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Gini Dietrich

Gaining Respect for Yourself and the PR Industry

By: Gini Dietrich | January 19, 2011 | 
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A few weeks ago, Doug Davidoff wrote an open letter to PR professionals, which speaks about the client’s view of our profession and how we’re stuck on tactics and not on results.

And on Monday, Les McKeown wrote “Living with the Pregnant Widow,” a tongue-in-cheek look at the so-called social media experts who, again, are stuck on the tactics and not on results (mostly because having a Facebook page or a Twitter account does not lead to business growth, directly).

The interesting thing about both of these letters (blog posts) is both Doug and Les run businesses and have hired PR firms. And they didn’t check with one another before writing their perspectives. This perception of our industry is pretty rampant and it’s also why mainstream media such as The Economist write articles like, “Public Relations: Rise of the Image Men.”

It’s our own fault, really. We ARE stuck on the tactics and the process and not on the results. And it’s because we’re typically not business people. We’re liberal arts people. We can skate by without ever having to take a business class or learn the difference between a P&L and a balance sheet or if revenue or income is better or how to grow the bottom line. Most of us have never walked in our client’s shoes and most of us likely won’t.

We’ve always gotten away with increased brand awareness and media impressions and advertising equivalencies. And that stuff is bogus because general accounting principles don’t value a company based on brand awareness (unless you’re Coca-Cola). It’s based on assets and income.

This is not going to be a one blog post lesson for PR professionals, but let’s begin now and continue next week.

Right now, learn the difference between the P&L and the balance sheet. Learn where equity and money invested plays into the business. Learn why profits exceeding expenses is better than a huge revenue number with huge overhead. Use Groupon as an example.

Find answers to the following questions:

  • How can Google offer them $6B to sell when their revenues (not income) are somewhere in the $300-$500 million range?
  • How can they raise $950MM on that kind of revenue number?
  • Why are they being valued on a multiple of their revenues and not on how much money they actually make?
  • How can the stock market be valuing them at $15B if they IPO?
  • How have they structured the business with debt and equity to not only pay out stock holders but the public when they IPO?

Granted, Groupon (and Facebook) is being way over-valuated and we’re about to have another bubble burst, but it’s a great way to begin to understand how a business makes money and how your efforts can help.

Ask questions.

If your company has an open book regarding financials, sit down with the CFO and have him/her explain how your business makes money and where the money goes. If your company does not have an open book policy, ask if the CFO will explain the P&L to you with $1 as an example.

For instance, if you take $1, is $0.60 of it going to payroll and $0.20 percent of it going to technology and $0.10 of it going to employee perks and $0.05 of it going to insurance and $0.04 of it going to reinvesting in growth and $0.01 of it going to bonuses and raises? I think you’ll be surprised at how it’s broken down.

Learn it. Understand it. Revel in it.

If you’re a solopreneuer or just starting your company, take some business classes. Find a mentor who has a financial mind. Join an organization like Vistage. Get yourself some help on this side of things or a) you won’t be able to counsel your clients effectively and b) you’ll never grow your business (or your income if you’re not going to hire staff).

Once you really understand how the company you work for makes money and once you’ve used examples such as Groupon to further your education, then you’ll be ready to begin having different conversations with your clients that lead to your becoming a growth generator, not an expense.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

64 comments
human resource consultancy
human resource consultancy

when you are have a respect from your industry you need first to have a respect to those who are the member of human resource consultancy. e.g if you are going to enter one organization you need to make a relationship first to the hr.

JoelFortner
JoelFortner

This is solid advice. In addition to understanding how the numbers work, in my experience, I've learned it's equally important to learn how leaders operate. This is another skill PR peeps should learn to help their clients even more and acquire and keep that infamous "seat at the table." Whether generals in the military or CEOs, they are brought up very differently than communicators. They're data-driven, we're instictive. They want decision options, we tend to present a single option and just expect them to take it. They think strategically, we think about our "lane." PR peeps aren't the only groups who tend to think this way. So called staff jobs such as lawyers, financial managers and human resources face the same challenge. By no means am I saying these groups aren't doing a good job. They could just be doing a better job. PR master Jim Lukaszewski wrote an outstanding book called "Why Should the Boss Listen to You?" If you haven't read it, do so and then read it again. It is truly transformative.

ElissaFreeman
ElissaFreeman

This post struck a real chord with me, Gini. So few busines people understand PR - yet so few PR pros understand business. And you can only get away with this for so long. After all, I went into PR because they told me there would be no math...lol...

My big wake-up call happened when I began working for a CEO who's background is steeped in Consumer Packaged Goods. If I didn't understand the P&L before, I sure do now. Not understanding 'where the money goes' and how it gets spent will not get you a seat at the Senior Management table. I am now expected to understand everybody's business. And that requires me to meet with my colleagues and basically ask 'the stupid questions'. But trust me, nobody thinks the questions are stupid, if they see you take an interest in learning. As time goes by, now I'm asking the smarter questions.

Helping one another learn about our respective specialties requires time and patience - but all round, a company, or your client, will be better off for it.

Steve_Mann
Steve_Mann

Gini - Hope you don't mind, but I'm sharing the heck out of this post. I've found that too often junior-level PR pros are left in the dark when it comes to the business side of their work. There's no reason we shouldn't be introducing younger employees to the world of budgets, ROI and the bottom line (at least the basics). It will only make them better counselors in the future.

Nikki Little
Nikki Little

Hi Gini - Like many PR programs, mine did not include any business classes, and I really, really, REALLY wish it had! I've had to do a lot of self-education to understand business principles, and I'm still learning. MBA's aren't in everyone's future once they graduate with an undergrad degree, so I hope more universities start integrating business classes into their PR programs.

I cringe knowing there are still PR pros who measure results based on ad equivalencies. :/

CarmenBenitez
CarmenBenitez

I <3 you Gini Dietrich! Why are you da bomb?! This article is more than spot-on...it is a must-read. Go, Gini, GO!

JonHearty
JonHearty

The numbers tell the story. I have many friends who see someone driving a certain car, say, a BMW 7-Series, and automatically start making assumptions about how much money the person has. They see money with only their eyes and not their brain. Money is the blood of business, and it is common for people to make the same mistake with business.

You can't understand a business without understanding the money that drives it and how it is treated.

This is a great post and looking at the numbers is a great exercise for anyone, for either their business or their personal finances.

Frank_Strong
Frank_Strong

Amen Gini! Assets + Liabilities = Owner's Equity. Note that there's a line item on the balance sheet called "goodwill" that PR pros should pay close attention too! After that, let's distinguish between the financial meaning of ROI and the word benefit which we often mistakenly use interchangibly with ROI. Doing so is a little bit like learning a new language, mispronouncing words and seeing our meaning is often lost in translation on the locals. We can go a long way by learning the language of business!

rachaelseda
rachaelseda

Wow, I feel like I just got assigned some grueling math homework...but in a weird way I like it! I am printing this post and going down the hall to talk to some people who understand this type of math...because well, it never was my forte but you're right we need to learn this stuff!

Thanks @ginidietrich for always mkaing me think!

3HatsComm
3HatsComm

Great post as always @ginidietrich and now I have to confess that even with my minor in B.A., I don't pay enough attention for my own practice. I'll spare all the time, interest, life excuses and just admit my slackness. As to business and clients, I've had those who love having me as their sounding board, eager for my input on their business well beyond marketing communications. I've got clients who will barely let me in the door, agree with my advice but then.. not act on it, go around me to save a buck. I'm putting in more time elsewhere so I can say yes to the former, no to the latter. FWIW.

Howie Goldfarb
Howie Goldfarb

PR is Dead. Long live PR.

I think the view of PR gets short shrift (is shrift a word?) anyway...until you need PR. Facebook is one of the worst at PR. From their stats page to how they roll out new features to how they handle the press. But they get a lot of free PR from the press who focus on just the shiny stuff vs the core. Look at Apple having to deal with PR this week with Steve taking a sick leave. Stock dropped in Europe then recovered.

I blog a lot trying to help Marketing people understand the numbers and financials. But they don't care. As long as there is a cash cow to milk so be it. But for long term survival this stuff needs to be understood. I asked a client what would be the sales number that maxes out her business. She didn't know. I said you need to figure this out because that is what I am shooting for with my Marketing efforts. Right there I just became more of a needed part of her world.

On the note of valuations. Here ya go:
At Apples $24 Billion in earnings run rate would cost $13 to buy $1 of earnings. Current annualized its $19 which is the P/E ratio.
At Facebook's $50bil valuation and $500m rumored profits it will cost $100 for $1 of earnings.

Apple makes things. What does Facebook make?

Lauren_AnnS
Lauren_AnnS

I'm about to graduate with a B.A. in Corporate Communications from a liberal arts college. Now, with that being said, I'm a 22-year-old aspiring into the field of Public Relations and Marketing, but have only taken one course in Marketing and and intro and writing course in PR. The intro to PR course I took emphasized the need for proficient writing and communication skills, and I'm fairly certain that the mention of business knowledge was a byline in a topic we discussed concerning different fields of expertise. For me, the lines between PR and Marketing are becoming more distorted as the boundaries of social media and generational shifts occur (Bloomberg Businessweek article "Marketing to Millennials"). The methods of traditional practices and tactics are becoming heavily linked to progressive forms of viral campaigns and marketing strategies. (At least, that is what I am seeing.) Ketchum is a great example in their integration of PR and marketing in the Stride gum case study of the "King of Kong: a fistfull of quarters" campaign. I'm excited to see how the industry transforms itself as the digital age gets more and more digital and expansive.

PeterFaur
PeterFaur

Gini, I got my MBA not because I wanted to be a CFO but because I wanted to be able to have an intelligent conversation with a CFO. Having the degree has helped me better understand the contributions that each department within a company makes to the overall enterprise. Your advice makes a critical point and comes at a good time.

In our field, I don't believe that every last thing we do can have a dollars-and-cents valuation placed on it. Communications is a process, and in business, that process usually moves through a cycle of gaining attention, to cultivating interest, to creating desire and finally, stimulating action. Only the final step can really be measured in dollars and cents. But is there value in increasing attention, interest and desire among a greater number of people? Is there value in moving people through the process more quickly and stimulating action more quickly? Absolutely. (Check out the time value of money to learn more!)

If we're trying to help businesses achieve financial goals, then it only makes sense that we learn how to talk the language of business. Thanks for the post.

Soulati | Hybrid PR
Soulati | Hybrid PR

Isn't that what investor relations is for, Gini? LOL (kidding). You're spot on, and I've been wanting to respond re that "open letter" thing which boiled me. This PR industry criticism is nothing new. When you've been in the industry as long as I have, you get used to it, sort of.

What that means is what you suggested -- never stop learning. Re-invent, re-innovate, and invigorate in what's coming around the corner. If we don't, we're dead.

lesmckeown
lesmckeown

Good response, Gini - and all true.

I would add is that while a good understanding of financials is important (it's why I started my business career as the UK equivalent of a CPA), the *reason* it's important is mostly to remove a barrier of communication with business owners and C-level execs. In other words, once it's clear that you understand the financial impact of any discussion, you get a better hearing for the underlying strategies you're proposing to the client.

I've written elsewhere that financial literacy is one of the seven non-negotiable differentiators between mere competence and mastery of any business occupation, and PR is no different. I think this debate underlines that point. Thanks for inviting me in to it.

EricaAllison
EricaAllison

Wow. This is chock full of business lessons. It's dangerously close to home for me in that I'm a solopreneuer who is experiencing tremendous growth, to the point that I am about to hire someone. The thought of that terrifies me and exhilarates me all at the same time. I'm fortunate in that I am a very bottom line, practical kind of gal, who has entrepreneur parents with unbelievable business acumen. They are my board of directors and financial advisors at the moment. When I first started my business, my mom sat me down (biz major herself) and made me learn the difference between a P&L and a Balance Sheet and why I am the most important person that needs to understand that. For my major business decisions they are my go-to. I have an accountant that guides me on tax issues. I have other folks in my life that I count on for a variety of business and management advice. Because just like my clients, I'm running a business too. This isn't just a joy ride; it's the read deal.

What I think is most important for me, and ultimately, the success that I have with my clients, is that if I don't fully understand not just their 'budget', but how the work I do impacts their overall bottom line, I'm just 'spinning' and not really helping. I also make it a point to fully understand and nail down my client's 1,2--and if they know them--5 year business goals, so that the work I do supports that and isn't just a one-hit wonder for the need of the moment. Operating in a vacuum is, well, self-serving and based on instant-gratification. Operating within your client's business context is powerful.

Thanks for the thought-provoking post, Gini!

ginidietrich
ginidietrich moderator

@ElissaFreeman And that's the problem right there! We're all told there is no math. The schools have to step up, too. And you bring up another interesting point. We spend A TON of time educating our clients (or executives) on PR and the importance yet we're expected to know how leaders work (as @joelfortner03 points out) and how the business makes money. No one teaches us those things so we have to learn them on our own.

CarmenBenitez
CarmenBenitez

@ginidietrich just as an FYI... I had a final round-up closing meeting with a prospective national property mgt company today on our application and I stayed focused on the bottom line, explained how the product worked from their perspective, worked my tail off to differentiate ourselves by putting everything I got into getting their bottom line and it worked. They are going to either launch now or in April when their national marketing director comes on board. It goes to show that you have to think client-centric before the first meeting, do your homework, feel their pains and simply deliver results based off them. you have to think about their bosses (both up and down and external) and work towards delivering actual results. It was a great meeting, I thought of your post after and was quite pleased by it all. Cheers Gini!

ginidietrich
ginidietrich moderator

@JonHearty I really love this analogy (and not just because I am a BMW enthusiast)!

ginidietrich
ginidietrich moderator

@LFJeremy I love this analogy, too! Dang! I should have had you and @JonHearty write the blog post. These are both way better than my Groupon analogy.

rachaelseda
rachaelseda

@ginidietrich YES YES GREAT IDEA..hahahaha you know I love those...I went to this restaurant yesterday actually and they had one on a magnet and it didn't work! I tried forever haha...I know I am such a dork.

ginidietrich
ginidietrich moderator

@rachaelseda Do you want me to create a QR code so you can just scan it and take your phone down the hall?

Howie Goldfarb
Howie Goldfarb

@rachaelseda @ginidietrich Maybe beam a hologram on the wall in the hall? BTW if you go to Yahoo finance and pick a stock the balance sheet and financial statement is there in overviews. Most are straight foward. Sometimes you have to dig a bit because of stuff they do for tax reasons.

rachaelseda
rachaelseda

@ginidietrich But just for the record, I promise I am all about saving some trees so while I said print...I will likely bring my laptop down the hall, haha.

3HatsComm
3HatsComm

@ginidietrich See.. now I feel bad about not tweeting on the weekends that much, trying for that work/life balance thing I read so much about. Sigh.

ginidietrich
ginidietrich moderator

@3HatsComm Great point. I think those of us who also run businesses get it a bit more than those who do not. Like you, we have clients who ask us for advice on all sorts of business topics, not just marketing or communication. But then we have clients (well, no longer) who get mad when we tweet during the weekend something funny about a crush a certain BFF has on a certain celebrity.

Derek_Schroeder
Derek_Schroeder

@Lauren_AnnS Something every public relations practitioner must remember, besides the business side of pr, there is the public side. Understanding where and how money is used by a company will give you the long-term stability but managing the relationship with your public doesn't always mean talking about money.

ginidietrich
ginidietrich moderator

@Lauren_AnnS Look into the opportunity your school does with Counselors Academy. I can find out the teacher sponsor, if you don't know what I'm talking about.

Lauren_AnnS
Lauren_AnnS

@Whitney Punchak Thats fantastic, and congrats! Thank you so much, I will most certainly take up any offers of mentorship. I went to NYC over spring break last year as an opportunity for Comm students at the College of Charleston. We met with PR reps from Ketchum, MTV, Edelman, Ca., Deloitte, Peppercom, and Landor. It was such an amazing experience. I'm looking to go back this spring break to NYC through the same program and possibly do the PRSA academy in Vegas (if I can afford it).

Howie Goldfarb
Howie Goldfarb

@ginidietrich @Whitney Punchak @Lauren_AnnS PR has got to be the hardest of anything to figure out the ROI. Advertising is really hard and the Agencies love that because they can pretty much steal money from clients. Sadly. So my industry has enough of a bad name. I have a Finance Degree and tell people the CFO decides where to invest and they like something they can measure. Just ask @meganbeausang
Where you can do your clients (and yourself) a big service is knowing more about their business vs just communications and finding things that you can figure out a way to show the CFO your value even if its hard to put a $$ value on your work.

Lauren_AnnS
Lauren_AnnS

@Whitney Punchak I am actually graduating in May, but plan to go back to school in a few years to obtain my graduate degree. I wholeheartedly agree with you about the business school vs communication school mentality. Even in the introduction courses, the first week or so is learning the techincal jargon of the marketing world and the PR world and each professor ardently stressed such differences.

ginidietrich
ginidietrich moderator

@Whitney Punchak @Lauren_AnnS First of all, the two of you are a breath of fresh air! I love your thinking, your writing, and your curiosity. Secondly, Lauren...I agree with Whitney. I you have an elective class you can take, get yourself into a business class! It'll put you heads and shoulders about your competition instantly.

Whitney Punchak
Whitney Punchak

@Lauren_AnnS I'm studying PR as well, and completely agree with you. There's a huge emphasis on linguistics. When I was doing my undergrad I did a minor in business. Those courses are still among the most useful I've ever taken. If you still have another semester, I highly recommend tagging along with the business students. They have a very different way of doing things than PR students. When I worked with them, in order to be really effective, I had to modify my behaviour and language. They spoke in numbers and used a lot of financial terms. Their bottom line was always profit and growth. It was really interesting and well worth it. I definitely learned a lot from them.

Techally
Techally

@PeterFaur Congratulations on getting your masters. It really is never too late to learn anything. I just picked up the violin for the very first time tonight - learned Twinkle Twinkle Little Star with my instructor ;-) Sometimes it feels like you're backtracking, but if you're learning something new, you're moving yourself forward. I'll cheers to that.

Techally
Techally

@ginidietrich Hi Gini! This is me following through on my promise to comment here more often :-) Great post!

PeterFaur
PeterFaur

@Techally Techally, I'm glad that you're putting in a plug for being a life-long learner. I didn't get my MBA until I was 48, and let's just say I'm a few years past that now. I consider life to be a journey of learning, and I'm pleased that you do too!

PeterFaur
PeterFaur

@ginidietrich Thanks, Gini. I come by often! It's always been funny to me that some people expect us to guarantee front-page coverage. I've delivered it, but I've never guaranteed it. My financial guy has delivered some really good returns over time, but he's never guaranteed it, and I wouldn't expect him too. I expect him to give me good advice and direction, to encourage me to take the plunge when sometimes I don't want to, and to keep me from doing anything reckless. It seems to me that those are pretty good deliverables for us as well, and they'll pay off over time. That's why long-term relationships with clients are so much better than the transactional relationships some people want to buy from us.

Techally
Techally

@PeterFaur While I contend that formal education is not essential to being able to understand complex business or technology concepts, as a recent university graduate, I do agree with Peter that getting an MBA can be helpful. But in the business world and our marketing discipline, the learning never stops - formal or otherwise. The original post made reference to Vistage: our leader here at inmedia, Francis Moran, is a member of TEC, the Canadian contingent of Vistage, where he has learned many effective leadership concepts, enjoyed camaraderie within a group of executive peers and developed his network with a trusted, confidential group that can help him with common business challenges. I, too, have been learning a lot from my SM peers through social gatherings here in Ottawa. Through networking, research, and old fashioned trial and error, PR practitioners worth their salt get to the point that they understand where we fit into the overall business plan and budget and how we can raise the bottom line of our clients's business is crucial for long-lasting business relationships. Client 2.0 is well-informed about PR best practices and expects nothing less than the best, which means that we, as communications professionals, must learn their language in order to be effective. With so much peer and educational support out there today, there's simply no excuse for us not to.

ginidietrich
ginidietrich moderator

@PeterFaur Totally agree (and love it when you stop by here)! I did an interview this morning where the question was about ROI. I think the problem our industry has is two-fold: Everyone wants to be on the front page of the NY Times and doesn't understand the time and effort that goes behind something like that (not to mention having something worthy if you're not Steve Jobs) and we tend to be yes men and try to make it happen. Then, when it does happen, there is a short spike in traffic and lots of atta boys, but then it's "what have you done for me lately?" and on to the next one. We HAVE to elevate the discussion.

ginidietrich
ginidietrich moderator

@Soulati | B2B Social Media Marketing LOL!! Goofball! Yes...never stop learning AND keep speaking our minds so The Economist, reality TV, and other mainstream media aren't the only voices painting a picture of our industry.

EricaAllison
EricaAllison

@3HatsComm @ginidietrich Thanks, Davina. I had a meeting with a new client today and when asked the question of where do you see your business 1 year, 2 years from now, gave me a blank stare. And then we delved in. So yes, Counselor is a term that comes to mind...coach, also. But that's ok, because it helps me in the long run to do a better job for the client which in turn, helps me be a better publicist. With this person in particular, they hadn't really thought beyond 2 months from now and me getting their name in the paper or in front of their clients.

Ms. Gini, I'll take you up on that chat!

3HatsComm
3HatsComm

@ginidietrich @EricaAllison Thanks for the shout out Gini. I have to confess Erica, you sound more ahead of the game than I. I do have a lot of the same ideas about taking it a step further. I'm working to get myself away from that and position myself to be more of a counselor to clients than just the one-hit wonders you mentioned. It's an educational process, you have to teach the clients that what they want may not be what they need. My problem is that's not always a lesson clients are willing to learn, so .. working on it. FWIW.

ginidietrich
ginidietrich moderator

@EricaAllison Yes, yes, yes! @3hatscomm wrote a great comment on her own blog last week with the questions she asks clients to get them thinking of her as more than just someone to get them in the paper. Perhaps she'll share them here. But my point is, I agree with you. And...if you ever want to chat about when it's time to hire someone, my door is wide open for you!

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  1. […] instance, a couple of weeks ago, I wrote a blog post about gaining respect for yourself and the PR industry. In it, I talked about how to learn and really understand how a company makes money so you can have […]

  2. […] would you like to charge and why? For instance, a couple of weeks ago, I wrote a blog post about gaining respect for yourself and the PR industry. In it, I talked about how to learn and really understand how a company makes money so you can have […]