.

Transparency is another reputation-building asset that companies can use technology to improve. Imagine if all your suppliers used blockchain to authenticate where the products you buy originate from. You could then help your clients ensure their own purpose-driven supply chain was sound and create a solution that has historically been a huge challenge for businesses. Some executives will shy away from this, knowing that their supply chain isn’t completely “clean.” But there, too, is an opportunity to increase transparency and create a conversation. Believe it or not, companies that proactively discuss their imperfections are more credible than those that only showcase their strengths.

Cyber Threats: A Reputational Threat

It seems hardly a day goes by without hearing about some data breach or another. Technologies for securing data are improving every day, but they aren’t perfect yet.

Companies examining their own cyber security internally may wonder what they would do if there was a data breach within their own technologies. Today, most cyber insurance companies will require you to have a business plan in place, but that isn’t enough because saving a business isn’t important. If its reputation is so damaged, no one will do business with it again. The best time to plan for a crisis is when there isn’t one. While cyber insurance programs sometimes include reputation-building services like PR in them, the limits are very low on all but the most expensive policies.

IPO Preparedness

The IPOs of 2024 will be from established and “safe” companies. However, for many businesses, 2024 may be the tip of the spear towards IPO. Preparing for an IPO is a cross-functional process, but one of the most important things a company can do, at least 24 months before an IPO is shore up its reputation and awareness. Yes, this is a financial commitment, but brand capital is a considerable contribution to most private company’s value. In a constantly shifting stock market, smart investors want resilient brands and brand equity is resilient. Investors want to know that the brand is trusted, but they also want to know that brand strength can be the foundation for exponential growth. No company grows exponentially without brand confidence.

Growth strategies for B2B tech pre-IPO include media coverage; if the company has never had much media coverage, there is much work to be done. The CEO must be heavily engaged in the PR process, and that is very often a shocking shift for founder CEOs, especially since it can be time-consuming. Not only that but making the news isn’t as easy as starting a business, believe it or not. Less than 1% of businesses ever receive media coverage – but those that do are well positioned to be at the top of their vertical.

Another key aspect of IPO preparedness is crisis planning for cyber threats and other considerations – they could be anything from a recall to a regulatory threat. Planning for a crisis means everyone at the C-level understands when there is a crisis and who leads it. Having a solid relationship with a PR firm before your crisis occurs is paramount to a quick, strategic, and effective response.

Sustainable and Responsible Business Practices

Even B2B companies will be called to understand their social impact. For growing B2B tech companies, this could include electrical footprint and processing power, as well as the international supply chain and even employee relations. But how is this part of the Growth strategies for B2B tech? Companies that are in hypergrowth must have a clear line of growth – and doing so includes considering cultural and business changes that are likely to impact growth over the next five years. A company’s reputation will be driven by how much it embraces these future valuation implications. ESG may have been a political hot potato, but the fact is that social impact isn’t going away. Businesses may go quietly about their own sustainable and responsible business practices, but they will still need to do these things because to NOT do them will become a reputational liability during critical moments like IPO or acquisition.

 

Reputational improvement and maintenance will be as important as any other growth strategies for B2B tech in 2024. Reputations will be simultaneously more expensive to acquire and more valuable. Investing in reputation today will drive the growth of tomorrow.

Ever wonder why certain brands stand out in the marketplace or how they consistently garner positive media attention? The secret behind successful brands is effective public relations managed by reputed PR firms. But what do PR firms do precisely? This question often bothers business owners seeking to establish a presence in the industry. Considering that reputation and public perception can make or break a company, understanding what PR firms do is essential.

In this comprehensive guide, we’ll delve deep into the roles and responsibilities of PR firms, emphasizing their indispensable contribution to achieving a company’s strategic goals. From the nuances of B2B public relations to the intricacies of managing B2C public relations and the dynamic environment of public relations companies in Los Angeles, we’ll cover it all below.

Defining Public Relations: The Art of Shaping Perceptions

Public relations is the strategic communication process that creates mutually favorable relationships between the public and organizations. But what do public relations firms do? They manage the spread of information between an individual or an organization (such as a business, government agency, or nonprofit organization) and the public. The goal? To paint the clients in the best light possible, often translating to shaping public perception, managing crises, and fostering goodwill.

The Multifaceted Roles of PR Firms

What do PR firms do besides crafting press releases or handling crises? The reality is far more complex, as these firms wear many hats depending on every client’s needs.

Image and Brand Management: PR firms construct a company’s public persona. They strategically shape perceptions and narratives, ensuring the brand image remains consistent, relatable, and positively received by the target audience. These crafted images help businesses connect emotionally, build trust, and stand out in the competitive marketplace, fostering loyalty and engagement.

Media Relations: Acting as intermediaries, PR firms navigate the complex media landscape. They foster relationships with journalists and influencers, aiming to secure beneficial coverage. Through carefully crafted messages and strategic timing, these professionals convey the client’s narratives, announcements, or responses, ensuring a consistent brand voice throughout various media outlets.

Crisis Management: When scandals or emergencies strike, PR firms step in to control damage. They develop strategies, communicate with stakeholders, and release official statements to manage the narrative. This proactive approach, timely responses, and transparent communication help to mitigate adverse impacts, restore public trust, and ensure the company’s reputation remains intact.

Event Coordination: PR firms excel in creating impactful events that enhance brand image. From organizing product launches to press conferences, they manage every detail meticulously. PR firms design these events to generate buzz, provide memorable experiences, and strengthen relationships with customers, stakeholders, and the media, ultimately bolstering the brand’s public profile.

Diving Deep into B2B and B2C Public Relations

While the core of what PR firms do remains the same, strategies diverge when dealing with businesses versus consumers, often known as B2C, and understanding these subtleties is crucial.

B2B Public Relations: Winning Trust in the Corporate Arena

B2B PR involves managing relationships and communicating strategically with other businesses. It’s about building a reputation for reliability, expertise, and consistency in delivering value. But what do PR firms do in the B2B context exactly, and how do they navigate this intricate landscape?

Thought Leadership: PR firms strategically position clients as industry vanguards. Through insightful white papers, industry panel discussions, and keynote speeches, they highlight the clients’ expertise and vision. This promotion not only underscores their authority but also sets them apart from competitors, influencing peers and attracting opportunities for growth and collaboration.

Industry Relations: Within industry networks, PR professionals operate with finesse. They cultivate strategic alliances, engaging peers, competitors, and industry bodies. By identifying synergies and facilitating partnerships, they enhance the client’s standing in the community, which is crucial for reputation management, competitive positioning, and long-term business sustainability.

Crisis Mitigation: The volatile nature of public opinion makes crisis mitigation essential. PR firms develop robust strategies, anticipating potential threats. In times of turmoil, they act swiftly, implementing these plans to manage flow, address stakeholder concerns, and stabilize the situation. This adept crisis response safeguards reputations, maintaining company integrity and public trust.

B2C Public Relations: Capturing Consumer Hearts

Conversely, B2C public relations revolve around market sentiments, consumer perception, and direct communication with end-users. This arena buzzes with brand awareness campaigns, product launches, and social media interactions, all tailored to engage the public’s voice and attention.

Product Launches and Reviews: PR firms handle everything from press releases to influencer collaborations to orchestrate successful product debuts. They strategically plan the reveal, ensuring it resonates with target audiences and stands out in the market. Additionally, by facilitating product reviews, they generate excitement and anticipation within the audience, influencing public perception and consumer decision-making and ultimately driving initial sales momentum.

Consumer Engagement: In the digital age, direct consumer interaction is vital. PR firms leverage social media platforms to bridge the gap between companies and customers. Through curated posts, response management, and engagement tactics, they humanize brands, create vibrant online communities, and strengthen consumer loyalty. This ongoing dialogue enhances customer experience, fosters brand advocates, and amplifies positive word-of-mouth referrals.

Crisis Management: Consumer-oriented crises require immediate responses. PR firms specialize in reputation management, swiftly addressing adverse incidents or public dissatisfaction. They craft transparent, empathetic communications, handle media inquiries, and provide guidance on the next steps. Their intervention helps companies preserve customer trust, mitigate potential backlash, and navigate the situation with the brand’s integrity intact, ensuring a resilient public standing.

The Pinnacle of Influence – Top PR Agencies

Why do companies, especially in bustling urban entrepreneurial landscapes, reach out to top PR agencies? The answer is simple. These firms are known for their strategic prowess, extensive connections, and seasoned experience in navigating the complex pathways of public opinion. Notably, public relations companies in Los Angeles stand out due to their proximity to vast networking opportunities, media houses, and a diverse client base that spans multiple industries.

Why Location Matters: Spotlight on Los Angeles

In the realm of public relations, location is strategic. Public relations companies in Los Angeles, a bustling hub of commerce and culture, are uniquely positioned. Here’s why:

Networking Epicenter: LA thrives with media giants and notable influencers, presenting endless networking prospects. PR firms leverage this environment, connecting with power players.

Media Relations: Being close to leading media outlets provides a distinct edge. Los Angeles-based PR firms capitalize on this, facilitating prominent exposure and impactful brand narratives for clients.

Diverse Industry Landscape: The city hosts various industries, from tech to entertainment. This diversity enables PR firms to develop extensive expertise and navigate different sectors skillfully.

Qualities That Set Top PR Agencies Apart

Top PR agencies aren’t just about a prominent client list. Leading PR agencies embody certain qualities, such as:

Strategic Storytelling: PR firms master crafting engaging stories, aligning narratives with the client’s brand and objectives to captivate target demographics and foster brand connection and loyalty.

Innovative Approach: These agencies pioneer unique engagement strategies. They transcend standard practices, initiating trends that elevate client profiles in the crowded marketplace.

Results-Driven Mindset: These firms prioritize tangible results. They aim to make discernible impacts through increased visibility, enhanced brand reputation, and crisis management.

Specialized PR Fields – Technology, Thought Leadership, and More

As the industry evolves, so do the niches within it. Fields like technology PR and thought leadership have emerged, requiring specialized and innovative strategies tailored to unique audience needs.

Technology PR: Navigating Innovation and Users

Technology PR is a realm where innovation meets the dynamic market, and public relations strategies play a crucial role in how consumers understand and embrace new technology.

B2B Technology PR: In this area, PR firms demystify complex technological solutions for businesses and showcase how they can improve operations or bottom lines.

B2C Technology PR: This type of public relations involves translating complex tech jargon into benefits for the average consumer, highlighting ease of use and life-enhancing features.

Establishing Authority through Thought Leadership

Thought leadership is about establishing a reputation as a field expert. It involves contributing new ideas, providing insightful commentary, and being the go-to source for industry insights.

Content Creation: PR agencies specialize in producing compelling, authoritative content. This strategic material strengthens brand credibility and effectively engages target audiences.

Public Engagement: From speaking opportunities to industry-wide panel discussions, they create platforms for direct audience interaction, solidifying the client’s role as a thought leader.

Essential PR Tools – Earned Media and Content Development

In the arsenal of any reputable PR firm are two tools: earned media and content development. These elements are crucial in creating organic reach and providing valuable material for engagement.

The Power of Earned Media

Unlike paid advertising, earned media is about publicity obtained through promotional efforts other than paid media advertising. But what do PR firms do with earned media? They strategically capitalize on this aspect, understanding that it’s a crucial component that provides a form of third-party endorsement, often seen as more genuine compared to traditional advertising.

Media Coverage: PR firms work diligently to secure valuable coverage in digital publications or television news segments. By achieving these placements, they provide the clients with an invaluable asset – third-party validation from reputable sources. This type of endorsement can significantly influence public perception, enhancing a brand’s credibility in the eyes of potential customers.

Social Proof: In today’s interconnected world, we cannot overstate the power of social proof. PR professionals strive to create a positive buzz around a brand through word-of-mouth, social media shares, testimonials, and reviews. This strategy doesn’t just increase brand visibility; it cements its reputation as a reliable entity, influencing potential customers’ decision-making processes.

Content Development: More than Just Words

Content development is the art of generating informative and engaging material that resonates with target audiences. This strategic creation and distribution of content go beyond mere volume. The focus is on the caliber, ensuring it serves the audience’s needs while reflecting the brand’s identity.

Multimedia Content: In the digital era, audiences crave diverse content forms. Recognizing this, PR firms produce dynamic videos, infographics, and podcasts. These compelling formats offer valuable insights, catering to the evolving consumption patterns of modern audiences. By encapsulating information in an engaging way, they enhance the audience’s connection with the brand.

Educational Material: Knowledge is power, and PR firms harness this by creating in-depth educational resources. These materials, including white papers, e-books, and webinars, serve as authoritative content pieces that explore industry-specific subjects. They not only assert the company’s position as an industry expert but also provide learning avenues for the audience.

So, What Do PR Firms Do?

They work tirelessly behind the scenes, shaping perceptions, telling stories, navigating crises, and building an image of authority for the clients. Their work is all-encompassing, from the specialized realms of B2B public relations to the direct-to-consumer strategies of B2C public relations.

Whether making technology accessible and exciting or establishing industry leaders through strategic thought leadership, PR firms’ roles are undeniably integral to business success. Understanding what public relations firms do underscores the value of these partnerships in achieving business goals. In the dynamic, ever-evolving business landscape, leveraging the unique expertise of PR professionals is not just beneficial; it’s essential.

So, are you ready to transform your brand’s public image and market influence? Partner with a leading force in the industry. Contact Avaans Media for a free consultation today.

Maybe you’ve never hired a PR firm before, or maybe it’s been a while and you’re just unsure of what a PR agency costs. Either way, you’re asking yourself, “how much will a PR firm cost me?” Since PR usually falls within the marketing budget, let’s start there.

To grow your position in the marketplace, a good marketing allocation is about 15% of revenue. In 2022, the average marketing budget for B2C brands was 13.7% of revenue, and for B2B brands, it was about 10% of revenue.

 

But what if you’re an ambitious company looking for PR to take you to the next level?

In 2023, PR hourly billing rates looked like this: 

PR Agency CEOs: $439/per hour (up from $417/hour in 2020) 
PR Agency EVPs billed an average of $381/per hour (up from $319 in 2020)
PR Agency Senior Account Execs billed an average of $333/hour (up from $319 in 2021)
PR Agency Account Managers: $257/hour (up from $256/hour in 2020) 

So if you’re an average company, and you’re looking to maintain your position, you’re probably spending in the range of 10% of revenue on marketing. If you’re looking to dominate, your budget should be higher. A typical breakdown might be that 1/3 of the budget is advertising, 1/3 of the budget is content, and 1/3 of the budget is PR.

Ambitious startups typically allocate between 12-17% of revenues to marketing.

Large international agency budgets can be $380,000 or more annually, while a mid-range agency budget typically clocks in at $156,000-$180,000 annually and a smaller agency budget would be $120,000 per year, a mid-range freelancer could be anywhere from $36,000-$100,000 a year.

If you’re a CPG or DTC brand with a marketing spend of under $100,000, then you might consider consumer product PR sprints, which feature micro contracts that align with key buying seasons. Hiring a PR agency is an investment, but considering PR converts ten to 50% better than advertising, PR is indeed a place where the ROI pays off.

It’s safe to say that if your PR team has executive PR experience, and your agency spends an average of 45 person-hours per month on your account, your monthly retainer will be around $14,400 per month. It could be less if your team is more junior. If you require more executive hours, your fees could go up. 

So, what goes into a PR agency’s fees?

 

According to Muck Rack’s 2021 State of PR report, the number one cost to a company for PR is the agency itself; the people on the account. This makes sense because, unlike programmatic ad spending (a typical minimum is programmatic spend is $25,000/month), PR agencies rarely have minimum spend or activation fee requirements outside their retainers.  60% of the PR agency fee is for staffing; experience and talent are the main drivers behind the PR agency fee.

Oftentimes, fees are different depending on your strategic objectives. For example, if you want to keep a firm on retainer for a few calls a month and no proactive media outreach, your annual fees may be considerably less. If you are trying to secure investment or you’re pre-IPO, you may find your fees are on the higher end of an agency’s fee structure.

Why is PR so expensive research

USC Annenberg Communication Report 2023

 

It’s a balance to strike your budget with your goals, but when asked, I always give the same advice to CMO’s and startup founders. If your budget is $400,000 or more per year, hire an agency that does $20 million+ in revenue. If your budget is $180,000 per year, hire a boutique PR firm, with less than $10 million in revenue. If your budget is $60,000 annually, don’t hire an agency, hire a freelancer.

Odwyer PR’s annual report shows rates increased considerably in 2019, 2020, 2021 and 2023, so if your agency didn’t raise its rates during those year, you’re fortunate, but if you’re shopping, the current rates may come as a surprise; but PR Rates are expected to flatten out in 2024, so while there will be modest increases in 2024, they won’t be the big jumps we saw in the last four years.

Agencies are notoriously reluctant to share minimum retainers, but in 2013, several agency executives did just that with PR Observer, an industry publication.

“To properly scope a client program and assign the proper team support, we feel $15,000 – $17,500 per month is a reasonable starting point.”Anne Green, President & CEO, CooperKatz & Company, Inc.

“Our retainers range from $7,500 – $50,000 or so. Crisis costs are different and generally charged by the hour with a $20,000 minimum.”—Ronn Torossian, Founder & President, 5WPR

“We have some clients that pay us $100,000 or so per year, some clients that pay us more than $100,000 per week, and many clients that pay us $100,000 or so per month.”— Mark Hass, President & CEO, Edelman United States

“Our clients generally pay between $15,000-$30,000 a month depending on the workload.”—Stu Loeser, Founder & President, Stu Loeser & Co.
So, what’s typically included in a bespoke retainer rate? Well, again, that may depend on each agency’s specialty. For example, if your agency specializes in digital communications, you may find that social media content creation is included, but media relations are not. But the following services are a good rule of thumb to expect within our typical PR agency retainer:
  • PR Strategies about how to stand out from your competitors using PR
  • Internal and external communication strategies that match your growth goals.
  • Campaign development and creative activations for marketing opportunities.
  • Media relations, and securing regular media coverage, speaking engagements.
  • KPI and business impact reporting.
  • Copywriting, such as press releases, speeches, white papers, and branded journalism.
  • PR crisis planning – but not necessarily crisis management.
  • Partnership strategy and potential management such as cause, social impact, or purpose-driven PR initiatives.
  • Executive training, including media training, interview prep, and research or executive ghostwriting.
  • Content strategy for video, social media, and inbound leads.
  • Content creation oversight, including social media, photography sessions, and video development.
  • Poll or research development, implementing the poll may or may not be within the agency’s retainer.
  • Peer agency coordination, such as with branding or advertising agencies.
  • PR campaigns that “make the news,” are designed to create word-of-mouth or media opportunities.

For a complete list of what we would include in your PR retainer, reach out to us and tell us more about your business and your goals.

Hiring a PR agency is an investment, but considering PR converts ten to 50% better than advertising, PR is indeed a place where the ROI pays off.

 

(sources: Odweyer PR)