Is is effective to compensate PR agencies based on the number of articles placed in earned media? With native advertising now thrown into the mix, it just might be.

Public relations experts have long debated the value of pay-for-placement strategies.

The question: is it advisable for clients to compensate PR agencies, solo PR practitioners, or publicity agents based on the number of articles placed in earned media?

Opponents of pay-for-placement PR argue that public relations delivers much more value than an article in a newspaper, thus it should not be billed by placement alone.

However, some companies have made pay-for-placement work successfully. Now, with the advent of native advertising, billing clients for placement may be seen as an effective strategy in some circumstances.

The following outlines the pros and cons of pay-for-placement, based on our review of multiple articles.

The Pros

Simona Covel tells the story of a small business owner’s success with pay-for-placement PR in Paying for PR — But Only When It Works.

Covel is quick to point out that pay-for-placement isn’t for every business. The strategy involves focusing solely on pitching to the media — ignoring other important PR tasks like SEO, crisis communications and media monitoring.

Yet pay-for-placement is gaining traction among businesses that simply want exposure. The key to successful pay-for-placement: understand the client’s audience. The small business owner in Covel’s article saw success when she hired a PR specialist who reached out to the media only when she thought the client was the right fit.

Such a technique is seemingly a win-win: PR agents see a higher coverage-to-pitch ratio, and clients see better results without an enormous bill.

Adding to the advantages of pay-for-placement PR is public relations’ increasing role in the advertising landscape. Native advertising has encouraged major PR firms like Edelman and Weber Shandwick to offer pay-for-placement services to their clients.

The PR-to-advertising shift is a natural one, Phil Johnson observes in Savvy PR Firms Could Soon Rule Native Ads and Social Campaigns. Embedding paid content in an editorial environment is conceptually the same as placing press releases that look like independent journalism. Through native advertising, PR agencies can now guarantee placement for their clients.

The Cons

PR’s ultimate responsibility is to protect and enhance the company’s reputation. Reputation management, however, is complex to measure, Steve Farnsworth explains in Let’s Shoot the CEO: Is Pay for Placement PR a Brilliant Idea or Acutely Ignorant?

Payment for placement “rewards the wrong thing,” says Farnsworth. A company’s PR goals should be to build brand loyalty, shorten the sales cycle and become the customer’s preferred provider by addressing their greatest needs. PR is best measured – and compensated — in the corporate outcomes, not its output.

When companies pay for placement, they are focusing on low-hanging fruit. Money that rewards short-term outputs is money wasted.

Immediate media placement often lures start-ups that have small budgets and need a big boost of brand awareness. But it’s a bad deal for both the client and the PR agency, according to Chuck Tanoqitz in 7 Reasons Pay-for-Placement PR Rips off Start-ups. Here’s why:

  • It’s impossible to measure the value. Advertising Value Equivalency cannot measure PR effectiveness for many reasons; the major one being that placements, no matter how high their advertising value, never guarantee revenue. Pay-for-payment clients don’t receive the PR agency’s best work. PR agencies, like any business, value committed clients. A client that’s on retainer and looking to build relationships, therefore, will receive more attention and effort than the client that’s only paying for one-time deals.
  • 911 PR doesn’t work. Companies can’t hire a PR agency and expect to be on the front page of The New York Times next week. Messaging and product positioning take time and relationship-building, neither of which pay-for-placement PR can support.
  • Important Aspects of PR Will Be Ignored.  People do the work that pays the bills.  If an agency is compensated only for placements, other vital PR work will remain undone.

Developing a scale of compensation under a pay-for-placement plan can be complicated. How does one assess the value of:

  • National vs. regional publications;
  • Consumer magazine vs. trade journal;
  • Front business page vs. internal business page;
  • News release story vs. feature story;
  • A 600-word article vs. a 2,000 word article;
  • An article in which a client is the sole corporate mention vs. an article that mentions competitors;
  • An article that delivers many of the corporate marketing messages vs. one that contains none;
  • A totally positive article vs. a balanced analysis;

…and a myriad of other placement possibilities.

One other consideration: entrepreneurs and start-ups are often better off doing PR in-house to develop their own long-term relationships with the media.

PR brings great value to companies. Can that value be measured — and billed — in the form of placements alone? Is pay-for-placement an appropriate method of compensation in PR?  Tell us what you think.

This article originally appeared on the CyberAlert Blog.