Building the Budget

The first thing many people do when they get a PR plan is flip to the last page - the Budget Page.

How many of us have received a budget from an agency (or other supplier) and been shocked because the recommended scope and budget has been greater than what we're looking for? The result is that you're frustrated because you didn't get what you want, and you have to wait for it to be revised - and the agency is frustrated because they've likely just spent a lot of time coming up with ideas and a budget that will never see the light of day.

Be open about the budget
To avoid this frustration and wasted time, disclose your budget in your initial brief. If you're just looking for a few hours of media pitching - say so. If, on the other hand, you're looking for a PR launch proposal for the most important product launch of the year, you want a big event with creative ideas and you've got a $100,000 PR budget - let the agency know your expectations so they can deliver.

Creating an open two-way dialogue with your agency about the budget will help to ensure you get what you're looking for. As part of a true dialogue between agency and client it's also important to listen to the agency about what can be realistically achieved within certain budget parameters - a product launch for $5,000 will look very different than a product launch for $30,000 - but both can generate great results if carefully planned and managed.

Set the budget
Once the budget and scope of work have been determined and confirmed, it's important to put it in writing so that everyone is on the same page and shares the same expectations.

As part of this documentation process, there should be a clear understanding that the agency is accountable for coming in on budget. Sometimes unexpected costs do arise or the scope of work changes over the course of a project, and if this occurs it's important to determine ahead of time how any unexpected costs will be handled. For the most part, agencies will notify their clients as soon as they start to anticipate the possibility of added costs so they can discuss and brainstorm other alternatives - or get approval on additional funds. This is an extension of the two-way dialogue, with the agency keeping you up-to-date on the progress of the budget and scope of work.

Plan for the unexpected
And yes, although no one ever thinks it will happen to them, it is a fact of life that unexpected costs do sometimes arise. For large projects with significant out-of-pocket expenses (i.e. design, printing, catering, rentals, etc), it's a good idea to include a 10 - 15 per cent contingency fee in the budget to catch any unexpected costs that may arise. Some clever clients create their annual budget with a miscellaneous or contingency line item in anticipation of unexpected expenses or new marketing opportunities that may arise throughout the year. However, an agency's professional fees shouldn't increase from the initially approved budget unless the scope of work is significantly altered - and even then you should get a heads up in advance so you can approve (or not) the additional hours.

Budget activities for value
As you're creating and managing the budget, it's important to constantly be on the look out to make sure you're getting the maximum value from your budget. There are a few administrative costs that should be carefully managed as they can add up quickly and don't necessarily provide the best return on investment. For example:

Reports - Every report you're getting you're paying for - so if you're not reading them let your agency know how you want them changed. For example, maybe you only want a report every other week or maybe you don't want to know every journalist they've contacted - just a top line summary. Similar for media clipping reports - do you want the agency to spend time (a.k.a. budget dollars) researching, evaluating and adding up the circulation and ad values?

Meetings - Because time is money it's important to think about how you structure your team meetings from a frequency and attendance standpoint. How often do you need to meet with the whole team? How often can you meet with just the account director? That's not to say that you should never meet with your whole account team - on the contrary it's crucial to getting everyone involved, on the same page and motivated - but the majority of meetings can likely be handled by your account manager who can then, more time and cost-efficiently, relay relevant information to the team.

Admin work - The productivity-driver in me hates it when a significant part of the PR budget is spent on admin work. Of course, it has to get done - but sometimes it's more efficient to be outsourced or done by the client's internal admin person. If there are five hours of budget I believe it's better to put the time towards generating results and meeting communications objectives - whether it's pitching media or writing a mat story - than compiling media kits. Many of Cowan & Company's clients share this quest for value - and in fact some of our clients have their admin people compile kits and courier out demo units so the external PR budgets can be focused on having us do media outreach (or other planned PR activities) in order to generate maximum results and get the best return on their budget dollars.

In my experience, following these simple but effective best practices will help to eliminate any Budget Page surprises - making the process more agreeable and efficient for everyone involved.

Published in PR Canada in 2005