Do clients consider your firm a ‘nonproductive’ expenditure?


For every article I read in PR Week, The Holmes Report or on the Arthur W. Page web site congratulating our industry for having won a seat at the coveted C-suite table, I see just as many advertising trade stories reporting the exact opposite.

The most recent example appeared in the February 13th edition of Ad Age, and was entitled, 'Pepsi shops not feeling the love as marketer trims their ranks 65%".

According to the article, Pepsi's army of advertising and PR firms were stunned to hear the beverage company's CEO Indra Nooybi say the North America Division had identified 100 ad and PR agencies it planned to eliminate from its roster. Oh, the humanity!

Now, I'll grant you that 100 firms may be a tad excessive, but Ms. Nooybi broke the news at a quarterly analyst meeting and, says Ad Age, caught the agencies completely flat-footed. What an impersonal way in which to be fired (and, what a shot across the bow that screams “No, PR types, you most assuredly have NOT earned a seat at Pepsi's C-suite table!”).

In the same article, Unilever's Chief Financial Officer Jean-Marc Huet said his company had reduced 'nonproductive' spending, which he classified as “…the money we spend on production costs and agency fees.” Merde! So much for a seat at the Unilever C-suite table.

I feel the pain of the many firms being handed pinks slips as you read this.

We've been fired over the years by some clients that didn't, and never will, recognize PR, advertising or any other marketing discipline as being C-suite worthy.

My favorite recent tale involves a retail client who called to thank us for our fine work, but to let us know our budget would be spent, instead, on a technology upgrade. Now, we've been replaced by an Edelman or a BBDO or even an in-house team, but we've never been dumped in favor of an infrastructure investment. That's akin to being told by the computer nerds you can't have a seat at their cafeteria table.

I understand the bottom-line obsessed, numbers crunching-crazed CEO or CFO who doesn't get the strategic contribution that PR provides. These individuals are classically-trained salesmen, accountants or engineers who can't measure branding, positioning, sentiment or social media. So, they dismiss it.

I'm glad to see the PR industry making progress within certain, enlightened corporations. But, I think we violate our own principles of truth and transparency when we keep publishing “we've arrived!” stories at the same time global marketers are firing us and referring to our services as nonproductive spending.

4 thoughts on “Do clients consider your firm a ‘nonproductive’ expenditure?

  1. I agree that we’ve failed to impress clients with either our process or a definitive measurement/ROI. That’s why so many of us still don’t have a seat at the table and are the first to be described as nonproductive expenditures.

  2. Nice post, I call the phenomena you describe SST – Super Short-term Thinking. As both you and Julie point out organizations fail to factor long-term brand building into their business metrics.
    Yet clearly the most successful businesses engage in long-term branding and are often praised for their efforts. So why the delta between what is known to be true and what behavior occurs with our clients.
    I believe our industry needs to bear part of the blame here. We have failed to create and sell a set of metrics that CEOs can use to justify the resources we demand.
    Steve in your example of the tech infrastructure replacement – I’ll bet half a year’s billings whatever provider sold your client that infrastructure deal – had a terrific ROI package that went with it. I’ll bet the other half the ROI – was about as accurate as a chimpanzee throwing darts at a board to produce a weekly temperature guide.
    Ed would occasionally refer to me as a “Process Freak” and while we all had a good chuckle at that; it was smart on his part because it showed prospective and existing clients we were process focused.
    For all the strides PR has made as a profession I think we still get failing grades on process.

  3. Thanks Julie. Sad, but true. Despite what we like to think, PR is still one of the first disciplines to be cut when times get tough.

  4. “These individuals are classically-trained salesmen, accountants or engineers who can’t measure branding, positioning, sentiment or social media. So, they dismiss it.”
    RepMan – You’ve pinpointed the problem in a nutshell. Unless these folks can “monetize” (a totally manufactured word that I cannot stand) PR, they see it as an expendable “expense,” along with other “non-revenue generating” departments (like HR).