Goodbye, Retainers

Pay as you go with results-based PR.

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After months of waiting for articles about her company to appear in newspapers and magazines, Ada Polla Tray began to ask herself exactly what she was paying her public relations firm to do. Tray launched the U.S. arm of her family's Swiss skin care company, Alchimie Forever, in Arlington, Virginia, in 2003. Eager to generate buzz, she soon hired a PR firm that promised meetings with editors, celebrity endorsements, and coverage in Us Weekly, Vogue, and Esquire.

The proposition was so alluring that Tray agreed to pay the firm a $2,000 monthly retainer. It was a huge cost, but she figured it was worth it. She was wrong. Seven months and $14,000 later, the firm had gotten mentions of Alchimie's skin care products, which are sold in boutiques, spas, and doctors' offices, in only a few lesser known publications, including New York City magazine Gotham. Tray fired the firm and hired a freelancer, who agreed to charge her when her products appeared in publications. "I didn't want to be in a position again where I was going to be paying something every month for nothing," she says.

Tray is part of a growing group of business owners eschewing the traditional retainer-based PR model in favor of pay-for-placement arrangements. The notion is simple: Companies pay only when their PR rep lands them mentions in the press. The model is becoming more popular owing, in part, to the fact that many companies have become accustomed to tracking the effectiveness of online marketing tools, such as pay-per-click ads, and are eager to do the same offline. "As an agency guy, I can remember sending out bills I was embarrassed about to clients, because we really hadn't done anything for them," recalls PR veteran Dick Grove, who worked in traditional PR for 20 years before starting Ink, a pay-for-placement firm in Kansas City, Missouri, a decade ago. "Clients are demanding more and more accountability today, and this is one model that solves the problem."

(Of course, there's no guarantee that any PR firm will convince editors to cover your company. At Inc., for example, relatively few stories start life as PR pitches. For the record, though: We're always interested in companies whose stories other companies can learn from.)

Depending on how much press you receive, pay-for-placement PR can be just as pricey as retainer-based deals. So it's imperative to set a budget up front, says Ian Treibick, founder of WindPath, a fractional ownership sailboat company in Greenwich, Connecticut. "If you're willing to pay for the big pieces, they're going to try to get you a lot of them," he says.

When Treibick signed up with Califon, New Jersey, firm PayPerClip, he told his rep that he was willing to pay up to $70,000 a year for mentions in niche sailing publications. Instead, the rep recommended targeting mainstream publications aimed at consumers who may be interested in timeshare sailboats. Last year alone, WindPath was featured in a CNBC news segment about affordable luxury and appeared in articles in Newsweek, the Chicago Tribune, and the New York Post. His PR bill for the year was only slightly above the original budget. His PR rep "knows what kind of opportunities I'm looking for, and he knows if he doesn't get them, he doesn't get any money," he says.

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