RIP AOR?

Marketers are increasingly seeking project-based and specialised PR support, driven by attempts to make inroads with the coveted Gen Z demographic and changing priorities during the Covid-19 pandemic. 

Creative and media pitches rose 11% globally in 2022, but they brought in 35% less revenue compared to the prior year, according to a report from consultancy R3 in February. R3 is seeing the same trend in PR, an area in which some marketers are still wet behind the ears, says Greg Paull, principal. 

He says many companies are unsure how to manage earned media—either in-house, through a boutique or a larger agency—leading them to test the waters with project-based assignments. 

“Marketers are trying to find the right resources to do a lot more earned media. The jury is still out on the best place to do that,” says Paull. 

Companies are particularly leaning into earned media to reach Gen Z, given the demographic’s nontraditional consumption methods, Paull notes. He says that these attempts to connect with younger audiences by focusing heavily on strategies such as influencer marketing mean clients are straying from the PR AOR model. 

“The AOR remits usually come through the corporate communications team at a large company, while the influencer marketing comes through the marketing team,” he explains. “The fact that it’s not all done under a single remit is probably as much to do with the company's structure as it is to do with the agency’s capabilities.”

“We’ve always liked projects, ones that have clear beginnings, middles and ends. It enables us to get a feel for the client, the challenge and the opportunity,” Rosenberg says, adding that projects can set the foundation for longer engagements. 

Hunter, a project shop at its core, is benefitting from clients’ shifting demands. In 2022, the agency’s revenue increased 21% globally to US$51.2 million. The firm supports Amazon, Ulta Beauty and Sparkling Ice with consumer PR.

Despite the revenue improvement, CEO Grace Leong says Hunter is looking for more security and accountability in its client relationships.  

“It’s challenging not to have AOR written down somewhere…We want more assurances from the client that it won’t just be a [one-time] transaction,” she says. “We think they should recognise our business model and that we have to keep our people employed.” 

She says that Hunter, a Stagwell agency, is seeking assurances through a second potential brief or guarantees that the firm will be included in a pitch for the next project. 

“We’re saying, ‘Look, if we pitch and win this and do it at your price, we really hope you’ll consider sticking with us,’” Leong says. “Are they putting it in writing? Not quite yet. But we are having those conversations upfront that we expect this to be a long-term investment.”

Consumer-focused agencies aren’t the only ones noticing a shift away from an all-encompassing model. Margery Kraus, founder and executive chairman of APCO Worldwide, says clients are looking for specialised support, sometimes enlisting numerous agencies for it. 

She says Covid-19 catalysed the change, forcing clients to reassess, operate differently and interact with new agencies. Companies also wanted strong, consistent senior counsel, which occasionally gets lost in the AOR model and its inherently larger teams. 

“I think there was generally this feeling that an agency, no matter how big it is, can’t do everything well, everywhere in the world,” Kraus says. “You can’t be all things to all people.”

Now, companies are much more concerned with outcomes, instead of favoring output, she says. 

“When you have an AOR, you have a tendency to define things in terms of outputs, [such as] putting out 10 press releases a week,” she says. “I think that’s less significant now. The smarter companies are saying, ‘Okay, how’s this going to affect our bottom line? How can we think about KPIs more substantively, as opposed to the numerics?’”