As CEO of RealWire, Adam Parker has built a very efficient delivery mechanism for the distribution of content from PR agencies. He’s an ex-PricewaterhouseCoopers chartered accountant and management consultant and has spent a good deal of time and effort scrutinising the make-up of the PR industry and its business model in a bid to better sell RealWire’s services as an outsourced offering.

We caught up for breakfast in Newcastle on Friday where he talked about business models, profitability and his efforts to sell to the industry. PR Week would do well to hire his skills to scrutinise its Top 150 League Table and better explore the fundamental economics of the industry.

Q. You wrote nearly 1000 words last week on how the PR industry needs to become more efficient and therefore better recession proof. Give me your pitch in a 100 words.
A. I can do it in less. In my experience other consultancy businesses such as accountants or management consultants have profits of circa 30 per cent or more. My research indicates that profits in the UK PR industry are substantially less. Yet these are the people dealing with the reputations of organisations. I think one key reason for this is that many of the functions in a PR consultancy are very admin based. They tie up valuable resource (people) when they could be automated or outsourced.

Q. Can you give me some examples?
A. I’ve spent the last three years learning about the PR industry. But in fact you don’t have to look too hard to find examples. Press release approvals could be automated using a project management platform such as Huddle. Clippings whether online or print should be delivered electronically and analytics included as standard. And of course press release distribution and coverage tracking can be outsourced to a company such as RealWire.

Q. But don’t PR consultancies outsource some functions such as press clippings, media databases and wire distribution?
A. I think there is an important distinction to make between utilising bought-in services to supplement activity and actually outsourcing delivery of particular processes and results. PR consultancies usually buy in the services you’ve mentioned as an incremental cost. For example the use of a media database can help to improve productivity of a member of staff; however the delivery of the service is still wholly the responsibility of the consultancy. In an outsourced situation this becomes effectively a partnership to deliver that element of the service.

Q. So if PR consultancies adopt RealWire they no longer need account executives?
A. No I don’t think that is the case. I think account executives should be doing work that is more valuable for both the client, and hence the consultancy, such as creating and developing relationships on behalf of clients. Would this not be more motivating and productive than photocopying press clippings, putting together clipping reports or cut and pasting press lists? A recent survey of PR consultancy staff by Aurum cited the top three reasons for job dissatisfaction as repetition, long working hours and admin.

Q. Have you any examples of agencies that are taking your medicine?
A. I don’t really want to go into detail and name names but the desk research that I have done on the PR Week Top 150 shows that there are clearly agencies that are more profitable than others. My guess would be that these agencies either have a lower cost base than average, high utilisation or low over servicing levels through tackling the very admin monster I’ve described.

Q. What’s your prognosis for the industry?
A. My recent analysis was on PR Week’s data for 2007. You can only assume that 2008 was tougher and that 2009 will be tougher still. I don’t need to tell you what the prognosis is for the industry; you and Andrew Smith have both covered this topic on your blogs. In the current economic climate PR consultancies, particularly those where margins are slim, will unfortunately be challenged by a combination of client losses, budget reductions and bad debt.

Q. How does RealWire deliver a cost-effective service profitably?
A. By striving to always find ways to be better in our specific area of expertise. The team has sought to develop efficient processes to optimise and distribute releases to relevant recipients, and then track and evaluate the coverage generated. We have invested heavily in both the technology to automate significant elements of the process, and at the same time in gaining an understanding of both the interests, and readership, of the publications and communities that we distribute to. We have done all this whilst maintaining a human approach in all we do and of course we’re based outside London and so benefit from a lower cost base.

Tags: adamparker, consultancy, profit, pr, realwire