Is signing a start-up client good business sense?

With the SME market flourishing in the UAE and a sharp increase in start-ups over the last 18 months, we ask, in the PR world, does signing a start-up client make good business sense?

“YES” says Nicola Gregson, Managing Director, Ketchum Raad Middle East

It is often the start-up companies who need to work smart and do their communications differently… these are the great companies to work with, as they allow us to push boundaries

If you look at this question from a purely financial sense, then many large agencies may not be able to take on start-up businesses as clients  – but that is looking at short-term gain, as opposed to a long-term partnership.

We work with clients both big and small, those long established and those just entering the market. Often with start-ups, the business heads behind these companies are people we already know, or they value PR enough to work with agencies who can partner with them to get it right, rather than those who think “PR=Press Release.”

It is often the start-up companies who need to work smart and do their communications differently, as well as be bold to break into the market, or who have a product or service that will change or bring something genuinely new to the market. These are great companies to work with, as they allow us to push boundaries, bring in crazy – but deliverable – ideas and think beyond traditional media; looking more at non-traditional media and working with influencers and stakeholders for that company.

On another note, we have an obligation to contribute to the development of the region that we live and work in, and learn from those around us. By investing time and resources in working with start-ups – that likely don’t have the big budgets – it allows us to engage in two-way knowledge sharing, and enables our teams to work on some exciting and fun projects that will impact the way people do business. It’s mutually beneficial – we get as much from the deal as our partners benefit by working with us.

Looking at it financially, we can afford to be flexible in our rates if we see a long-term relationship and potential business model that excites us. When does a start-up stop being a start-up? If they get the business model right and we get the communications element right, businesses can grow rapidly.

Regardless of size of client, if the client/agency respect and dynamic is right, both parties benefit. In terms of business and on-going trust, there is value in having an agency that really is a communications partner and brand guardian.

“NO” says Ketaki Banga, Account Director, BPG | Cohn & Wolfe

The question is – at what stage of a start-up does it make sense for a multi-national agency like ours to get involved… we are a profit organisation and wouldn’t be able to justify coming in at the very early stages of a start-up

I’m a firm believer in looking at things from a realistic perspective. While it might be easy to list the reasons for why it may not make sense for a PR agency to have start-up clients – this may not be the entire point.

The reasons could be – first and foremost, that you are too expensive for them at this stage; they are less likely to sign long-term retainers and, if they do, the retainer may outlive the business (three out of four start-ups fail, and that is a modest estimate). You also run the risk of building the brand, and if they are extremely successful, may look for multi-nationals as they outgrow you.

Taking on an established brand has its advantages. It’s a big name to showcase, the budgets are higher, and the opportunities and expectations for results are usually higher too. Winning a big brand when you are being pitted against other successful agencies is also a major vote of confidence in any agency. But most importantly, you just have a larger canvas to do things, rather than a constant struggle to turn recommendations into realities that can sometimes be governed by budgetary constraints.

But I wouldn’t say that larger brands are less time consuming. The difference is that they have experience and understand the investments required. That’s not to say you don’t have to work efficiently to provide the most bang for their buck. But with bigger brands we are able to focus on strategic things like evolving customer perceptions, crisis management, integrated marketing strategies and public affairs consultancy, rather than the most basic form of PR, which is trying to fit the most activity into the least budget.

Admittedly, we do not take on the PR for a start-up client as often as established brands. But we practice a consultancy approach based on the hours spent on a business, regardless of their size, and we have a track record of building regional brands (both semi-government and private sector). It is in our business interest to diversify our revenue stream to sustain growth.

The question is – at what stage of a start-up does it make sense for a multi-national agency like ours to get involved, and to what extent? We are a profit organisation and wouldn’t be able to justify coming in at the very early stages of a start-up. In general we believe that larger PR firms need to come in at the stage of sustaining the start-up and taking it to the next level, through strategic value-adding in a way that will make us grow as partners.

But saying that, there will also be times when we make a decision based on the innovation, ideas and philosophy of a business, if we believe it has the potential to be a game changing organisation. In this case, our support could help them to succeed and prosper in the long- term – benefitting both the SME and our reputation as a creative PR agency.