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Save Money, Fire Your PR Agency

Josh Catone

With all due respect to my friends in the public relations industry, for many web 2.0 startups, PR is a luxury, not a necessity. Coming off the worst week on Wall Street in the US ever, the markets are on the rebound this week, but lets not make the mistake of thinking we’re in the clear yet.

Last week, a number of high profile investors advised their startups to stretch the money they’ve already raised by lowering their “burn rate.” Angel investor Ron Conway, for example, sent his portfolio companies an email advising them to “lower [their] ‘burn rate’ to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses.” (Emphasis mine.) Similarly, Benchmark Capital General Partner Bill Gurley told startups to be more frugal and to “extend the runway” (i.e., get more out of the money they’ve already raised).

After cheering the Conway memo, PR agent Michele Mehl tweeted the following:

Get PR budget to no more that $15K retainer per month (shoot for $8-10K for pure media relations). Cut back a week before Thanksgiving-Jan.

Now, Michele is great at what she does, and it wouldn’t make sense for her to advise her clients to nix her completely (she’s probably taken enough flak from her colleagues for saying what she did), but I think $15k/month on PR is a luxury in this financial climate. Over those 6-months that Conway was talking about, $15k equates to $90,000 — or the price of a good engineer for a year. Over a year, that’s two engineers that a startup could pay just by cutting out their PR retainer.

For some companies, PR is definitely an actual necessity. Those that have multiple products to manage, have to reach a specific or mainstream audience, or live and die with the press cycle have a genuine need for the pros. But for many early stage startups that are still operating on the TechCrunch 53,651 side of the proverbial chasm, spending $15k/month on public relations is beyond overkill. Especially given that social media tools let you speak directly to your customers like never before.

We laid out 4 tips for speaking to your customers back in July.

  • Tip #1: Blog – Use your blog to offer insight into your industry, your methods, and your thoughts — not just sales pitches. Create fans out of your users and cultivate an army of readers who will evangelize your product. Don’t miss our list of 15 companies that really get corporate blogging to get a good idea of how best to do it.
  • Tip #2: Utilize Social Networks – Like blogs, social networks offer a huge number of potential customers who can be turned into potential fans. Utilizing social networking services to form or enhance a dialog with your customers is a smart move — just be sure to really engage them.
  • Tip #3: Get in the Conversation – There is a conversation going on about your products or services whether you like it or not. People talk, and they don’t always say things you probably want said. The trick is to keep tabs on what is being said and then jump into the conversation. Respond to both the positive and the negative.
  • Tip #4: Keep Track of Customer Complaints – In fact, you should pay special attention to the negative conversations. Become a rock star with users by providing over the top support. Happy customers are the ones that go from being users to being fans to becoming fan boys.

It is not necessary to hire a PR agent for any of the above. All of that can be brought in house to save money over the next few months. Further, if you’re leaning on your PR agent to pitch the media and get blog coverage, some of that can also be brought in house. Sure it’s a little extra work, but bloggers and journalists are more accessible than they ever have been.

We offered a how to guide for pitching bloggers last July that should definitely be read before you try your hand at managing press yourself. But there’s no reason that a competent company executive can’t do what a PR agent is doing — at least for the next few months when money is tight and you need to, as Conway advised, “lower your burn rate” by cutting your marketing and G&A expenses.