Agency PR Retainers: When To Avoid And When To Pay
Most companies invest little in PR. They spend a lot on marketing, but they stop spending on PR at $50,000 a month. Crazy for me.
Bill Gurley, the GP of Benchmark VC
How much does PR cost? It’s always a chicken and egg question. Depending on your startup’s PR strategy, ambitions and current growth stage, the answer might be very different. And it often causes confusion for the founders.
Do I need a PR agency? Or an in-house PR consultant? Or, maybe I need to ditch PR whatsoever and spend all my budget on paid media? If any of those questions even popped in your head, you’ll definitely find this post useful.
On average, startups working with agencies spend $5-10k per month on PR retainers and expect tremendous sales growth and calls from investors as an ROI. However, often a small comment in an article about their competitor is all what they get. Or nothing at all. In order to avoid it, it’s crucial to understand the lowdown.
Let's see how a PR agency works, whether your company needs it and what to expect.
How does a PR agency work?
Any PR agency's goal is the same as that of a startup – to make money, but not in the long run. A PR agency needs revenue from day one.
You meet with a PR agency’s founder or director, talk goals and vision, then you get an offer with a very tempting PR cost. All these “comprehensive PR work aimed at building the image of the founder as an expert in top media outlets.” sounded nice too. So why not?
The actual work then goes to a PR manager, who looks after a bunch of clients, including your startup.
Over the next few months, they send you project plans with phrases like “conducted outreach.” They draft long coverage reports that are primarily about other companies. On the calls, they repeatedly suggest the same three reporters from TechCrunch and CNBC. At the end, you’ve spent a lot of money on PR, you haven’t seen any coverage. Why?
If you have a news hook, it’s easy. An account manager uses this hook to get as many publications on one topic as possible. What if there is no news, and there are KPI in the contract?
Your PR account manager must figure out the editorial calendars, collect the market data, discuss your case studies and pitch the ideas to the journalists.
This work takes at least a week. A reporter may still pass on the pitch. But here’s a trick: agency reports on the hours spent, the salary still needs to be paid, so you have to pay even if the KPI has not been met.
You are arguing you are not going to pay, but the agency points to the contract: you are paying for 20h per month, and KPIs are just “directions”. Importantly - this horrible scenario does not depend on the size of the agency and can easily occur both for $5k and $50k you spend.
Do I need PR at all?
At this stage, you start questioning – do you need to spend your time on PR at all? Don’t fall into despair - PR can certainly help you with:
- domain authority,
- awareness among investors and partners,
- HR brand,
- your personal brand.
You can argue this can be done without PR. Setting up SEO and email newsletters, applying for Forbes Council and publishing op-eds once a month, paying for partner materials and interviews should do it, right?
In a way. Surely, not everyone will understand that a piece of coverage is paid for. But here is a thing.
Not all media offer a paid placement. Those, who do, will charge you as much as the month of a hefty PR retainer.
How about DIY PR?
At this point, you probably come back to the idea of “earned” media coverage through PR. Does it mean you need to hire an in-house PR straightaway? Not really. Finding a good PR consultant to join your startup is just as hard as finding a good PR agency.
Important - at the early stages, the founders are often doing the best PR for their startup. And DYI PR will let you to look under the hood, making it easy to hire proper PR people at a later stage.
Start your DIY PR with 3 questions:
What are your needs for the next 6–12 months? Do you need industry credibility? Or trying to develop traction in local markets? Or are you launching a product? Or planning a round and want investors’ attention? That will define your pitch angle.
What media outlets read your target audience? What’s the gap between the media you pitch and the media your audience reads? If you spend all your time pitching TechCrunch while your customers prefer Vogue or Drones News Today, that’s clearly some time wasted.
Who are the reporters covering your topic? If your are reaching out to editors, you are almost certainly pitching wrong people. Both points 2 and 3 define your media list.
There are plenty of tech tools to support your DIY PR strategy, and many have flexible PR price packages to fit startups’ needs.
When do you really need an agency?
Here’s an ultimate rule: hire an agency when they have something to work with. The benefit of hiring an agency is getting an access to their relationships with media. And while PRs may indeed have a good relationship with journalists, you must have an interesting story to tell. Not every news is big media news.
If you enter new foreign markets, or grow from idea to unicorn in less than a year, or are raising a major funding round, or maybe even preparing for an IPO - all those are substantial reasons to talk to professional PRs. And still, depending on the news, you might want to try an independent consultant on a project basis rather than signing up a retainer contract.
It's our job to share the knowledge. Whether you're early-stage, pre-seed, or already funded, contact us to receive step-by-step advice for startups looking to get good press coverage without an agency.