/ pr-market / A fair price for the PR-services - the basic need of clients and agencies
28 February 2011
A fair price for the PR-services - the basic need of clients and agencies

             Despite PR- service market in Ukraine is relatively young, it has managed to go through its ups and downs. Domestic PR-market was one of the most dynamic in the country. And if, before the autumn of 2008, it was a positive dynamics of growth: new agencies, new services, in the crisis 2009 PR-market has felt these difficulties. According to the Ukrainian PR-alliance (UPRA), in 2009 the market volume declined by 35%, and its capacity (a situation in which outsourcing would be equal to 100% of customer needs) - 40%. Estimated IAC «Publicity», PR-market continued to decline in the first half of last year, but the second half it started to recover. Now, according to experts IAC, in Ukraine doesn’t work more than 50 specialized PR-structures (that provide PR as a single or as one of the basic services). 
              The crisis has hit not only to the number of PR-agencies, but also to the cost of servise. According to various estimates, prices fell by 30-70%, and for some types of services – in 3.2 times. It would seem that such a "devaluation" should be painful hit to stay afloat agencies. But every cloud has a silver lining: lower prices contributed to increased customer interest in PR communications, especially by professional agencies. 
               An active search by Ukrainian companies marketing specialists of alternative tools to promote products and services on background of widespread reduction and optimization advertising and marketing budgets also contributes to this state of affairs. This gets the impression that domestic companies finally paid attention to the fact that PR is one of the most effective tools of integrated marketing communications (along with advertising, direct marketing and sales promotion), and they can’t to abandon it. 
                Caught between the Scylla of the need for PR-services and the Charybdis of widespread economizing, clients logically come to the conclusion: they must to pay for the PR, but the price must be justified: the work done and the results achieved. In other words, "Expensive PR», this idol, which prayed most of the agencies before the crisis, inevitably falls off the pedestal ... at least in the mind of clients. 
                  It should be noted that the opinion of costliness of PR-services fueled by not transparent pricing at the market, absence of unified standards for determining costs and (paradox), the closure of many operators PR-market. According to a survey of companies - consumer PR-agencies, conducted by E'COMM in 2008, 54% of respondents had already considered the cost of the agencies PR-services inflated, and another 15% - very inflated. 
                  On this occasion, interesting as the results of a survey held by IAC «Publicity» and promulgated in early 2010 (interviewed representatives of 210 companies operating in the 5 key markets). The aim of the research was to determine the fair - according to representatives of those companies - price of certain types of PR-services. Here are the most common price ranges, called by a majority of respondents of the study: the value of an integrated client service should be 3000 - 10000 UAH per month, and the support of media relations - 2000-3000 UAH per month. The price of development and implementation of a news event, according to most respondents, should be 5000-15000 UAH, and a PR-events - from 5000 to 10000 UAH. Development a comprehensive communications program is evaluated by a majority of respondents to 10000 UAH, while the development of PR-campaign in the media - only 2000 UAH, and a month of work on PR-support of the Internet - 1000-3000 UAH. It is obvious that not all agencies seem the present value adequate and fair - but such was the vision of customers at a given time.
                   Of course, the customer is interested to pay less, and the agency is interested to get more for their work. But the concept of "fair price" includes the mutual interest of both parties - both client and agency. The client must receive a quality service and results, not overpaying. The agency must receive sufficient financial rewards to ensure the quality and results for the client. A fair price is born at the union of these interests. 
                    "Holy place" is never empty. Instead of an expensive PR that’s not associated with the marketing results, the new idol of the Ukrainian market can be "affordable PR». It is beneficial primarily to clients of PR-agencies, because of money on "expensive PR» most companies can’t assign or don’t want to do it. According to the «MASMI» company, in 2007-2008, the average PR-budget of big companies fluctuated between 300-500 thousand dollars a year, while 40% to 60% of the budget was given to outsourcing. In 2009-2010, the situation changes dramatically. According to industry research PR in Ukraine, conducted by the agency "IFAC Ukraine” in September 2009, during the crisis, 40% of the leading Ukrainian companies – consumers of PR services cut back PR-budgets, 35% reduced or waived outsourcing, and only 16% deployed a more active PR-activity. Moreover, PR-budget 43% of leading companies located in an extremely wide range - from 10-100 thousand UAH, 40% - from 101 to 500 thousand UAH, 7% PR-budgets were respectively in ranges of 501 thousand - 1 million UAH, and 7% had budgets in range1,01 million - 5 million, and only 3% were more than 5 million. 
                    Results in 2010 show - even the big companies have mostly middle-size PR-budget. General Director of Publicity Creating Valeriy Kureiko says: "Now most companies operate the middle budget. In other words, today PR-budget of an average company in the B2B market can be compared with the PR-budget of international brand. This is due to post-crisis realities, caution and tactical development. In 2010, budgets were a point and laid down between 50-90 to 150-200 thousand UAH. For 2011 we can forecast increasing of PR-budgets by 30-50%".
                    But with the middle budget we can achieve good and sometimes excellent results, if the agency really knows how to work with it.
                    The quality of the middle budget and cost transparency, that bring a specific marketing and reputation result, are very important in collaboration with the client. But besides the satisfaction of the client's interests at the best price for it, there is another side of the coin - the interests and motivation of the agency. 
                      Reduction of PR-budgets of Ukrainian companies on the market is a sobering and cleansing in itself for casual companies. But for agencies that focused on the development after the crisis, it is vitally important task is to set a price for their services, so that it at least has not been below cost, and the maximum - allowed to move forward. Thereafter, this price should be well-reasoned - the client may know exactly where PR-budget is going to. In other words, the pricing for the services of the PR-agency is at the intersection of PR-client's budget allocated to outsourcing, cost of service and price expectations of the agency. 
                      Moreover, that the volume of outsourcing is gradually increasing. "Providing the functions of PR clients by their own PR-departments dropped significantly. Those employees were the first who got laid off in a recession. Only the ones who really brought the benefit to the strategic objectives of the company and ensure that key functions to enhance intra-culture. To solve the current problems in the field of PR - the client company rather use outsourcing. It's more reliable and often cheaper, "- says Valentyn Korol'ko, head of chair of public relations, psychology and pedagogy NaUKMA. 
                     What includes the cost of services to the PR-agency? First of all, it is salary of personnel (in order to pay the costs of time management team to develop, implement programs and preparation the report) and distributed costs - office maintenance and administrative staff. 
                     The costs of organizing and conducting activities (room rental, equipment, communications, transportation, printing, electronic media, videography, etc.), media support and other - is a separate line of costs. 
                      An important advantage of experienced PR-agencies is their ability to provide the client with a clear and reasonable pricing of services. Some agencies have internal quotation for the work of four categories of professionals (from assistant to the managing partner), as well as the internal circuits costing. About the major schemes of co-working of PR-agency and clients in Ukraine – it’s a subscription service (for long-term projects) and "project" scheme (the cost of services for the development and organization of a specific project). 
                      Sufficiently high level of professionalism of managers involved in the project, the application of effective methods and schemes of work, good sharing of responsibilities within the PR-agency, the absence of overstaffing, and other factors that can not only provide quality services, but also optimize their cost. 
                      Thus, the agency can justify the cost to the client's own services and efficiently dispose of the average PR-budget, are in the post-crisis period in the most advantageous position. Agency for which no problem to keep within a clear framework for medium-budget, provide affordable public relations is not just a prestigious addition to the marketing program, but also efficient tool for dealing with client problems. 
                       If in the post-crisis period the number of clients will substantially increase, it will lead the agency to enter the mass PR-services market. Development can be accelerated, if he goes to a spiral: PR-agency establish a transparent, fair price - an affordable PR attract more customers - agencies receive more revenues, which allows to expand and evolve to serve new clients. 
                       To implement this optimistic scheme of PR-market development, is necessary firstly good will of agencies themselves - to develop and coordinate the efforts to unify the pricing on PR-services for the mass market. And then times of closing and the narrowness of Ukrainian PR-market will sink into oblivion. 


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