The inside-out agency

PR magnate Richard Edelman takes me to task for arguing in What Would Google Do? that PR people, like lawyers, can’t be Googlified. After saying nice things about the book, he adds: “But it is hard to love a book that assigns your profession to the scrap heap of history. Jarvis contends that lawyers and PR people cannot evolve their business models ‘because they have clients….’” He urges me to reconsider (or at least to separate PR from lawyers).

OK, I’ll try. I’ll take inspiration from Doc Searls’ VRM (vendor relationship management, as opposed to customer relationship management) and from adman Rishad Tobaccowala’s argument, in the book, that agencies should focus on consumers – on agencies’ customers’ customers – and “should be the champions of those people.” [Snippets below.]

PR and ad agencies are at war – undeclared or at least quietly declared – to take over more of clients’ marketing budgets and also to help recast companies’ and brands’ relationships with their customers given the realities of the new world I describe in WWGD?. Those goals may be in conflict. Let’s start with the latter.

I argue in the book that the goal of companies and brands must be to have direct relationships with customers, cutting out the middlemen of ads and PR (and – newspapers, magazines, and TV be warned – media). This new agency should try to help them have that direct relationship. Then it should, in the words of Craig Newmark in the book, “get out of the way.” In that sense, the agency is a consultant and when its job is done, it should exit. That’s not a very sustainable business model, particularly for ad agencies, which make a cut of what they spend for clients and thus are never motivated to help companies spend less on ads. In that way, PR agencies have an advantage; they already act as consultants.

PR also acts as a company’s mouthpiece and that puts them in conflict with the ethos of the Google Age, when we distrust the institutional voice and expect to have a human conversation (see Cluetrain: markets are conversations held by humans). Don’t you hate it when so-called customer-service people at phone, cable, and airline companies say they they won’t do what you want as they insist on explaining their policy. I tell them that I have a policy, too, and they should listen to it. They don’t. It’s not in the script.

So if there is any vestigial middleman in our relationship with companies, shouldn’t that be our advocate who explains our policy to the company? That would be the new, inside-out agency. It would represent our interests and help make our case and make the company smarter (which will make them more money). If you want a good relationship with your customers, doesn’t that simply make sense? When I visited Google, I met someone at the book talk who said her job was “customer advocate.”

There’s just one problem with being a customer advocate as an employee or agency: Who pays you? Who’s the boss? I come back to the reason I argued in the book and the reason Edelman argues with me: Being paid by the client puts you in the service of the client. Can there be a church/state wall, as there has been in newspapers, that allegedly separates the holder of the public’s interest – the journalist – from the revenue – the advertisers? Well, indeed, perhaps a PR agency could be that. Perhaps it could act as the voice of the customers.

But to maintain its credibility with those customers, this advocacy agency would need to fire clients when they don’t behave. To get quite specific, if I were the agency for Wal-Mart – which Edelman is – I would have fired them (or as an employee, I would have quit) after so many of the deaf-and-dumb things that company has done to harm its relationship with its public. (I’ll let you fill in your own litany of sins.) But Edelman hasn’t fired Wal-Mart and I well understand that. Wal-Mart pays them a lot of money. Wouldn’t it be foolish to pass that up? Wouldn’t firing them make the next client skittish about hiring an agency might embarrass them by firing them?

Richard Edelman argues in his blog post, as he punctures my myths: “No client is worth the risk of long term damage to the reputation of the PR practitioner or its firm. We recognize that relationships with reporters, with the public and other stakeholders are a true asset, imperiled by obfuscation or prevarication.” Does that necessarily say that Edelman endorses Wal-Mart’s behavior and its sins, or at least slow learning? Or if they are trying to fix Wal-Mart, aren’t they judged on that success? It does affect the company’s reputation with consumers and those other stakeholders.

That is the PR agency’s risk. That is why I still wonder whether PR people can be open and transparent and keep their income.

But perhaps there the possibility of creating a new kind of agency that is really is owned by the public – the people formerly known as consumers – that is so good as representing customers that companies gain credibility by working with it and paying attention to its precepts. That, I think, is what Doc Searls is trying to build with VRM: a platform for that new relationship. Is that the new agency?

* * *

For today’s 30 Days of WWGD? snippet, then, we bring you snippets from the advertising chapter:

To quote Google’s own No. 1 rule, “Focus on the user and all else will follow.” Australian ad executive Peter Biggs spoke for much of his industry when he told ABC Radio National’s The Media Report: “It’s a consumer-driven business, but they are not our most important audience. Our most important audience is our clients, and their brands.” Tobaccowala says the opposite. “Our fixation should not be on our clients. It should be on the people our clients want to engage, sell, and interact with. We should be the champions of those people. That is where we are missing the boat.”

I wonder whether focusing on the consumer instead of the client ends up usurping much of the job of the agency as we know it. Fixating on customers should be the job of everyone—everyone—in a company. In business, we’ve long said we’re customer focused. But today you have to mean it or your customers will call your bluff. Focusing on customers can’t be outsourced to agencies.

Agencies will resist change until the economics of the industry change. Because agencies make a cut of what they spend, they are motivated to spend more on ads rather than to replace ad dollars with more valuable relationships between brands and customers. So clients may be the first to evolve. Just as I tell newspapers to imagine a day when they stop the presses and book publishers to think past the book, so I advise marketers to imagine as an exercise firing the agency, canceling the ad budget, throwing out the ads, and starting over. What is your relationship with your customers then? Where should you put your money? Where should you spend your first ad dollar and why?

Start, of course, by investing in your product or service. Tobaccowala said no amount of advertising will make up for a bad product. “Stop this yelling and screaming about what’s your Facebook strategy,” he tells clients. “Make absolutely certain that you have a great product or service. Make absolutely certain you have great customer service. Those are the first two rules of so-called advertising in this world. If you don’t have those, don’t pay any money to anyone to do anything.”

Then turn the relationship with the customer upside-down. First, invest in customer service, making it a goal to satisfy every single customer. Remember that your worst customer is your best friend. Second, invest effort in social tools that enable customers to tell you what you should be producing; hand over as much control to them as you can (I examine this idea from another perspective in the chapter on manufacturing). The goal must be to produce a product people love. All companies claim that customers love their brands. But I mean customers love your product so much they want to tell the world—that kind of love, Apple love. Third, hand over your brand to your customers—recognizing that they have always owned it. Don’t tell them what your brand means. Ask them what it means.

Every product is great; every relationship is satisfying—shoot for nothing less. So now you are spending quality dollars and relationship dollars over advertising dollars. You have handed over control of the product and the brand and gotten out of the way. If you haven’t gone out of business by now and convinced every boss, board member, analyst, reporter, and stockbroker that you’ve gone mad, then it probably worked.

Won’t you still advertise? Ask yourself why. To interrupt and irritate random people? No. To convince customers that a bad product is good? No. To inch ahead of your competitor with the brute force of media spending? No. To get people watching Sunday morning shows to buy your stock? Please, no. Do you advertise to tell customers something they didn’t know and need to know about your product, such as an improvement or a better deal? Well, OK. Tobaccowala defines advertising as “the economics of information” (the title of a 1961 essay by Nobel laureate and University of Chicago professor George J. Stigler). Advertising is supposed to tell us about a product or its price so we can save effort, time, and money in our search for it. The internet has made that much more efficient. If the customers’ goal is to reduce their transaction cost—the effort to find the right product at the right price—then doesn’t the internet itself replace advertising? Often, yes. . . .

The agency and advertising need to get out of the way in the relationship between companies and customers. Agencies may help solve problems—teaching companies how to build networks with customers, assisting them with product launches—but once the consultation is done, the good consultant leaves town.

And here is what I said about PR people and lawyers (note that lawyers already protested):

The problem for public relations people and lawyers is that they have clients. They must represent a position, right or wrong. As they are paid to do that, the motives behind anything they say are necessarily suspect. They cannot be transparent, for that might hurt their clients. They cannot be consistent, for they may represent a client with one stance today and the opposite tomorrow, and we’ll never know what they truly think. In a medium that treasures facts and data, they cannot always let facts win; they must spin facts to craft victory. They must negotiate to the death, which makes them bad at collaboration. It’s not their job to help anybody but their clients. They are middlemen. They won’t admit to making mistakes well; clients don’t pay for mistakes.

* * *

Here are the other “myths” Edelman answers in his post:

Myth #2—PR people must spin facts to craft victory. This is to define PR by a tiny minority of political PR agents who are masters of leaking, attacking and exaggeration. The best PR work combines policy and communication, because truth is the most effective approach. Jarvis himself notes the possibility of companies having sites where they share information and are factual as part of “the new ecology of information online.”

Myth #3—PR people only help their clients. PR campaigns work when they premised on both public interest and private gain. There is a mutuality of benefit from a partnership forged between a non-governmental organization and, say, a corporation to grow bananas in a more environmental manner.

Myth #4—PR folks won’t admit to making mistakes well—quite to the contrary, we constantly fight lawyers to get clients to acknowledge their actions, to apologize, and to provide a way forward that is measurable and accountable. . . .

In Jeff’s world, companies speak directly with consumers, giving up control of product development, focusing on customer service instead of marketing/advertising, building strong relationships within communities of interest. Public relations actually plays a vital role in this new construct by making valuable information easily accessible and open for improvement. We provide big ideas that bring together constituencies (such as the Quaker Oats Substance) for action. We also offer advice to companies, encouraging them to take on the big issues of our day that inspire employees while offering new opportunities to make money.

What do you think? Can PR live by the ethos of the internet age: open, honest, transparent, collaborative? Is the inside-out agency possible? Or does the paycheck rule the relationship?

  • http://robertdfeinman.com/society robertdfeinman

    It seems to me the underlying discussion is really about the concept of the “brand”. A PR firm is promoting the brand, not the product. Walmart doesn’t sell Walmart branded products (although it has its own captive labels), it sells Walmart the concept. This is what Edelman is defending/promoting.

    Brands have become a thing of value in themselves which is why we see brands like Calvin Klein or Martha Stewart being attached to any manner of things, many not made or sold by the parent company.

    So, in the internet age are brands becoming more, or less valuable? Google is probably the most successful brand launch of the past few decades, now having turned into a verb as well.

    On the other hand, I recently purchased two items online – an analog TV converter box and an oven thermometer. In both cases I searched for information online and selected the items which had the features that I preferred. I never heard of either brand and can’t tell you even now what they are without looking at the item itself.

    It seems this is the trend that is affecting the newspapers and news magazines as well. When one goes to a consolidation site like Yahoo’s front page and reads the latest news stories, the institution providing the feed is the least important part of the paragraph. If you are interested in the details, you follow the link regardless of the “brand”.

    Presumably some brands will still need to be promoted as such, I can’t see unbranded or generic automobiles anytime soon, but perhaps this means that PR firms will only be of use to firms which function in the pre-internet space. This seems to be a shrinking total of what consumers spend on.

  • http://mturro.com Michael Turro

    “But perhaps there the possibility of creating a new kind of agency that is really is owned by the public – the people formerly known as consumers – that is so good as representing customers that companies gain credibility by working with it and paying attention to its precepts.”

    I’ve been batting this around in my mind for a few years now, but I think magazines (some of them anyway) may in fact be able to transition their current relationships into your “new agency” model. Trust, especially in the niche consumer market, has always been a major factor in the magazine’s ability to play the role of “middle man” between its readership and its advertising base. The best magazines have always run on a symbiotic flow between the edit/ad sides. The best magazines give readers almost as much quality information via advertisement as they do via editorial proper. The best magazines have always been “so good as representing customers (readers) that companies gain credibility by working with it and paying attention to its precepts.”

    Obviously this is not a slam dunk, but to my eye (albeit the eye of a mag-man) magazines are better positioned to play this role than either PR or advertising agencies – they have always catered to their customers’ (advertisers’) customers because they just happen to be the magazine’s customers (readers) too.

    A lot of magazines will never be able to make that switch – they’re just too deep into selling space instead of services, but the ones that can go the extra mile and provide their traditional advertisers new services without alienating their readers should do very well.

  • http://ryanholiday.net Ryan

    The best part is that Edelman is probably most common violator of any of the Google principles. Having a corporate blog and Steve Rubel are nice tokens but ultimately mean nothing if it doesn’t doesn’t change the underlying business practices. Not a month goes by that I don’t get an awful, mistargeted, presumptuous press release from an Edelman flack that clearly just draws names from an internal spreadsheet. And worse, there’s no memory inside the firm because they never remember that the last time they did it, it completely blew up in their face.

    Then of course there are the splogs and the Wikipedia controversies and the whole obnoxious history of Edelman paying lip service to these new business ideals and then continuing to do a mediocre job of the old ones.

    How about less blogging about it Edelman, and more RESULTS?

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  • Jenn_lee_ca

    Edelman lives in the past. He cannot get over the traditional top-down hierarchical information flow and therefore, PR firms are needed as the middleman between organizations and consumers. What is not being addressed is that the role of lawyers and marketers/PR people are being changed by the Internet.

    The Internet is a democratizer of information. Therefore a lot of hierarchies and “old ways of doing things” are being tossed out the window. I think that the Internet brings the marketing/PR person back to its roots. Marketing is supposed to be the 4 Ps: Product, Price, Place and Promotion. Many agencies only focus on promotion. They have no say in the product, the price or its distribution. This is in line with Lucas Conley’s book, Obsessive Brand Disorder. Too many organizations equate “managing the brand” as marketing. This is only ONE of the four other items that need to be addressed. In addition, Steve Cuno’s book, Prove It Before You Promote It is just the beginning of a marketing shift back to “product, place and price.”

    Edelman does make a good point regarding policy. Both marketers/PR and lawyers are (or should be) familiar with policy. I do not expect too many consumers getting too deep in that area. In some cases when consumers find out about a policy (and why it was instigated in the first place) they are quite accepting of that policy and the business process. Rather than take extreme position, its a balance between the organizations’ business process/policy and allowing your customers to shape the products/services that results in a wow experience.

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  • http://www.viralhousingfix.com Dan McCarthy

    There’s a dovetailing in the question of brand/content/journalism that is buzzing around during this great economic shift, and PR firms do have a place to play that can generate significant incremental value and gives them more of a direct contact with the consumer. As brands enter into a conversation with consumers across multiple interactive platforms, intelligent and consistent management of content becomes paramount. The brand interaction will only be effective to the company goals is it reinforces the basic brand premises. That’s not a marketing department skill, nor is it an ad agency skill. It actually plays to the more free-form space that good PR agencies play in: consistent content management. So forward thinking PR firms that become content managers and content developers will help fill in an important role.

  • http://www.greenbanana.wordpress.com Heather Yaxley

    PR people operate within organisations not just as external consultants and the best don’t operate as a closed door or barrier to enabling organisations to engage with publics exactly as you state.

    They also operate as listeners and provide a valuable internal advocacy of what those outside the organisation think and do. This has always been the case with views of traditional media in my experience where being able to reflect what the press might say has been recognised as influencing company behaviour.

    PR isn’t just about saying what an organisation wishes, but also challenging that organisation when the message or behaviour is wrong. To that extent, at the very least, the best PR people are acting as advocates of the public.

    It is PR people (as opposed to lawyers) who have advocated increasing transparency in communications and engaging with stakeholders.

    “Victory” is often not in getting across a one way message but in ensuring dialogue has a positive outcome for everyone – if only the organisation wins then its very licence to operate may be compromised. So enlightened self-interest is necessary.

    It can be difficult for any PR person, in-house or consultancy, when their advice or input is ignored, but by establishing a competency as having valuable understanding of publics – not just as expert persuaders, but as enablers of co-orientation or win-win solutions – will ensures PR practitioners facilitate the opening of doors into the organisation.

  • Jenn_lee_ca

    Hi Heather,

    In my experience, very few PR (or agencies) are challenging organizations. Too many times, it is about how to spin the message so that it is palatable to the customers. Many PR pros have not grasped how to capitalize on markets as conversation. They try to join the conversation with tales of how wonderful their clients are. That is the rub.

    j.

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  • http://www.itsopen.co.uk Justin Hunt

    I used to be a new media writer for The Guardian and before then I was head of PR for Capital Radio in London, dealing with showbiz tabloid writers. I now blog for Media Week and have set up a social media consultancy in brighton called ItsOpen (www.itsopen.co.uk) which gives me a useful slant on this debate.
    Traditional PR agencies who simply pump out client messages and will not dare challenge their clients are dead. There are a lot of traditional PR agencies who simply do not understand social media. And they could be dangerous to their clients. Or possibly reassuring to traditional, head-in-the sand clients. PR agencies grew up to a position of power on the basis of having close relationships with editors on newspapers and specific writers. Now they are scared. They don’t know bloggers and are terrified about what they might have to deal with.
    I do believe there is room for a new kind of agency – which is what we are trying to create (www.itsopen.co.uk). PR agencies now have to encourage companies to open up and be honest, show more humanity and personality. You have to get them to create content which is genuinely useful and interesting to their audiences. Traditional corporate speak is no longer required. It was always sterile but now social media exposes it for what it really is.
    The rise of social media presents a whole raft of areas which can be liberating for companies. For example after being restricted to the scarcity of print space they can now link, use podcasts, videos etc to talk in more depth and richness about their policies and what they do. Plus they can use crowd sourcing tools to develop better products and services as Jeff has covered before. The role of a new agency is to encourage companies to embrace social media to participate and have conversations. There is so much more companies can do as well in terms of using these new 2.0 channels to distribute their news ie automated updates on Twitter etc and getting personally involved in social media.
    The best PR people were able to give journalists what they wanted. The best PR people will encourage companies to give their customers what they want. PR agencies have to reinvent themselves. And it will be very painful for them. The current crop of senior PR people are not net natives.
    However what we are finding is that in-house PR people are catching up with what is going on because members of their company are raising issues with them. They are starting to feel the effects of the change. Bloggers writing about them. Questions coming into the press office from Facebook groups etc. These kinds of questions demand real honest advice. Spin will not work.
    Heads of in-house PR I think are realising the inadequacies of the jargon of traditional agencies. They want real conversations with real agencies. They know the world is changing and they know that the reputations of their companies could be damaged in seconds by a blogger. They know they need to act differently.
    The traditional PR industry is based on an old traditional media model. So long as you get coverage in the newspapers everything is fine. Which is obviously no longer the case.
    The guy at Edelman is desperately trying to protect the reputation of the agency. He wants to be seen as leading edge. He wants to demonstrate he understands the new culture because clients are looking to him for advice. He wants to protect his client income. He’s desperately trying to PR his agency. If he wants some advice, he should put a young member of his agency on the board and listen to him or her.
    Overall the big PR agencies, in my experience, don’t get social media. They might talk 2.0 but they don’t grasp the fundamental change it represents to our lives and business. And that is why smart companies are looking for specialists, different kinds of agencies who are more in tune with the new 2.0 language. I think the rise of social media is going to enfranchise and bring to the centre new kinds of individuals with a range of skills.

  • http://www.millsworks.net/blog Robbo

    Brilliant piece. This reflects as well on the relationship between news organizations and advertisers but we won’t go there right now.

    Of course the relationship between the current PR agency and client model is governed by the pay cheque. I won’t stoop to calling them whores but it is a service they are providing. Would Edelman dump Wal-Mart as a client because Wal-Mart refuses to change in order to meet the needs of consumer perspective on what makes a company “good”?

    Not a chance.

    The folks who run Wal-Mart would have to be caught red handed committing ritual baby killings at midnight in the housewares aisle before any existing PR firm would walk away from their “relationship”. Edelamn’s challenge to your position is PR posturing for his own firm – and nothing more. The only way to prove other wise would be through their actions.

    Walk away from a pay cheque?

    Not gonna happen.

    Cheers.

  • Andy Freeman

    > PR firms are needed as the middleman between organizations and consumers.

    Huh? What do consumers “need” PR firms for?

    Consumers may be willing to listen to what an organization has to say, but “need”? Not so much.

    • http://www.buzzmachine.com Jeff Jarvis

      Well said, Andy.

  • http://makingmoneyontheinternetwithgoogle.blogspot.com Brent small business trainer

    As far as I can tell and understand PR people are only needed when companies “stuff up” and need professional help to soften the message, even if they tell the truth.

    If you look at the advice that most of our governments receive from their consultants they are not needed either.

    I suggested to our CEO, who writes a weekly newsletter for the staff, that he should post those or similar newsletters on a blog. I thought the open discourse with the general public, our customers, would be a very interesting conversation but the IT (Idiot Technologists) folk said it would be too hard to have a “secure” site.

    I hate people who can’t see beyond their self interest and refuse to think of the bigger picture.

  • Mary Davie
  • http://brc.edu Jeff Sersland

    Absolutely brilliant book. Picked it up and couldn’t put it down. I have made my staff read it and comment to me by weeks end. Then I am bringing in my IT guy to answer our questions and assist us with elegantly organizing our information within the college. The key for optimal success is to be organized as you enter the disorganized internet world. Congrats….

    • http://www.pbs-group.co.uk Mike Murphy

      Jeff, What you doing reading books? no time for that
      drop me a line

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  • http://www.pr-squared.com Todd Defren

    In response to my post today re: “The True & Remarkable Fate of Public Relations” (http://is.gd/pGoG), some folks pointed me to this post of yours. Sorry I missed it the first time around!

    I respect your position while respectfully disagreeing.

    The PR world is enabled to now, finally, fulfill its original mandate: to facilitate Relationships with the Public. I explain more at my post today; no sense rehashing it here but I hope you might give it a read.

    Meanwhile, thanks for the food for thought.

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