7 Reasons Pay-for-Placement PR Rips Off Start-ups

moneyFor start-ups, the allure of a pay-for-placements situation is obvious: they just want media coverage, why pay when they don’t get it? Recently I heard from a company (I won’t name them) that wanted to involve me in a pay for placements concept.

The sell, according to the CEO–who also tells me that he’s ”personally generated ‘millions in earned media’ (whatever that means ;) for [his] own companies and projects”–is that start-ups would drop their stories into an online marketplace, then a PR person would choose the stories they want to tell, pitch those stories to a reporter and get paid when the placements happen.

It’s a bad deal for everyone.

This concept surfaces every once in a while. One of the biggest kerfuffles came about a year ago when TechCrunch got word that a PR firm was getting paid for placements, including those in TechCrunch. Alexis Tsotsis warned “we believe that there’s something smarmy about putting an a la carte price tag on an individual article like this, even if it’s a relatively inexpensive $750.” TechCrunch editors went so far as to tell their reporters to blackball the PR firm in question, “Because we actually get paid to write amazing stories, not write amazing stories to get PR people paid.”
There are a number of reasons to walk away from this deal, both from the PR side as well as the start-up side.
  1. It’s a waste of money — The URL for the TechCrunch story says “We are worth at least $3k.” It’s a bit tongue-in-cheek, but it brings up a legitimate question: how do you value a single placement? If you’re measuring traffic and conversions, and that single placement sends you a lot, then you have a sense of the value after the fact. But so many factors go into even that issue. You could work very hard on an article and then the reporter posts it at 3pm on a Friday. Traffic fail. You could work hard on an article and the week it’s about to run a major news story pushes you out of the way. The article could come out and offer only a small mention with no link back. Sure, it could be the New York Times and based on the deal you work out it could have cost you a few hundred dollars, but provide little value.
  2. You’re not getting the best work — Put yourself in the shoes of a PR agency person. During their day they need to put time into various clients. On the one hand is a client that’s on retainer and building a relationship. On the other is a pay-for-placement situation. The PR person knows that any pitch they do may or may not result in coverage for any of a number of reasons that are outside of their control. An editor may kill a story, a major event could push it off,  the client could give a lousy interview or it could just months before closing (and therefore: getting paid). Chances are, they’ll put their time and effort into the retainer client.
  3. You need more than just your story — Sure, you think your story is great, and so does your mom, your girlfriend, and the guys in the co-working space. But what happens when you bring it to reporters? “Your story is boring until proven otherwise” writes Amy Westervelt quoting Lora Kolodny. What’s going to make it exciting? What will work for each individual reporter? What will resonate with your intended users? Sometimes this is apparent, sometimes it takes trial and error. Often an outside perspective can add tremendous value, since your firm isn’t steeped in your own messaging. While your firm is certainly there to help amplify your message, it’s just as important that they ask tough questions as part of the planning process. This doesn’t take place at the moment you write the pitch, it happens much earlier.
  4. PR isn’t just about media — Great, you had a successful launch. You told your story and a few reporters picked it up. You even got a boost of traffic and sales. Now what? How do you move on, what’s next for your marketing program? What is going to help your sales team? Do you need third-party validation? Reviews? Maybe you’re looking for funding and you need business credibility. Are you ready for brand-building PR? What other influencers play a role in the buying process? How do you reach them? What channels work? What content do you need to produce? So much work left to do!
  5. Time Matters — Rebekah Iliff at AirPR points out that what she calls “9-11 PR” simply doesn’t work.  At best, a launch takes between three and six months to truly succeed, but 60 to 90 days can work in a pinch. Just about every PR person has a story about a client that came in at the last minute needing help. Success at that point is more about luck than skill. But the launch that took time to build properly not only has a greater chance to success, but helps lay a foundation on which to build.
  6. Relationships Matter — Most people see PR people as “those guys who know reporters,” but just as important are the relationships we build with our clients. The more we get to know the companies and the people we work with, the more opportunity we see. This could be as simple as knowing that our client grew up in Iowa and the reporter attended school in the state. It could be having enough knowledge of the technology by listening to countless analyst and reporter briefings, to better pitch a highly technical publication. These aren’t things you can learn in a single meeting or call, they are tidbits that you learn over time. It’s also how the client learns to trust their PR counsel. The give and take has tremendous value for both sides.
  7. You Can Spend Your Money Better — The CEO mentioned above asked me “If a start-up only has $10k to spend on a launch, should they hire a firm who may or may not get them any exposure? Or would they be wiser to craft a great story in-house (or with some spot advisement), research the top 10-20 places they should be featured, and then make a listing on our exchange?” My advice would be very different. Rather than spending a little and expecting a lot, get a subscription to Muck Rack and do the PR yourself. If you as a start-up know the audience you want to reach and it’s a relatively tight audience, then go ahead and do the work on your own. You may also be able to engage a freelancer for a little bit of money to help. It’s not helpful to anyone to try and engage an agency when you have neither the budget nor the need. Everyone walks away from that unhappy.
In truth, an agency brings a lot of value, but only once a company is ready to engage. Success comes over time by building relationships, momentum and exposure. It comes through all forms of media, whether that’s earned media (traditional placements), social engagement, owned content or even paid native ads. All of these play into a broad PR program that drives value.
Smaller start-ups are probably better off taking the DIY approach. But if you’re headed in that direction be sure to track the impact of any outreach on your business, whether that is traffic, sales, investor interest or any other metric that matters. That way when you do get large enough to need and afford a firm, you will have a good understanding of how to measure the impact of their results.
Chuck Tanowitz

About Chuck Tanowitz

Chuck’s clients rely on his expertise to help set strategy that combines content, social and media to reach customers, partners, investors and prospects. His clients include technology and manufacturing companies of all sizes and directions, from major manufacturing companies like Heidelberg, the printing giant, to consumer-facing startups like CoupFlip. Along the way he has worked with cloud computing, IT security, document management, content management, open source, energy and even food products.

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