How much should you spend on PR?

I was asked by someone this week how much they should spend on PR in the US for 2011 (yes it’s that time of year again).  They’re a small business with a small budget and they feel they’ve not been getting the results they want.  My answer was that they were spending too little with the wrong agency.  Now you’d expect me to say that given Next Fifteen is parent to a bunch of PR agencies.  But this common question got me thinking and so in order to help prospective marketing heads, here’s a simple scorecard that you could use to try and figure out what you need to spend:

1.  Are you:

A.  A start-up

B.  A mid sized

C.  A very large company that has an atrium at its head office big enough to house five startups

2.  Is your business:

A.  Doing really well

B.  Making it but not flying

C.  Struggling.  I know my friends wonder why I stay at the company.

3.  Is your senior management:

A.  Really engaged in PR

B.  Does it when asked

C.  Too busy talking to customers/playing golf

4.  Is your management:

A.  Good at talking to the media and always gives great perspective and quotes

B.  OK at talking to the media but sometimes over complicates things

C.  They’re too busy playing golf – they don’t give interviews

5.  Is your company:

A.  The market leader in a recognized space

B.  The business that is trying to catch the market leader

C.  A business trying to create a new category so that it doesn’t have to compare itself with the market leader

6.  If someone reviewed your product would they give it:

A. 5 stars (out of five)

B. 3.5 stars

C.  We definitely wouldn’t let them review it but we’d direct them to a real cool demo on our web site

7.  Does your CEO:

A.  Have a really great blog that everyone reads

B.  Have a blog but they are poor about maintaining it

C.  Think blogging is just a fad and that newspapers will rise again to push them out of existence

8.  Does your business have something genuinely interesting to say/announce:

A.   Every few days

B.  Every month

C.  Interesting to say?  Can you give me a bit more detail on what you mean by interesting?

9.  Does your company:

A. Put out news, links etc on Twitter every day

B. Put out news and links etc on Twitter every week

C.  What’s Twitter?

Now, for every question you answered A to give yourself 10 points.  For B’s score zero and C’s score -10.  When you have the answer you are then ready to calculate your spend.  So, if you answered all As, then you would have scored 80.  In this instance you would be a startup and should spend $15,000 per month plus 90%.  In other words you should spend $28,500 a month.  If you answered A to question one and Cs for the rest, then you’d have a score of -70.  This means you should spend $4.5k a month.  Given this is a stupidly small amount to spend with an agency you shouldn’t bother.  If you answered B to everything you would be a mid sized business that turns the handle.  In this instance your PR spend should be around 5% of revenues.  If you answered C to the first question and all the rest, then you are about become a B company.  You are probably looking for a new job so I suspect PR spend is pretty low on your list of priorities.  If, by some miracle, you are interested in PR spend, you should be aware that your company doesn’t care about PR and it seems highly likely PR isn’t going to solve the issues it faces (note your CEO is too busy playing golf to worry about PR, so you should be too busy interviewing to worry about the PR budget).

As I hope you can tell, the point I’m trying to make here (somewhat lightheartedly), is that there are some normal amounts that companies should spend on PR and that they relate to their revenues AND their ability to fully leverage what PR is capable of doing for them.  Spokespeople that aren’t willing to commit the time, crappy products and a business that is struggling don’t make for a great PR campaign.  Struggling companies can make a great story IF the management is seen to be engaged and has a plan etc.  but they also need to believe that PR is a key part of the plan to get the business going and invest in it properly both with time and money.  Some of you might feel that you need to spend more if you have an average company with average products etc.  You can but in this instance, you need to demonstrate PR’s potential and get management to embrace it before asking for more money.  If they believe, you’ll get every dollar you need.  You may also question, why companies that believe in PR and use it well, need to spend more.  I’d argue that when a company makes full use of PR and is getting good results, it should spend all it can and then some.

Good luck with the budget games for 2011!

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5 Comments on “How much should you spend on PR?”

  1. lonn says:

    One of my favorite PR blog posts of all time. Nice one, Tim!

  2. Matt says:

    Thanks for this. And it was me that asked … I would have preferred a spreadsheet with drop-down menus and a call to action at the end that automatically directed me to the most suitable Next Fifteen agency (and offered to buy my stock at an inflated price).

    There’s a dilemma here, though, which is that if you’re a startup (which we are, by US standards) but have kick-ass technology (which we have) and hugely ambitious plans (which we have) BUT you’re a recurring revenue SaaS business, you run an incredibly tight ship. Ergo, we should stretch ourselves to get market suck (to use an old Adams phrase) but we’re a quarter-by-quarter, sales-driven business …

  3. […] money to cover it, sometimes because it will cause political problems elsewhere. Tim Dyson had some good insight on how to work out what to spend on PR, but the problem is that the way in which the budget is drawn […]


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