What Does It Cost? How to Budget Your PR Program by the Numbers

By Mike Nikolich, CEO Tech Image Ltd.

Your goal is to select a public relations agency to handle a new product launch. The RFP nets four respondents; their proposed budgets range from $50,000 to $200,000. How do you evaluate their plans? While it's true that you usually get what you pay for, should you automatically discount the lowest budget (or the highest for that matter)? Wouldn't it be helpful to have a tool to determine which proposals are priced fairly?

To help compare agencies, you need a benchmark to determine what firms charge for various tasks. Although hourly rates for agency talent may range from $75 to $350, rates alone don't tell you the full story. The key to establishing a reasonable public relations budget is to determine what an agency charges for typical projects and how many hours of creative time it takes to complete these projects.

When an organization is interested in hiring Tech Image Ltd., our first step is to send them our brochure and a copy of our pricing guidelines. If the prospect is comfortable with our prices, we'll work with them to establish a realistic budget. Once we've determined the budget, we'll develop a comprehensive program. Our clients appreciate this no-nonsense budgeting approach. After all, you wouldn't buy a new car without knowing what you'll be charged for cruise control, air conditioning and other features. Why would you hire an agency without knowing what you should expect to pay for their services?

Not all agencies share this philosophy, so don't be surprised if some balk at discussing prices with you before they submit proposals. Our pricing guidelines are based on 20 years of experience serving clients in the computer products, digital video, Internet, IT, technology training and telecommunications industries. These guidelines will help you establish accurate baseline budgets that cover creative fees, plus out-of-pocket expenses.

The guidelines cover seven traditional public relations program elements:

  • Press release writing and distribution;
  • Media relations;
  • Case study and feature writing;
  • Media Tours;
  • Press kit development;
  • Trade show PR; and
  • Newsletters.

In addition, we provide estimated hours for three electronic public relations activities:

  • Online monitoring;
  • Web Site audits and content updates; and
  • Fax-on-demand servers.

There are two additional services that Tech Image offers: the TIMEÔ (Tech Image Market Evaluation) audit, a review of a company's messages and its competitive landscapes, and the MICÔ (Message and Image Coaching) workshop, designed to focus a corporate message for key spokespersons. Ask the PR firm that is preparing a budget for you what they charge for similar services.

To simplify the budgeting process, Tech Image offers a PR Budget Planner Worksheet for Microsoft Excel. If you'd like to receive a copy, don't hesitate to email me at mike.nikolich@techimage.com or give me a call at 888-4-TECH-PR, extension 222.

Your comments and suggestions would be welcomed!

Media Relations
Media relations will have the biggest impact on the success or failure of your public relations program. Despite advances in distribution technology (such as email, WWW servers, search engines and portals, push technology and fax-on-demand servers), public relations is, and always will be, a relationship business. Your agency must have strong media relations capabilities; their relationships with editors and reporters will go a long way toward determining the success or failure of your public relations campaign.

Even the smallest PR programs should budget at least 25 hours per month for basic media relations. Larger companies often budget hundreds of hours per month for this activity. A good rule of thumb is to add up your universe of publications and assign an equal number of hours for media relations activities. For example, if your company needs to be in regular contact with 100 key reporters, reviewers and analysts, consider budgeting approximately 100 hours per month. The core media relations budget should include such tasks as:

  • Monitoring editorial calendars;
  • Pitching stories to editors;
  • Following up on press releases;
  • Maintaining ongoing contact with key industry analysts;
  • Placing all feature articles and case studies;
  • Tracking product reviews and interview opportunities; and
  • Monitoring key publications, media outlets and online media to create feature placement opportunities.

Out-of-pocket expenses (for postage, photo and slide duplications, long-distance phone charges, Federal Express, etc.) should range from $750 to $2,000 per month).

By the way, one of the best ways to evaluate a new agency relationship is by regularly auditing the monthly long distance phone charges. Have the agency provide you with copies of the long distance bills for the first four months. If you have budgeted 50 hours per month for media relations and your long distance phone charges are not averaging $150 to $250 per month, there's a good chance those media relations calls aren't being made!

Press Releases
Press releases are the building blocks of any PR program and a typical two-page release requires between five and 10 hours of creative time to write and distribute to appropriate media. Distribution costs, assuming the release will be mailed to 100 media outlets, should not exceed $500.

To keeping mailing costs as low as possible, Tech Image normally distributes 50 to75 percent of its releases via e-mail or fax to a customer list of reporters and editors. We also recommend using the regional circuits of PR Newswire or Business Wire, rather than the more expensive national circuits. This will save you money, but still ensure that your releases are posted on all of the major search engines, portals and online services. Regional circuits cost between $55 and $125 per release. National circuits average $400 or more per release.

Case Studies and Feature Articles
Public relations programs are only as effective as the quality of the material you provide news media and analysts. Great customer stories are always in demand, particularly ones that show how a product or service helped a company solve a mission-critical business issue. A typical 1,500-word case study or feature article will require between 20 and 30 hours of creative time to research and write, including a minimum of two revisions. Placement costs should be absorbed by the media relations budget. Photography and travel are additional charges.

Unless the case studies and feature articles will also be used as collateral, you may want to have the agency boil the stories into shorter 500-word briefs and pitch these to the news media. Once a reporter expresses interest in the brief, it can be developed into a full-blown feature, or the PR firm can link the reporter with the customer to create a custom story. By working this way, companies can get much more mileage out of their public relations budgets. There's no sense spending thousands of dollars to develop customer stories that have little, if any, chance of being placed.

Media Tours
Few public relations techniques have more impact than face-to-face meetings with key national media. Every PR program should have a budget for at least one national media tour per year. A media tour of four major U.S. cities (such as Boston, New York, Washington, D.C. and San Francisco) requires about 50 hours of creative time to schedule interviews, develop advance material and briefing books. Since your account executive will be the person to maintain an on-going relationship with the news media, it makes sense to have them accompany your spokespersons on a media tour. However, this will add extra hours of creative time to your media tour budget, plus the related travel and out-of-pocket expenses. Tech Image has a flat daily rate for out-of-town activities like tours and trade show support, to make this item easy to budget.

Trade Show PR
Due to the noise level at most trade shows, we urge our clients to shy away from press conferences at trade shows. However, we do believe trade shows provide an excellent opportunity for you to meet face-to-face with key editors. We recommend scheduling interviews with between 15 and 20 reporters per trade show. The meetings can take place at a quiet corner of the booth or in a nearby conference room. Budget 50 hours of creative time for the agency to book these appointments, and remember to factor in the daily rate if an agency representative attends the show.

An increasing number of high-tech companies are opting for Web-based and email-distributed newsletters to communicate with their customers and prospects. A typical four-page, 8-1/2 by 11 sized newsletter requires about 35 hours of copywriting time, plus another 10 hours of desktop publishing time. Printing, graphics, photography, etc. are additional. Be sure to have a PDF version of the newsletter available to post to your web site.

Online Monitoring
Internet news groups, chat rooms, search engines, websites, portals and E-zines will provide a wealth of rumors and news about your company and its competition. Many companies look to public relations firms to monitor these outlets and provide a weekly executive summary to upper management, with hotlinks back to key stories. Budget 15 to 35 hours per month for online monitoring.

Website Archiving Process
You may have a great-looking web site, but when was the last time anyone audited all of your on-line content for accuracy? We recommend allocating 50 hours to perform a web site audit and then assigning 10 hours per month to track the site and be sure the latest links are posted to relevant search engines. All releases in the pressroom should be monitored to ensure they feature the latest company boilerplate. Since the average technology company has a turnover rate of 25 percent or higher, it's also important to regularly monitor news releases and white papers to determine if the correct spokespersons are listed. Releases older than 12 months should be archived.

Fax-on-Demand Server
Like the Internet, fax-on-demand servers are streamlining the way companies communicate with editors and customers. If you're interested in a fax-on-demand server but are discouraged by the high hardware and programming costs, some PR firms offer turnkey, 800-number, fax-on-demand servers. Budget about 10 hours of creative time to program the server, plus $250 in out-of-pocket expenses. Depending upon volume, fax transmission charges will range from 85 cents per minute to $1.20 per minute. The costs of uploading additional documents should be billed at the agency's hourly rate.

Market Evaluation
You might know your place in your market, but do you clearly communicate that position throughout your efforts? A market evaluation audit can help determine if your message is still appropriate for your current market situation, by comparing a number of factors, including: company message and sales support materials (collateral, trade show booths, advertising), press materials and web site messaging. Messages and themes from competitors are also reviewed for a complete evaluation.

This data will be analyzed with an eye towards defining differentiation, clarifying cluttered or muddy themes and recognizing message opportunities (benefit vs. feature, customer focus, etc.). This becomes the platform for all communications going forward.

Message and Image Coaching
Technologists often rely upon their anagram shorthand to explain themselves, which can leave editors and the general public confused. But many marketers know how powerful an interview can be for delivering their story to key customers. By fine-tuning company messages before product launches, media tours, IPOs or other significant activities, clients are better able to gain control of an interview and direct a reporter to the appropriate angle. Message and image coaching workshops are day-long seminars that force executives to focus their messages, improve their listening and speaking skills, and reinforce the power of the interview for everything from stock valuations to sales presentations.

A Leap of Faith
Entering a new relationship with a public relations firm should be a very positive experience for both parties. If an agency is willing to work with you as a team to establish a realistic budget at the beginning of the relationship, the odds are very good that the two companies will work well together. When business partners respect and trust each other, everyone benefits. Isn't that what building a relationship is all about?

Tech Image Ltd., "The Media Relations Experts for Emerging Technologies," provides Intelligence Reports on a variety of public relations topics, including:

  • Developing Budgets for Public Relations Programs;
  • Product Review Tracking;
  • Sales Lead Tracking;
  • Trade Show Public Relations; and
  • Global Publicity Campaigns.

Copies are available via fax, mail, email or the web.
Phone: 888-4-TECH-PR, extension 222
Fax: 847-632-1841
Mail: Tech Image Ltd., 3265 N. Arlington Heights Rd., Suite 301, Arlington Heights, IL 60004