When deciding whether to hire in-house public relations or engage an agency, there are a few factors to consider. Having worked in both roles myself, I am a strong believer in companies of all shapes and sizes engaging a PR agency on a retainer or at the very least a project basis (i.e. bringing them on during specific periods when you need them).

The question is really whether you need an in-house communications team at all. For smaller firms, the answer is almost always no. For larger firms, the answer is almost always yes – but that is in addition to an agency, not as a substitute for one. Let’s break this down a bit further.

Cost versus output/productivity

 

Firstly, most small businesses will not have enough PR, communications, or marketing work to justify multiple (or in some cases even one) full-time hire, eight hours a day, five days a week, 365 days a year. Having been there myself, I can tell you that small businesses just do not have enough internal demand to justify the cost and relatively little output achieved from a single hire, who will without exception have a more limited skillset than an entire agency – and at a comparable monthly cost to the company.

I have heard many business owners concerned that hiring an agency for a few hours a week does not make sense when they can pay someone the same price and have them working for their business in house all day, every day. My question to them is: Yes, but how many hours of the day are they actually working? This can be a hard reality to face up. The cost of labour has an associated cost of output or productivity. On that metric, the agency wins almost every time.

Think about it, what is an agency? It is a group of professionals, in this case in public relations, who work on a transparent model where they either bill by the hour or, more commonly today, by deliverables achieved. This could be a press release, a media interview, or a piece of content developed and placed in a business magazine or newspaper. There is no clearer metric for cost and associated output than that. This is on top of the broader – and more valuable – counsel they provide on messaging, positioning, and strategy.

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At this point I want to take a quick detour so that we understand the concept of cost centres versus profit centres, because it is important to this part of the discussion:

Unlike in a business with an in-house PR person where that individual constitutes a cost centre (i.e. they are not directly responsible for sales or generating company revenue), in an agency the consultants working on an account are profit centres in their own right because they are servicing the agency’s clients. They are directly linked to that economic activity (output of goods or services for capital). What this ultimately means is that if relatively little is delivered from the in-house role, the person in that role knows it is not directly tied to the company’s financial performance or revenues either way.

In an agency, things are different: the fear or underservicing a client and therefore losing out on revenue is much more acute. It means there is more economic (money makes the world go round) alignment with the agency model for delivering good work than the in-house model. That’s just the way business and economics works.

Finally, the agency will also absorb the costs of industry-standard software and databases that it subscribes to as part of its client services – costs which a business would be wont to invest in for an in-house team, but which are nonetheless very vital to delivering the best standard of work and results possible.

Next, let’s look at skillset.

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Skillset

 

I referenced this earlier, and it is really very simply: an agency will always bring more skills to the table than even a fairly large in-house team. This is especially true for agencies that operate across geographies and can tap on relationships and expertise in different markets. But even if both the agency and in-house team are operating in a single market, the agency still wins out on the skills side in most cases.

That is because agencies hire a variety of skills sets that are needed across the consulting businesses, from digital marketing to media relations, from content specialists to crisis communications. This means that they can “activate” the necessary skillset on different accounts, as and when the need arises.

The client benefits because demand for certain skills can be ramped up or down throughout the year, but they also save costs because it would not make sense to have a crisis expert, say, on a full-time salary when a business may only need his or her specialist skillset from time to time. The same goes for all sorts of other areas within the PR toolkit.

Therefore, the cost and associated output of activating agency specialists when necessary actually represents a cost saving rather than an additional expense for a client, something I wish more business owners would understand. And the value of getting a moment of crisis or large company announcement dealt with properly and professionally, versus things falling apart or being underdelivered due to inadequate in-house skills, is something that will stick to the business’s reputation for years to come.

So, we can also see why agencies win over in-house nine out of ten times on the skills question – it is about economies of scale, diverse specialists available at the flip of a switch, and lower costs of tapping on those skills relative to the results achieved versus full-time in-house hires.

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Ideas

 

I am calling this section ideas, because that is what it boils down to – but you could equally call it “creativity” or any other number of synonyms. The point is, PR is ultimately about one thing: communicating ideas effectively. There will always be multiple ways to tell a story, just as there are lots of different ways to write the headline of a newspaper or journal article (a headache for journalists). But which of all the options is superior, and how do you know?

That is where brainstorming, experience, a nose for a good story, and a sense of the news cycle comes into the equation. The advantage most agencies have here, again, over an in-house team is that there are multiple PR professionals on any given account who can brainstorm narratives and angles together. They can also tap the experience of colleagues on different accounts in diverse industries, and sometimes share media opportunities amongst themselves – especially when one might not be suitable to client A, but is perfect for client B.

When combined with feedback from the client and their in-house team, this dynamic tends to result in the best of both worlds: an idea-meritocracy of sorts.

This brings me to my second point linked to ideas, which is that advisory is the intangible part of the client-agency relationship that is not explicitly billed for on timesheets or contracts, but is always available through meetings, phone calls, and emails. If you need feedback on an idea, you can ask the agency for their thoughts at no charge, and the advice you receive will always be professional and dependable.

With an in-house team, internal company politics and other challenges can often prevent the best ideas winning out or honest opinions being surfaced, which is necessary for a truly effective advisory relationships – something that is true whether it applies to finance, fitness, or public relations.

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If an agency thinks a company’s campaign idea is weak or an announcement will not deliver media results the client is expecting, then it is in their best interest to advise them as such. If a project goes ahead and the results are underwhelming, it does not reflect well on the agency as the advisor and it does not bring any benefits to the client, so agencies are unlikely to take that route.

Ultimately, agencies are economically and professionally aligned to give honest feedback about ideas and come up with the best ideas they can, even when it means the right thing to do is to advise the client not to go ahead with a project – and even when doing so may mean less business for the agency.

Conclusion

These have been some of my thoughts on the question of public relations agencies versus in-house. Let me know your thoughts in the comments!

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Image Credit: Oleg Laptev on Unsplash

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