Tag Archive for: pr agency los angeles

Why Is PR So Expensive?

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I have a friend who once described PR as the “dark arts,” and while I completely disagree with that assessment, what he was getting at is he really didn’t understand how PR works. Reputable PR firms are the opposite of “dark arts”; they’re very transparent. There are some tools of the trade that PR agencies keep close to themselves, but really, there isn’t anything magical about HOW PR works; it’s just a specific combination of relationships, hard work, strategy, and culture. And that specific combination takes a long time to acquire, requiring commitment to the craft. But why PR is expensive isn’t because of human hours worked. Ultimately, there is a price to the human capital, but that’s not really why PR is expensive.

So, Why Is PR Expensive?

PR is expensive because the outcomes are so important and relevant. PR’s lasting value is in improving a brand’s reputation like no other marketing lever can. For companies wanting to be acquired or IPO, your PR investment ROI could be hundreds of millions of dollars.  PR outcomes range from high valuations at IPO or during capital raises to making advertising more efficient and reducing time to sale for both B2B and B2C customers. In short, it’s not unusual for PR outcomes to be more than 10X the investment. To 10X investment, the most impactful PR aligns with trust and loyalty, which requires consistency.

For many ambitious companies, the long-term benefits of PR are sometimes forgotten, and yet that can be considerable. Due in part to high marketing budgets during the pandemic, brand valuations increased dramatically in 2023 – from 6.3% growth to 9.7% growth.

Your reputation is your most valuable asset.

Why is PR so expensive research

Data from USC Anneberg Communications Report 2023

What is a Good PR Budget?

When considering your PR agency budget, your budget should match your goals. If you’re trying to grow your business, your overall marketing budget and PR should increase.

As of the fall of 2023, according to The CMO Survey, the average marketing budget was 10.6% of budget and 9.2% of revenues. For companies with $10-$25 million in revenue, the average spend was 15.5% of revenues. So, if you’re looking to be above average, your overall marketing budget should be higher than that. For companies under $10 million in revenue, the number was 19% of revenue. And consumer packaged goods reported spending 25% of their budget on marketing and PR.

If you’re an ambitious brand or fast-growing company, your budget could be 25% of revenue – is that aggressive? Yes. It is. Again, that’s a budget to grow considerably. A good rule of thumb for your budget might break down like this: 20% content, 20% advertising, 20% PR, 20% SEO, 20% activations.

While your distribution might vary depending on your goals – for example, if you’re raising money or looking for a M/A event, you might skip advertising all altogether and move that to PR and content. Alternatively, if you’re a consumer brand,  you might increase the content and advertising portions and focus your PR budget on certain campaigns. Emerging industries may need larger PR budgets because they need to create public and investor trust.

Based on the rates of PR agencies your budget may be higher or lower based on the experience level of your agency team. Naturally, less seasoned agency teams will be less expensive. But it’s probably more important for you to budget based on your goals.

If you’re ambitious or seeking investment or pre-IPO, your marketing budget should match those very important objectives and allocate 12%-17% of revenues or target valuations to marketing, with a third of that, at least, going to PR. Depending on whether you’re a B2B or B2C company.

How Does PR Make a Company More Competitive?

68% of CMOs reported expecting more intense customer rivalry in the coming year. In B2B segments, that number increased to 73%, with 61% expecting more innovation. By themselves, even new products don’t excite people without a story. If your company is new, you need to define a compelling story, and you need to tell it over and over. Whether you’re a tech company, or a consumer product company, PR is a key part of how people discover new products.

According to Nielson, global CMOs said brand recall was the #1 most important goal in media. Advertising is ubiquitous, and advertising is an important part of any marketing budget. After a while, ads blend in a social feed or even on TV. But if your product or CEO is in a magazine, people remember that. They might not even remember WHAT was said, they’ll remember that they saw it there. Brand recall is critical to the sales funnel. If people can’t remember your company, how will they purchase from it?

PR’s lasting impact is its value, including the fact that earned media lives forever. Less than 1% of companies ever get PR for their company, so by being in that top 1%, you’ve already differentiated yourself. Can you start a company without PR? Absolutely. Can your company thrive without PR? No. There are no household names without PR at the table, period. There are no industry leaders without PR.

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Publicity vs PR – Which is Right for You

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What’s the difference between PR vs publicity? At first glance, they look the same. Publicity is a specific tactic to attract media coverage, it might be good or bad coverage. Public relations is a holistic brand-building, loyalty building and trust-building strategy that includes positive media coverage.

Should you choose publicity or PR?

Most brands do not subscribe to the “all media coverage is good media coverage” philosophy and want ONLY positive media coverage, which is why most brands choose PR. PR refers to the deliberate efforts that organizations make to build and maintain positive relationships with the public. Public relations will create a path toward media coverage including key messaging, brand positioning, making the news, jumping in on breaking news, and strategizing positive company announcements. A PR strategy may also include a crisis communication plan which is important for any consumer brand, but especially DTC or CPG brands. PR is an investment in your brand’s reputation. If your business goal is to be the #1 brand against your competitors or to secure investment that launches you into hypergrowth, then you’ll definitely want to choose PR.

Publicity is a narrowly focused goal, any form of media coverage or exposure for an organization or individual. And it might be OK for a brand that just wants to get into gift guides, for example. That would be an example of publicity without the added benefit of public relations. If your key messages are solid, and you don’t need any additional help building the brand’s trust or loyalty, or your long-term reputation isn’t important, then publicity may be an option for you.

Long Term or Short Term Media Coverage?

Publicity is great for a blast of short-term coverage. Something consistent with a calendar event, or a word-of-mouth campaign with a celebrity for a product launch. Publicity is also great if your brand is willing to do “anything” for media coverage. Stunts in Times Square or the Santa Monica pier often get coverage simply because of the location and the unexpected commotion. That’s publicity. Another example of publicity is an April Fools stunt.

If you’re looking for consistent press coverage regardless of whether you have a product launch or an activation, then you definitely want PR. PR will enable your brand to build trust with your audience, while also building loyalty with your existing customers.

Rinse & Repeat or Bespoke?

Publicity tactics are very similar to one another. Your publicity in gift guides, for example, will also share coverage with other products and possibly even competitors. Think of a publicity campaign as a short-term boost to secure coverage, regardless of quality. If you simply need additional exposure for a specific period of time in order to get noticed by potential customers or clients, then publicity may be a cost-effective solution.

In contrast, public relations will develop custom strategies to build and manage your reputation, reach key audiences and achieve your business objectives through strategic messaging and tailored PR campaigns. With the right PR firm on your side, you can effectively reach your target audiences, build positive relationships with key stakeholders, and stand out from the crowd in today’s competitive marketplace.

 

Many people think public relations (PR) and publicity are synonymous, but there is actually a clear distinction between the two terms. If you’re interested in discussing the difference with Avaans, please contact us, we will help you decide based on your business goals and budget, which type of media coverage is best for you.

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