There is no one answer to this question. PR is delivered by all shapes and sizes of agency and the relationship between the marketing manager and the agency often plays a big part in the compensation model. Here, I will run through three of the most popular PR agency payment models:
Retainer
A retainer is a regular fee that covers either hours spent on PR or the delivery of set outputs, such as two press releases, one article and one award entry per month.
Clients that want an agency to meet certain objectives, e.g. "raise our profile among data centre managers" may be willing to pay a set rate that covers the agency's time in trying to achieve these objectives. These clients tend to have worked with PR agencies before or trust the existing agency to work towards achieving the objective using the best approach.
Other clients may opt for specific outputs for their money. This may be because they are also measured on those outputs, they feel more secure in the knowledge that they will have spefic deliverables for their money, or they know that certain outputs will indeed achieve their objectives.
Savvy clients will also request outputs that achieve specific outcomes, e.g. a press release should lead to a news story in a named industry publication or website that is read by their target market. Clients should watch out for this type of arrangement where an agency produces reports full of outcomes (coverage/exposure) that are in fact low value, e.g. a press release on an office move published on low value websites probably won't achieve your objectives, but can be claimed as a tick against a target.
Project-based
For clients with a restricted budget or those who may want to try PR or use it promote a specific activity, a project fee may be more appropriate. Often time-restricted and great for events, launches or to promote significant news, project PR can be run by an agency that a client is familiar with or alternatively, a client may have a roster of agencies for different pieces of work. A slight disadvantage of project PR is that your PR agency won't be constantly looking out for opportunities for you and an agency will need to spend some time getting up to speed with your company/product.
Payment by results
Payment by results agreements also vary, but usually involve a basic fee and an additional success fee, based on the amount of coverage achieved by the PR agency. Unfortunately, to hit targets, agency teams can chase quantity rather than focus on quality. This type of fee is useful for consumer campaigns or those with easy concepts to communicate, as opposed to educating a target audience about complex enterprise technology. Often agencies that start on a payment by results fee structure will try to switch this to a fixed fee. On the plus side, it provides reassurance to clients who may be sceptical or new to PR, and shows an agency's confidence in achieving desired results. On the down side, the agency is likely to set its fees at a premium rate and the client can often end up paying more than in project or retainer agreements.
