December 4, 2025 • 46 mins
What separates integrated communications and public relations agencies that grow from those that stall? Part of the answer lies where strategy meets serendipity and where chance favors those that are prepared.
Anne Green sits down with Michael Lasky, chair of the public relations practice at Davis+Gilbert, to unpack the gap between aspiration and execution found in D+G’s 13th Annual Public Relations Industry Trends Report. They dig into the push toward AI enablement inside agencies, from practices and policy to risk and ethics, and why training may have over-rotated toward technology while fundamentals like business development, financial management, and cross-team collaboration lag. Michael explains the “donut effect” in performance, with small and very large firms outpacing the middle in 2025, and how focus and specialization fuel profit. They also get practical on pricing models and the shift from vendor to counselor that will be increasingly critical moving forward.
In this episode:
Anne Green sits down with Michael Lasky, chair of the public relations practice at Davis+Gilbert, to unpack the gap between aspiration and execution found in D+G’s 13th Annual Public Relations Industry Trends Report. They dig into the push toward AI enablement inside agencies, from practices and policy to risk and ethics, and why training may have over-rotated toward technology while fundamentals like business development, financial management, and cross-team collaboration lag. Michael explains the “donut effect” in performance, with small and very large firms outpacing the middle in 2025, and how focus and specialization fuel profit. They also get practical on pricing models and the shift from vendor to counselor that will be increasingly critical moving forward.
In this episode:
- Michael’s three top takeaways from this year’s research: AI governance, neglected areas of training, and the role of long-term incentive programs
- Why specialization and focus are outperforming the generalists, and what the “donut effect” says about performance across different types / sizes of firms
- Why it’s essential to talk with clients about AI strategy, usage, contracts, and ROI before procurement calls
- Continued evolution in pricing strategies and why better success metrics are critical to aligning value and outcomes
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
There will be things that the machine should do more of,
(00:02):
and we then, whether it's senior people or more junior people,
become the orchestrators of agents of colleagues that are machines.
But I think we're going to have to be really
open and nimble. And I love your idea about how
do you look at other types of value add that
may not be just a monetary outcome too. Hi, and
(00:33):
welcome to another episode of Building Brand Gravity. I'm Anne
Green and.
Speaker 2 (00:38):
I'm Steve Halsey. It's great to be together again.
Speaker 3 (00:40):
Anne, it always is.
Speaker 1 (00:42):
It always is here both in our New York office today,
just at the opposite ends of the office, which is fine.
Later in the episode. Today, we're going to be digging
into data and insights from the thirteenth annual Public Relations
Industry Trends Report from Davis and Gilbert, well known to
you and I and many of our listeners, Steve, and
it's a good read this year. There's a lot of
(01:03):
really important points to discuss, and Michael Laski is going
to be on deck to take us through the findings.
But to kick things off today, I thought we'd do
a quick round of in the news, what headlines have
been catching your eye in the last week or so, Steve.
Speaker 2 (01:18):
You know one that I saw was really interesting, which
is a new report that came out from McKenzie called
Nailure First. And what's interesting about this is the core
idea of this was really that the CEO role now
starts first with stakehold credibility, not operational cadence. So what
the article was really talking about in the findings were saying, hey,
(01:41):
in those first one hundred days, the most critical thing
for leaders is to really communicate well, because that's how
they're going to be evaluated, how they show up, how
they listen, and how they build trusts. So long before
their strategy has actually taken place, and long before where
you're seeing the operational changes, they're really being judged by that.
(02:06):
And what I really find fascinating about that is how
much pressure that then places on the corporate comms and
corporate affairs ecosystem to really make sure the CEO gets
out of the gate really strong, really fast, and you know,
you've got to be aligned, and you've really got to
help make sure the CEO really isn't flying without instruments
(02:28):
that they're really putting that vision out there quick and fast.
Speaker 1 (02:32):
You know that reminds me. I resonate with that being
a CEO and you know we're in a smaller pond here,
but still leading you and I and our partners in
this space. But it reminds me of reading some articles
in Harvard Business Review about the skill sets that are
needed for CEOs today and that emotional intelligence and that
communication across stakeholders is so critical, and it makes me
(02:56):
think of for years now, I've felt that MBA is
in particular. You know, these training grounds for corporate leadership,
we're very under indexed from my perspective, on the communication
side and that skill set that many of us learn
either through study or on the job when we're practitioners
like you and I are. It sounds to me like
(03:18):
more than ever, you know, CEOs need to be coming
in or those that may be on the path for
organizational leadership need to really lean into that well.
Speaker 2 (03:26):
And you know we're communicating everywhere and always in every way,
shape or form. That I think you're right is really
having that communications framework to really bring that visional life.
And let me just read here. I wanted to pull
this cook because I found it really interesting. It says
new and incoming CEOs are often unprepared for the intensity
(03:48):
of internal and external stakeholder engagement. There's no honeymoon period.
People in other roles may have six months or even
a year to find their footing. As CEO, you're expected
to be ready from day one and communicate from day one.
That's serious pressure.
Speaker 3 (04:07):
Yeah, I couldn't agree more.
Speaker 1 (04:08):
And I think we see that with a lot of
our clients and just what we're observing in the landscape.
Speaker 2 (04:12):
So I thought that's interesting. That really parlays a lot
of the things I'm hearing from the chief communications officers
I'm talking to, and kind of as we've talked about
in previous episodes of Brand Gravity, it's no longer the
old question do you have a seat at the table?
It's like what do you do now? It's how do
you get them out the door as quickly as possible.
But that's something that kind of stuck with me. What
(04:34):
have you been reading? What's sticking out for you?
Speaker 1 (04:37):
So in preparing for this, I definitely had a story
that caught my eye. You and I have been talking
a lot about structure and the role of integrated communications
within corporations.
Speaker 3 (04:48):
Within those functions.
Speaker 1 (04:49):
So a big story that caught my eye this week
is the appointment of an executive vice president, a new EVP,
to lead a newly unified corporate affairs structure at Verizon.
So this was in PR week and covered in many
other places. Now this group is going to combine corporate communications,
public affairs, government relations, and what they term at Verizon
(05:10):
responsible business, which is very interesting too to see how
that language evolves. And the new EVP, Franz Pash, I
believe that's how you pronounce it. He's a seasoned veteran
that's worked at a lot of agencies and a range
of corporations. But the thing that of course really caught
my eye as Dan Shalman is the newly appointed CEO
at Horizon. He was at PayPal before, and he had
(05:32):
some very powerful quotes. This was in the actual formal
announcement in the press release that was quoted. I have
them here, So some of his quotes on this, we
have an opportunity to redefine not just who we are
as a company, but to fundamentally change and lead our
entire industry. And then he also said, in a world
where trust and transparency matter more than ever how we
(05:55):
show up, communicate, and liver define who we are as
a company. By creating a world class corporate affairs function
will take bold and responsible actions to drive growth and
position Verizon as a leader with all our stakeholders. Now
I was telling you this, Steve Offline. I had the
honor of working with Dan Shulman years ago in his
(06:17):
first CEO role at Virgin Mobile USA, and he I found,
was always very savvy about brand, about reputation, about the
breadth of stakeholders, and the critical importance of building trust.
He brought a lot of values with him from that
entity to a stint AMEX and then of course famously
at PayPal, where some people might call him an activist CEO.
(06:42):
I don't think he would typify it like that. Was
much more about being very clear on the values of
the organization tied to their business and their stakeholders and
their customers and living those values. But for me, just
this idea about being so clear and deliberate about this
move at a time where other entities, as we've discussed
(07:02):
on this podcast, are kind of fragmenting that coms structure.
I don't know, I just found that really interesting. What's
your take on this.
Speaker 2 (07:11):
Yeah, it is very interesting, and I like some of
the words that EE use, like redefined, be bold, you
know that to me really kind of ties those themes
together that we're talking about. You know, the McKenzie piece
is really arguing about leading with reputation for results. And
what I think is interesting that Verizon is doing is
(07:32):
they're clearly architecting a system here around Dan that makes
this whole thing possible, right by unifying corporate comms, public affairs,
government relations. That's more than a structural change, it's really,
as you said, a deliberate signal of trust, of transparency,
of stakeholder leadership. So this one's going to be interesting
(07:53):
to see how it works out. But yeah, absolutely interesting
story in the news.
Speaker 1 (07:59):
And just you know, the day after I saw this story,
I noted Fortune in their CEO Daily, or it might
have been Wall Street Journal in their CEO Brief.
Speaker 3 (08:10):
There's so many good newsletters, but one of.
Speaker 1 (08:11):
Them had featured more remarks from Dan Shulman from one
of their board level gatherings, and so a lot about
needing the kind of mindset that's needed, the kind of boldness,
and also even large entities needing to think about themselves
as a startup and being more nimble and agile, So
definitely a space to watch. And I guess you know,
we've been talking a lot so far on this episode
(08:33):
about the corporate side of the fence. Now I think
it's time to turn our attention back to the agency landscape,
and that's our chance to ask Michael Laski, who's been
a long time partner Davis and Gilbert, well known in
the industry, you know, you and I Steve have known
him for decades, to everything we want to know about
the New Trends Report. Having done it for thirteen years
is a long scope of time, and there is so
(08:55):
much change right now, and I think the conversation I
had with Michael yesterday will bring that level of change
into focus. So for now, please stay tuned for my
conversation with Michael. I am so excited to welcome an
old friend and colleague for many years now, Michael Laski.
Speaker 3 (09:13):
Welcome, Michael, Thank you, anna real pleasure.
Speaker 1 (09:16):
And Michael is the chair of the public relations practice
at Davis and Gilbert as well as co chair of
Litigation and Dispute Resolution practice. But Michael, you are well
well known in our industry. And I've known you for
many years, as I've said, and you've been a great
mentor and a support and counselor to me.
Speaker 3 (09:32):
Over those years.
Speaker 1 (09:33):
But I don't know that a lot of people know
your own story in terms of how did you end
up in this specific practice area, because you're so deep
in it. Tell us a little bit about that. I
think it's a great way to start.
Speaker 4 (09:45):
Sure, well, thank you. Well, you know, I'd like to
say it was a combination of strategy and serendipity. The
strategy was when I joined Davis and Gilbert, the firm
had a really proud history of being pre eminent in
the advertising law area. And back then in nineteen eighty three,
(10:07):
advertising was still king and everything else was below the
line business. But the firm had been around since the
early part of the twentieth century, and we literally put
the first radio spots, yes I said, radio on the
air for P and G. And we've been synonymous with
the monetization of what we now referred to as commercial
(10:29):
speech since the early days of radio. And to be frank,
our practice followed the technology of the day radio, television,
point to purchase, then Internet, social digital and the like.
So when I joined the firm, I actually came at
(10:50):
a time when I thought we were really well positioned
to essentially work with firms whose key assets were people
and ideas as creative businesses. You know, the term marketing
communications had not yet been invented yet, and I looked
at what we were good at and thought of what
were logical line extensions and public relations you know, cried
(11:12):
out as something that I thought we really could add
a lot of value too. I think that was in part,
so that was the strategy, and I think the strategy
was in part and formed by my own background. I
did a lot of writing as a student, and I
ran a twelve hundred page publication when I was in
(11:33):
law school, and I actually was a I wrote for
my student newspaper. I was a Broadway theater critic for
a bit when I was in college. So the craft
of storytelling and authentic communications always resonated with me, and
I thought, reaching you know, audiences with the information that
(11:57):
would influence outcomes is also something that I think really
resonated a lot with me. So, you know, strategy and
serendipity came together, and I, you know, consistency and persistence
also probably played an important role.
Speaker 1 (12:12):
I think that is how my life often goes Well,
it's interesting to reflect back on the trajectory of many
of the agencies in this space. Is where we came
from and what we are today. Like you said, you know,
I would describe our firm today at GNS has integrated
marketing communications. I still really love and feel passionate about
(12:33):
the term of public relations too, but we also, like
many firms, do much more than that. And you know,
I can think about the trends I've seen over time.
You've got some years on me to think about that too.
When you think about the evolution of the whole space,
especially the agency side, What are some of the things
that you've noticed some of those bigger trends.
Speaker 4 (12:51):
Well, I mean, certainly it's changed dramatically, and you know,
largely influenced by you know, both scope of services, the
complexity of the services, and the technology that's enabled the
very substantial expansion of the swim lanes. So, you know,
(13:16):
I was actually thinking this morning, and I've thought about
this a lot as relates to the skyrocketing use of
AI in the industry and frankly in all industries. But
it really reminds me to a time in the in
nineteen ninety four ish when we started with the year
(13:38):
with virtually no firms having websites to By the end
of the year, you know, www became synonymous with, you know,
an extraordinary explosion. But frankly, it was a time when
people were still trying to grapple with was this world regulated?
And you know, I kid it at the time that
(13:59):
you know, WWW stood for wild wild West. People thought
it was completely unpoliced, when in fact it was policed
the very same way it was old wine and new bottle.
So the technology created new issues, but a lot of
the same kinds of framework applied. And I think, you know,
I certainly the kind of trends that I'm seeing are
(14:23):
also greatly influenced by the expansion of services and the technology.
Speaker 1 (14:28):
It's funny to hear you speak about those early days.
I very much remember when my firm, Cooper Kats, back
in the early nineties sent out a postcard that said
we are on the Internet super Highway.
Speaker 3 (14:41):
And that just dates us all but I embrace it.
Speaker 1 (14:44):
You know, you've got to get in the way back
machine and enjoy those old memories. One of the reasons
I wanted to connect with you. Michael is talking about
today and the trends that are really shaping our industry,
and you folks have had for many years now your
annual Public Relations Trends Report very helpful.
Speaker 3 (15:02):
I always look forward to it.
Speaker 1 (15:04):
I have participated, you know, in events when we're speaking
about the trends. I've you know, done mainstage work with
you guys on the AI side and some other pieces
M and A so just came out and the overall
theme and I've got it here that report really emphasized
a gap between strategy and reality, those disconnects between agencies,
(15:25):
aspirations and the actual execution. So I want to go
piece by piece through some of the findings. And I
know you've been on a bit of a roadshow for this,
so you're you're ready to go. But what what are
some of the top lines that you would identify before
we drill down abouit?
Speaker 4 (15:39):
Well, I think I focused on three and certainly you
know the whole purpose of the report is to look
at the white space where can we influence outcomes? What
is separating the the advancement of the kind of firm
(16:01):
that every firm hopes to be you know, growing profitable,
well positioned, And as we looked at the data, there
were three areas. One is, I really saw some misalignment
between the virtual unanimity of firms using AI for a
(16:27):
virtual explosion in types of services and for types of
purposes from content creation to media monitoring, to data analytics,
to proof of concept to crisis communications. Let's just went
on and on. But when you look to see, though
it was popular, many firms did not have comprehensive policies
(16:51):
in place and that exposes them to liability for how
employees were to be using it, what kind of client
involvement and consent they had, and virtually no firms had
you know, appropriate AI policies for the vendors they used.
So frankly, getting an alignment on the usage and policy
(17:13):
to reduce risk was one area that we certainly, I
certainly felt would improve agency performance and check a lot
of important boxes for alignment. Second area that came out
very clearly from this year's data was while there was
a very sharp increase in training at firms around AI platforms,
(17:40):
ways to you know, you know, best prompts, best outcomes,
every other area of training was dramatically down, and you know,
the shoemaker's kids were going barefoot. So at a time
when many agencies were strug only mightily to grow top line,
(18:03):
maintain or grow profits, business development and client growth strategies,
and operating holistically to cross collaborate. Notice I didn't say
cross sell, but cross collaborate among types of service offerings
and between and among areas of specialization. That was dramatically
(18:27):
down over prior years.
Speaker 2 (18:29):
You know.
Speaker 4 (18:30):
Similarly, we saw a lot of agencies still having the
bulk of their revenue driven by retainer work, yet there
was very little training being done around financial management client contracts,
how to appropriately stay within the scope of work, making
(18:52):
sure the account people know, you know, how to proactively
communicate with clients on those issues. So that was another
area of probably, if not leaving money on the table,
losing money in part because that training piece was misaligned
with you know, the growth opportunities.
Speaker 1 (19:13):
You know.
Speaker 4 (19:13):
The third area that came out in this year's data
in terms of what I'll call closing the gap was,
you know, I'm a strong believer in economics striving behavior,
and while there is again the agencies were struggling to
grow revenue and profitability many of them still were operating
(19:36):
in a annual discretionary bonus arrangement and did not properly
and appropriately incentivize key employees over a multi year period,
typically referred to as long term incentive plans of one
kind or another. And you have to sort of reverse
(19:59):
engineer what outcomes you want for your mid level and
senior people, and if you needed a roadmap about what
works well the data, you know, the endpoint is not
the data, it's the starting point. But the data shows
that the top performing firms, firms that grew revenue or
(20:23):
profits or both by more than ten percent this year
had on average a very higher percentage of these long
term incentive programs for mid level and key employees, both
as a retention tool and as an incentive arrangement then
agencies at large. So those are the three areas that
(20:46):
really struck me. As you know, what I'd recommend is
sort of advisory services to help enhance performance in the
year ahead.
Speaker 1 (20:58):
That's really helpful. Overview a lot to dig in there.
I want to take this second one first, on training.
I think that's very critical and as I was listening
to you, you know, I always have a double consciousness
in these things, which is I'm thinking about the industry
at large, but I'm also trying to also interrogate myself
(21:19):
and say, what are we doing? Where are we at?
That's the helpful thing. I always joke that there's a
pendulum that swings between we're doing great or we have
to fix everything, you know, And I think that's a
healthy dynamic tension. But your point about the focus on
training in AI, which I think is obviously critical. This
is a massive upskilling moment, but missing some of these
other pieces. A lot of the trainings you mentioned, Michael
(21:41):
are known to us as leaders agency leaders, we should
know that these are critical the constant refreshing of financial
management skills, how an agency works, how it makes money.
But even recently, our chief growth officer, one of my partners,
Steve Halsey, did a series of events around so of
our office had called Grocella and it was a fun,
(22:03):
tongue in cheek way of saying, for both junior people
but also more senior people, how does our business work?
How is our new business processing work? You know, what
are the pricing models, et cetera. Why do you think
that these sort of perennial best practices are falling by
the wayside.
Speaker 3 (22:18):
You know, I think it's harder to.
Speaker 4 (22:22):
Stay current, and you know, maybe there's a strong focus
on the new hula hoop. If I can date myself
with that analogy.
Speaker 3 (22:33):
Go for it, the pet rock of today.
Speaker 4 (22:36):
There you go, and and uh, you know, I think
a lot of firms are really working really hard to
stay current and to move quickly. And you know, there's
an amish expression, the harrier we go, the behinder we get,
and sometimes, you know, things that are really back to
(22:56):
the basics get left behind. And I think that some
of what came out in this year's data that it
was easy to focus on. I mean, there was so
much energy. I mean, thirty seven percent of the firm
said they're building, you know, an AI model, and sixty
two percent said they're investing in an AI power program.
(23:19):
I mean that's a herculean undertaking. So, you know, not
looking to be critical, but just to provide, you know, comment.
And that's sometimes the perspective that an outside advisor can
whether it's a public relations professional or a lawyer who
does a lot of work in the industry, can provide
is you know, you know, objectively, I get it but
(23:43):
there's also this other thing here which you can't leave behind.
Speaker 2 (23:47):
It's it's it's basic.
Speaker 1 (23:48):
Yeah, and you're making you think of too. I was
looking this morning. I was scanning Fortune CEO Daily and
they were quoting that or was Wall Street Journal's CEO Brief,
one of those types of newsletters, and they're quoting a
Deloitte leader. I think it was the Deloitte CEO talking
about recent research they did with CEOs in general, and
he was just talking about two of the most important
(24:10):
things of this pivot is really human mindset. It's a
growth mindset, and it's kind of leaning into the ability
to change and emotional intelligence. So that growth mindset and
emotional intelligence, interestingly, both randomly and I guess happily, both
things we've been focused on here this year very intentionally.
(24:31):
But this is very much a human challenge. So you've
got the core skill sets of the business, you've got
the training on the business of the business, and then
you have that training on being a manager and a
business leader and how you bring your best self to it.
So I find that really interesting. Switching over to some
of the other trends, revenue and profitability, it was really
interesting to me. And there's a million different details in here,
(24:53):
but there was this donut effect that you've guys found
that smaller firms and larger firms, and there was numbers
associated with them, tend to be outperforming whatever we see
as mid size and I think larger firms were typified
as over one hundred.
Speaker 3 (25:08):
Was that right in terms of staff? But how would
you and I feel like you've seen that.
Speaker 1 (25:14):
Effect before in earlier studies in different years, But tell
us a little bit more about that doughnut effect and
what you noticed about it.
Speaker 4 (25:22):
Yeah, I think there are a few things that account
for that, I mean certainly, and the devil's in the details. Look,
there are a lot of very large firms that have
had massive layoffs this year and are continuing to have them.
So it's not like, you know, larger firms have all
the answers and are immune from all the kinds of trends,
(25:45):
the uncertainty, the you know, you know, clients asking more
for less than anybody else. But they do have, you know,
a larger revenue base to put against their expenses, so
I think that has helped them in some way. You know, again,
(26:10):
as a monolith, you know, do a little bit better
than the mid size at the you know thirty and under,
which we called you know, smaller, not small, small but mighty.
You know, remember the tueboat can also pull the ocean liner,
so it's not it's not big as not always best,
but you know. I think the reason for this stronger
(26:33):
profitability at the smaller firms is they tend to be
laser focused. They tend to be very much focused on
an industry, and you know, this is a hard time
to be all things to all people, so I think
the specialization has become more important than ever. And whether
(26:55):
you're a firm over one hundred or a firm that
is smaller but nimble, I think knowing and understanding your
competitive advantage where you're going to make your investments, being
close to you know, particular or or more than one industry,
but having some laser focus in those industries and envelop
(27:19):
all the service offerings that are relevant for that industry,
you know, can really be very helpful to drive both
revenue and profits and actually also grow you know, your
clients internally so that there's a stronger connection with them.
You're not only you know, doing their media relations, you're
doing their content creation, you're doing their events, you're doing
(27:41):
their thought leadership. You know, you're doing their data analytics.
And you know, sometimes firms have had to acquire different
talent or even do smaller acquisitions to be able to
bring in a capacity to get more heavily involved with
an industry or a client so that they're not they're
(28:01):
using their relationship to build the strongest connection to that client.
Speaker 1 (28:05):
Yeah, it's very It was helpful and heartening to read
some of this data and also here right now what
you're saying. We've been having a lot of conversations about where,
especially in the world of AI, right where is the
human and where's the machine? And there needs to be
a symbiotic relationship there. The PR Council recently put out
a framework that I really liked, and it was more
(28:27):
about the writing side, but it was looking at how
do you understand a framework? So you're very intentional about
this is all human, this is all machine, but this
is where on the spectrum they merge mostly human, mostly machine,
et cetera, et cetera, and being intentional about that. But
the reason I bring that up is that where is
the human essential as counselor so sector expertise, deep knowledge
(28:50):
of an area or an industry, really going deeper into
areas or service sets that are fueled by technology underpinned
by AI a tool, but then overlaying with human analysis.
I mean, I think this really puts a sharp point
when you look at it from like the revenue and
profitability side, puts a sharper point to you know, as
(29:11):
you can dig into the details on how we need
to be thinking about what why someone needs a counselor
at this point, why do they need someone outside their walls?
Speaker 4 (29:19):
Well, you know, I'm the the analogy to law, you know,
rings true to me because there was a time in
the practice of law where a lot of attorney's business
cards said attorneys and counselors at law, and that, you know,
really was a reference to the English legal system where
(29:43):
there were two distinct roles that lawyers provided. One was
transactional and that was you know, the solicitor, but there
also was the barrister, the counselor, the the the you know,
advice and counsel role. And I think actually that has
become more important than ever in a lot of professional services,
(30:06):
certainly in strategic communications and public relations. And i'd argue,
perhaps even in law.
Speaker 1 (30:12):
That is an excellent metaphor. Are we in what we're
seeking to do? When are we the solicitor and when
are we the counselor or the barrister. I think that's
an excellent, excellent analogy. So in your trends and when
you're talking about training, you mentioned something I wanted to
get into, which is the persistence of the retainer and
retainer billing. Obviously we're both in professional service. It's a
(30:34):
common construct, as you well know, in our industry. There's
been talked for so so long about this buzzword of
value based pricing, and my observation and I'm not the
only one, has been easy to talk about, difficult to do.
I think by other names, it might be consulting, or
it might be project or there might be other words
(30:57):
for it. But it's been a buzzword and a bit
of a cudgel times where it's kind of beating agency
leaders over the head, like, hey, dummies, why haven't you
done moved to value based pressing? Yet, when oftentimes the
corporate side really needs that retainer model or would prefer
a model that's sort of legible and understandable. What's your
take on the persistence of the retainer model, and what
(31:17):
are the things you're seeing now that are interesting relative
to how pricing may shift over time. If you have
a POV on that.
Speaker 4 (31:25):
Yes, my point of view is it's the wrong discussion
to think about it as an either or. I like
to have you know, clients, either early in the process
of onboarding a new client, or sometimes even in the
you know, end of the pitch process, or maybe when
it's time to renew the contract, say okay, what does
(31:48):
your home run look like? We're going to do all
these things and that's going to give you, you know,
great results, great outcomes, you know, to use maybe a
sports analogy, just for a moment. There'll be some great
you know, singles and some great doubles, might even be
an occasional triple. But what does your home run look like?
(32:08):
And you know, if I think there's a no lose
scenario to that discussion, even it may well be Okay,
home runs are rare, but if I can deliver against that,
would you be open to at least having a placeholder
in the contract. So at year end we have a
(32:29):
discussion as to whether or not that success fee is
warranted for the home run. It might even be given
that we now have you know, a lot of data
tools on our hands, setting an objective measure for how
to measure not solid work, but spectacular you know, outcomes.
(32:50):
And you know, I would like to think that either
for new relationships or one where there's a history of trust,
that you know, those conversations can be had more frequently. Look,
there are not there are a number of ways to
also do this. Maybe it's okay. I understand that you know,
(33:13):
corporate won't allow you know, this kind of success fee,
But how about this the next time one of your
brands you know, wants to do a RFP for new work,
can we basically have a most Favored Nation status and
not have to go through the RFP process which costs
us blank thousands of dollars? You know, I think it
(33:36):
just elevates the debate about we want to hit the
home run for you and if you know, to use
the analogy again, if economics drive behavior, we want to
align our incentive with your preferred you know, home run.
Speaker 1 (33:51):
Yeah, and I think you're really talking about it both
and in a way which I think we need to embrace,
which is not all pricing models. It doesn't need to
go way. Something doesn't need to go away in favor
of only one model. One thing we've been talking a
lot about on our leadership team is kind of having
freedom to operate across different models within the same entity,
(34:12):
and that even within the same client, especially with AI,
there may be aspects of the program that really need
one kind of contract structure and another aspect of the
program that needs a different one. And it's not like
this is unheard of in our field. I just think
that there's been a lot of angst about trying to
get away from the hourly bill, which I agree, you know,
(34:33):
billing by hours, especially as now there will be things
that will be more commoditized, there will be things that
the machine should do more of, and we then, whether
it's senior people or more junior people, become the orchestrators
of agents of colleagues that are machines. But I think
we're going to have to be really open and nimble.
(34:54):
And I love your idea about how do you look
at other types of value add that may not be
just a monitor Harry out come too. Yeah, let's talk
about the AI of it all.
Speaker 3 (35:05):
That's what I liked the AI of it all.
Speaker 1 (35:09):
I was very interested in what you're saying about these
gaps between it's almost like a governance and behavior gap.
How does it relate to the client. What are those
governance structures, what are the ethical structures, the legal structures,
what's the risk matrix? As you've talked to various firms.
I know you were just at the Provoked Summit speaking there,
(35:32):
but what have people's reactions been to the gaps you've
identified in around this sort of AI practices.
Speaker 4 (35:40):
I think people have really responded like a bit of
a oh yeah aha, And I think people have it
has resonated with them, and I'm a little humbled by that.
But you know, one of the things that really struck
me also when I looked at what I call closing
the gap and the different between strategy and actually how
(36:04):
it's being executed, is when we asked the question about
are you using with clients? Have you modified your contracts?
Most responded that they had not had the conversation with clients,
but those that did responded in a very high percentage
that the clients were receptive and were open to the
(36:27):
conversation when proactively, you know, brought up by the agency
and that actually told me a lot, which you know,
one of my favorite quotes from Louis Pasteur is chance
favors the prepared mind. And you know, you know, being
passive about something is probably a worse set of state
(36:53):
of mind when things are moving as quickly as they
are in this industry than frankly ever before. But you know,
having to use your word intentional conversations with clients about
let's talk about why I think we can get better
outcomes with you, for you, for your brand, for your
(37:14):
objectives if we use AI in this way, these platforms,
for these tasks, and this is the ROI we expect
from it. And that ROI is not just measured by Okay,
we're going to save you a few nickels here and there.
It can be about we're going to have a much
(37:35):
better crisis plan in place because we're going to be
using this to help really, you know, look at experience
for similar kinds of situations to help use data to
guide your next strategic moves. And that's you know, a conversation,
(37:56):
yes advisory and nature and yes strategic. You know you're
using the AI to maybe you know, empower you if
I may to have the conversation, but it's only the
starting point. And I think clients are looking for their
communications firm to be you know, good stewards of their
(38:17):
trust and frankly, you know, this is their area of
expertise and the client, frankly, I think will respect and value.
There's that word, the kind of advice and counsel that
is not just relegating the function to execution. And I
(38:40):
think that's a big mistake that the business some firms
make more than others. And if we were to look at, frankly,
the firms that are defying gravity, to use the analogy
from the Wicked song.
Speaker 3 (38:57):
Very timely every time.
Speaker 4 (39:00):
Yes, we're all waiting for the release on I guess
Thanksgiving weekend of Wicked for good. You know, I think
it's firms that are really you know, playing at a
higher level. They they're leveraging off you know, their their
(39:21):
value and playing not just the execution you know, aspects,
but also the strategic advisory as the threshold that then
guides the execution.
Speaker 1 (39:36):
I couldn't agree with this conversation more. I have a
few observations. It was interesting in the research to see
I have it here the sixty three percent of respondence
to the trends reports that clients are cautious but open
to integration. I would say that it really depends on
which clients you're talking to, and I would say some
of the corporates are really starting to chat ahead and
it's radically different than a few months ago. And so
(39:58):
one of the things I enjoy about being out and
about in our industry. And it's not just the agency side,
it's not just PR. It's a broader integrated marketing communications.
It's both corporates, agency side, nonprofit academia venues like Page
pre Council. What's really helpful that a venue like Page
is that it's very self selected about who is decided
to be in that room. Not only are they senior
(40:20):
communications professionals and leaders and counselors, they've also said that
their commitment to the industry and professional development is such
that they want to make that time. And I feel like,
and I'm sure Michael you agree. When you're in those
kinds of rooms, you hear how quickly a sect of
the organizations out there, sectors of them and categories of them,
(40:41):
are leaning in and starting to find acceleration and looking
at what does this mean? For our FTEs in house,
our partners out of house, you know. And so to
build on what you're saying, my feeling is that I
say to my people, when it comes to AI and
our clients show them work, we need to go intentionally
(41:02):
and be the ones to bring up this conversation and say,
we want to first of.
Speaker 3 (41:05):
All, show you our AI policies.
Speaker 1 (41:07):
This is how they're in our contracts, this is how
we're thinking about it. These are how all the levels
at which this is how we're doing peer to peer
discussions and council are tech stack because there's so much
focus on generative AI through the large platforms and the
language models, but there's a transformation of our entire tech stack,
a lot of which are technologies that we carry and
(41:28):
use on behalf of many of our clients to lower
their cost basis. But if we don't know how AI
is tracking, but then from there, how do we have
those discussions to say, this is the ethical framework we're using,
this is how it's making us smarter, this is how
we're getting to value. Because, as I've said many times
to my peers, if we don't lead that conversation, eventually
(41:49):
the call comes from procurement and the procurement professionals are
going to be under huge pressure here, and I see
them already trying to interpret what this change means and
how they pull value back to the organization. Sometimes that
can be a blunt instrument. I think there are some
very nuanced conversations going on. But I love that you're
bringing this up, because if we don't come forward ourselves right,
(42:11):
then we are being I think you use the word passive, right,
That's that's not a good place.
Speaker 4 (42:15):
To be, right, No, And I'd even take it one
step further. Not only can't you be passive, you can't
stand still. The rate of the change has been so dramatic,
you know that, you know, I think more now more
than ever, staying still is really falling behind. And that's
(42:38):
definitely not a good place to be. So, you know,
anticipating the conversations, thinking through the ROI that you can
explain to the client, making sure that you're not you're
approaching the AI conversations with the right client contract adenda,
with the right internal policies, that you're not setting yourself
(43:02):
up for a breach of contract because you're using it
in an unauthorized ways or disclosing confidential information of the
client in a in a non in an open platform,
or or worse, infringing on uh intellectual property of a
third party. So there are lots of let alone, you know,
(43:26):
having you know, issues that could lead to you know,
bias and the results or you know, using it in
a way that's gonna lead to a deceptive practice. So
there are So it's a combination of the you know, frankly,
the artificial intelligence and the human intelligence. You know, one
of our colleagues used the expression that, you know, the
(43:51):
public relations professional of tomorrow is going to be a
data engineer. I like to think of the analogy of
the toolkit. You know what, what tool from the toolkit
you're going to pull out to advance the clients objectives.
And that's not an automated function. That's based upon your
(44:12):
skill and experience and your knowledge of the client and
your knowledge of the industry and everything else that you do.
Speaker 1 (44:19):
Yeah, when you talked about not standing still reminded me
of another Broadway reference, which is a song move on
from Sunday in the Park with George. You've got to
move on, you know, You've got to find that next thing.
So as we wrap up today. You know, we talked
early on you talked about those three takeaways. We dug
into many of them. If you had one piece of advice,
not just for agency leaders but other senior communicators that
(44:42):
are working to transform or or work with counselors, you know,
what would be maybe one or two things you really
want folks to think about going forward.
Speaker 4 (44:51):
You know, I'd say, you know, maybe a reverse engineer.
You know, you know, if you had a magic wand
what would you like to achieve for your agency and
its clients?
Speaker 2 (45:03):
And then if you.
Speaker 4 (45:03):
Know that you know that goal, it's easier to achieve it.
And then frankly, try to think about what are the
barriers right now within your organization to getting there. And
you know, it's almost like in the M and A context.
We typically will tell independent firms to flip your hat
around and if you are buying your firm, what would
(45:26):
you want to find and you know, build towards that outcome.
Flip the hat around and what would you want the
outcomes to be, and whether that's on the people side,
you know, build your compensation system that reflects what you
want to achieve for that practice group, for that office,
for that whole firm, and if it's on the training
(45:50):
and development side, we'll think about what's missing in that
equation and why you're not, you know, getting where you
want to be and what you need to do to
get there.
Speaker 1 (46:00):
That's great advice. I love that well, Michael, thank you
so much for joining us today. I'm building brand gravity
and people can easily google the report. Go to Davis
and Gilbert look for the Public Relations thirteenth Annual Trends Report.
We'll put a link in our show notes. And thank you.
It's always good to see
Speaker 4 (46:16):
You, my pleasure, and it's great being with you.
There will be things that the machine should do more of,
(00:02):
and we then, whether it's senior people or more junior people,
become the orchestrators of agents of colleagues that are machines.
But I think we're going to have to be really
open and nimble. And I love your idea about how
do you look at other types of value add that
may not be just a monetary outcome too. Hi, and
(00:33):
welcome to another episode of Building Brand Gravity. I'm Anne
Green and.
Speaker 2 (00:38):
I'm Steve Halsey. It's great to be together again.
Speaker 3 (00:40):
Anne, it always is.
Speaker 1 (00:42):
It always is here both in our New York office today,
just at the opposite ends of the office, which is fine.
Later in the episode. Today, we're going to be digging
into data and insights from the thirteenth annual Public Relations
Industry Trends Report from Davis and Gilbert, well known to
you and I and many of our listeners, Steve, and
it's a good read this year. There's a lot of
(01:03):
really important points to discuss, and Michael Laski is going
to be on deck to take us through the findings.
But to kick things off today, I thought we'd do
a quick round of in the news, what headlines have
been catching your eye in the last week or so, Steve.
Speaker 2 (01:18):
You know one that I saw was really interesting, which
is a new report that came out from McKenzie called
Nailure First. And what's interesting about this is the core
idea of this was really that the CEO role now
starts first with stakehold credibility, not operational cadence. So what
the article was really talking about in the findings were saying, hey,
(01:41):
in those first one hundred days, the most critical thing
for leaders is to really communicate well, because that's how
they're going to be evaluated, how they show up, how
they listen, and how they build trusts. So long before
their strategy has actually taken place, and long before where
you're seeing the operational changes, they're really being judged by that.
(02:06):
And what I really find fascinating about that is how
much pressure that then places on the corporate comms and
corporate affairs ecosystem to really make sure the CEO gets
out of the gate really strong, really fast, and you know,
you've got to be aligned, and you've really got to
help make sure the CEO really isn't flying without instruments
(02:28):
that they're really putting that vision out there quick and fast.
Speaker 1 (02:32):
You know that reminds me. I resonate with that being
a CEO and you know we're in a smaller pond here,
but still leading you and I and our partners in
this space. But it reminds me of reading some articles
in Harvard Business Review about the skill sets that are
needed for CEOs today and that emotional intelligence and that
communication across stakeholders is so critical, and it makes me
(02:56):
think of for years now, I've felt that MBA is
in particular. You know, these training grounds for corporate leadership,
we're very under indexed from my perspective, on the communication
side and that skill set that many of us learn
either through study or on the job when we're practitioners
like you and I are. It sounds to me like
(03:18):
more than ever, you know, CEOs need to be coming
in or those that may be on the path for
organizational leadership need to really lean into that well.
Speaker 2 (03:26):
And you know we're communicating everywhere and always in every way,
shape or form. That I think you're right is really
having that communications framework to really bring that visional life.
And let me just read here. I wanted to pull
this cook because I found it really interesting. It says
new and incoming CEOs are often unprepared for the intensity
(03:48):
of internal and external stakeholder engagement. There's no honeymoon period.
People in other roles may have six months or even
a year to find their footing. As CEO, you're expected
to be ready from day one and communicate from day one.
That's serious pressure.
Speaker 3 (04:07):
Yeah, I couldn't agree more.
Speaker 1 (04:08):
And I think we see that with a lot of
our clients and just what we're observing in the landscape.
Speaker 2 (04:12):
So I thought that's interesting. That really parlays a lot
of the things I'm hearing from the chief communications officers
I'm talking to, and kind of as we've talked about
in previous episodes of Brand Gravity, it's no longer the
old question do you have a seat at the table?
It's like what do you do now? It's how do
you get them out the door as quickly as possible.
But that's something that kind of stuck with me. What
(04:34):
have you been reading? What's sticking out for you?
Speaker 1 (04:37):
So in preparing for this, I definitely had a story
that caught my eye. You and I have been talking
a lot about structure and the role of integrated communications
within corporations.
Speaker 3 (04:48):
Within those functions.
Speaker 1 (04:49):
So a big story that caught my eye this week
is the appointment of an executive vice president, a new EVP,
to lead a newly unified corporate affairs structure at Verizon.
So this was in PR week and covered in many
other places. Now this group is going to combine corporate communications,
public affairs, government relations, and what they term at Verizon
(05:10):
responsible business, which is very interesting too to see how
that language evolves. And the new EVP, Franz Pash, I
believe that's how you pronounce it. He's a seasoned veteran
that's worked at a lot of agencies and a range
of corporations. But the thing that of course really caught
my eye as Dan Shalman is the newly appointed CEO
at Horizon. He was at PayPal before, and he had
(05:32):
some very powerful quotes. This was in the actual formal
announcement in the press release that was quoted. I have
them here, So some of his quotes on this, we
have an opportunity to redefine not just who we are
as a company, but to fundamentally change and lead our
entire industry. And then he also said, in a world
where trust and transparency matter more than ever how we
(05:55):
show up, communicate, and liver define who we are as
a company. By creating a world class corporate affairs function
will take bold and responsible actions to drive growth and
position Verizon as a leader with all our stakeholders. Now
I was telling you this, Steve Offline. I had the
honor of working with Dan Shulman years ago in his
(06:17):
first CEO role at Virgin Mobile USA, and he I found,
was always very savvy about brand, about reputation, about the
breadth of stakeholders, and the critical importance of building trust.
He brought a lot of values with him from that
entity to a stint AMEX and then of course famously
at PayPal, where some people might call him an activist CEO.
(06:42):
I don't think he would typify it like that. Was
much more about being very clear on the values of
the organization tied to their business and their stakeholders and
their customers and living those values. But for me, just
this idea about being so clear and deliberate about this
move at a time where other entities, as we've discussed
(07:02):
on this podcast, are kind of fragmenting that coms structure.
I don't know, I just found that really interesting. What's
your take on this.
Speaker 2 (07:11):
Yeah, it is very interesting, and I like some of
the words that EE use, like redefined, be bold, you
know that to me really kind of ties those themes
together that we're talking about. You know, the McKenzie piece
is really arguing about leading with reputation for results. And
what I think is interesting that Verizon is doing is
(07:32):
they're clearly architecting a system here around Dan that makes
this whole thing possible, right by unifying corporate comms, public affairs,
government relations. That's more than a structural change, it's really,
as you said, a deliberate signal of trust, of transparency,
of stakeholder leadership. So this one's going to be interesting
(07:53):
to see how it works out. But yeah, absolutely interesting
story in the news.
Speaker 1 (07:59):
And just you know, the day after I saw this story,
I noted Fortune in their CEO Daily, or it might
have been Wall Street Journal in their CEO Brief.
Speaker 3 (08:10):
There's so many good newsletters, but one of.
Speaker 1 (08:11):
Them had featured more remarks from Dan Shulman from one
of their board level gatherings, and so a lot about
needing the kind of mindset that's needed, the kind of boldness,
and also even large entities needing to think about themselves
as a startup and being more nimble and agile, So
definitely a space to watch. And I guess you know,
we've been talking a lot so far on this episode
(08:33):
about the corporate side of the fence. Now I think
it's time to turn our attention back to the agency landscape,
and that's our chance to ask Michael Laski, who's been
a long time partner Davis and Gilbert, well known in
the industry, you know, you and I Steve have known
him for decades, to everything we want to know about
the New Trends Report. Having done it for thirteen years
is a long scope of time, and there is so
(08:55):
much change right now, and I think the conversation I
had with Michael yesterday will bring that level of change
into focus. So for now, please stay tuned for my
conversation with Michael. I am so excited to welcome an
old friend and colleague for many years now, Michael Laski.
Speaker 3 (09:13):
Welcome, Michael, Thank you, anna real pleasure.
Speaker 1 (09:16):
And Michael is the chair of the public relations practice
at Davis and Gilbert as well as co chair of
Litigation and Dispute Resolution practice. But Michael, you are well
well known in our industry. And I've known you for
many years, as I've said, and you've been a great
mentor and a support and counselor to me.
Speaker 3 (09:32):
Over those years.
Speaker 1 (09:33):
But I don't know that a lot of people know
your own story in terms of how did you end
up in this specific practice area, because you're so deep
in it. Tell us a little bit about that. I
think it's a great way to start.
Speaker 4 (09:45):
Sure, well, thank you. Well, you know, I'd like to
say it was a combination of strategy and serendipity. The
strategy was when I joined Davis and Gilbert, the firm
had a really proud history of being pre eminent in
the advertising law area. And back then in nineteen eighty three,
(10:07):
advertising was still king and everything else was below the
line business. But the firm had been around since the
early part of the twentieth century, and we literally put
the first radio spots, yes I said, radio on the
air for P and G. And we've been synonymous with
the monetization of what we now referred to as commercial
(10:29):
speech since the early days of radio. And to be frank,
our practice followed the technology of the day radio, television,
point to purchase, then Internet, social digital and the like.
So when I joined the firm, I actually came at
(10:50):
a time when I thought we were really well positioned
to essentially work with firms whose key assets were people
and ideas as creative businesses. You know, the term marketing
communications had not yet been invented yet, and I looked
at what we were good at and thought of what
were logical line extensions and public relations you know, cried
(11:12):
out as something that I thought we really could add
a lot of value too. I think that was in part,
so that was the strategy, and I think the strategy
was in part and formed by my own background. I
did a lot of writing as a student, and I
ran a twelve hundred page publication when I was in
(11:33):
law school, and I actually was a I wrote for
my student newspaper. I was a Broadway theater critic for
a bit when I was in college. So the craft
of storytelling and authentic communications always resonated with me, and
I thought, reaching you know, audiences with the information that
(11:57):
would influence outcomes is also something that I think really
resonated a lot with me. So, you know, strategy and
serendipity came together, and I, you know, consistency and persistence
also probably played an important role.
Speaker 1 (12:12):
I think that is how my life often goes Well,
it's interesting to reflect back on the trajectory of many
of the agencies in this space. Is where we came
from and what we are today. Like you said, you know,
I would describe our firm today at GNS has integrated
marketing communications. I still really love and feel passionate about
(12:33):
the term of public relations too, but we also, like
many firms, do much more than that. And you know,
I can think about the trends I've seen over time.
You've got some years on me to think about that too.
When you think about the evolution of the whole space,
especially the agency side, What are some of the things
that you've noticed some of those bigger trends.
Speaker 4 (12:51):
Well, I mean, certainly it's changed dramatically, and you know,
largely influenced by you know, both scope of services, the
complexity of the services, and the technology that's enabled the
very substantial expansion of the swim lanes. So, you know,
(13:16):
I was actually thinking this morning, and I've thought about
this a lot as relates to the skyrocketing use of
AI in the industry and frankly in all industries. But
it really reminds me to a time in the in
nineteen ninety four ish when we started with the year
(13:38):
with virtually no firms having websites to By the end
of the year, you know, www became synonymous with, you know,
an extraordinary explosion. But frankly, it was a time when
people were still trying to grapple with was this world regulated?
And you know, I kid it at the time that
(13:59):
you know, WWW stood for wild wild West. People thought
it was completely unpoliced, when in fact it was policed
the very same way it was old wine and new bottle.
So the technology created new issues, but a lot of
the same kinds of framework applied. And I think, you know,
I certainly the kind of trends that I'm seeing are
(14:23):
also greatly influenced by the expansion of services and the technology.
Speaker 1 (14:28):
It's funny to hear you speak about those early days.
I very much remember when my firm, Cooper Kats, back
in the early nineties sent out a postcard that said
we are on the Internet super Highway.
Speaker 3 (14:41):
And that just dates us all but I embrace it.
Speaker 1 (14:44):
You know, you've got to get in the way back
machine and enjoy those old memories. One of the reasons
I wanted to connect with you. Michael is talking about
today and the trends that are really shaping our industry,
and you folks have had for many years now your
annual Public Relations Trends Report very helpful.
Speaker 3 (15:02):
I always look forward to it.
Speaker 1 (15:04):
I have participated, you know, in events when we're speaking
about the trends. I've you know, done mainstage work with
you guys on the AI side and some other pieces
M and A so just came out and the overall
theme and I've got it here that report really emphasized
a gap between strategy and reality, those disconnects between agencies,
(15:25):
aspirations and the actual execution. So I want to go
piece by piece through some of the findings. And I
know you've been on a bit of a roadshow for this,
so you're you're ready to go. But what what are
some of the top lines that you would identify before
we drill down abouit?
Speaker 4 (15:39):
Well, I think I focused on three and certainly you
know the whole purpose of the report is to look
at the white space where can we influence outcomes? What
is separating the the advancement of the kind of firm
(16:01):
that every firm hopes to be you know, growing profitable,
well positioned, And as we looked at the data, there
were three areas. One is, I really saw some misalignment
between the virtual unanimity of firms using AI for a
(16:27):
virtual explosion in types of services and for types of
purposes from content creation to media monitoring, to data analytics,
to proof of concept to crisis communications. Let's just went
on and on. But when you look to see, though
it was popular, many firms did not have comprehensive policies
(16:51):
in place and that exposes them to liability for how
employees were to be using it, what kind of client
involvement and consent they had, and virtually no firms had
you know, appropriate AI policies for the vendors they used.
So frankly, getting an alignment on the usage and policy
(17:13):
to reduce risk was one area that we certainly, I
certainly felt would improve agency performance and check a lot
of important boxes for alignment. Second area that came out
very clearly from this year's data was while there was
a very sharp increase in training at firms around AI platforms,
(17:40):
ways to you know, you know, best prompts, best outcomes,
every other area of training was dramatically down, and you know,
the shoemaker's kids were going barefoot. So at a time
when many agencies were strug only mightily to grow top line,
(18:03):
maintain or grow profits, business development and client growth strategies,
and operating holistically to cross collaborate. Notice I didn't say
cross sell, but cross collaborate among types of service offerings
and between and among areas of specialization. That was dramatically
(18:27):
down over prior years.
Speaker 2 (18:29):
You know.
Speaker 4 (18:30):
Similarly, we saw a lot of agencies still having the
bulk of their revenue driven by retainer work, yet there
was very little training being done around financial management client contracts,
how to appropriately stay within the scope of work, making
(18:52):
sure the account people know, you know, how to proactively
communicate with clients on those issues. So that was another
area of probably, if not leaving money on the table,
losing money in part because that training piece was misaligned
with you know, the growth opportunities.
Speaker 1 (19:13):
You know.
Speaker 4 (19:13):
The third area that came out in this year's data
in terms of what I'll call closing the gap was,
you know, I'm a strong believer in economics striving behavior,
and while there is again the agencies were struggling to
grow revenue and profitability many of them still were operating
(19:36):
in a annual discretionary bonus arrangement and did not properly
and appropriately incentivize key employees over a multi year period,
typically referred to as long term incentive plans of one
kind or another. And you have to sort of reverse
(19:59):
engineer what outcomes you want for your mid level and
senior people, and if you needed a roadmap about what
works well the data, you know, the endpoint is not
the data, it's the starting point. But the data shows
that the top performing firms, firms that grew revenue or
(20:23):
profits or both by more than ten percent this year
had on average a very higher percentage of these long
term incentive programs for mid level and key employees, both
as a retention tool and as an incentive arrangement then
agencies at large. So those are the three areas that
(20:46):
really struck me. As you know, what I'd recommend is
sort of advisory services to help enhance performance in the
year ahead.
Speaker 1 (20:58):
That's really helpful. Overview a lot to dig in there.
I want to take this second one first, on training.
I think that's very critical and as I was listening
to you, you know, I always have a double consciousness
in these things, which is I'm thinking about the industry
at large, but I'm also trying to also interrogate myself
(21:19):
and say, what are we doing? Where are we at?
That's the helpful thing. I always joke that there's a
pendulum that swings between we're doing great or we have
to fix everything, you know, And I think that's a
healthy dynamic tension. But your point about the focus on
training in AI, which I think is obviously critical. This
is a massive upskilling moment, but missing some of these
other pieces. A lot of the trainings you mentioned, Michael
(21:41):
are known to us as leaders agency leaders, we should
know that these are critical the constant refreshing of financial
management skills, how an agency works, how it makes money.
But even recently, our chief growth officer, one of my partners,
Steve Halsey, did a series of events around so of
our office had called Grocella and it was a fun,
(22:03):
tongue in cheek way of saying, for both junior people
but also more senior people, how does our business work?
How is our new business processing work? You know, what
are the pricing models, et cetera. Why do you think
that these sort of perennial best practices are falling by
the wayside.
Speaker 3 (22:18):
You know, I think it's harder to.
Speaker 4 (22:22):
Stay current, and you know, maybe there's a strong focus
on the new hula hoop. If I can date myself
with that analogy.
Speaker 3 (22:33):
Go for it, the pet rock of today.
Speaker 4 (22:36):
There you go, and and uh, you know, I think
a lot of firms are really working really hard to
stay current and to move quickly. And you know, there's
an amish expression, the harrier we go, the behinder we get,
and sometimes, you know, things that are really back to
(22:56):
the basics get left behind. And I think that some
of what came out in this year's data that it
was easy to focus on. I mean, there was so
much energy. I mean, thirty seven percent of the firm
said they're building, you know, an AI model, and sixty
two percent said they're investing in an AI power program.
(23:19):
I mean that's a herculean undertaking. So, you know, not
looking to be critical, but just to provide, you know, comment.
And that's sometimes the perspective that an outside advisor can
whether it's a public relations professional or a lawyer who
does a lot of work in the industry, can provide
is you know, you know, objectively, I get it but
(23:43):
there's also this other thing here which you can't leave behind.
Speaker 2 (23:47):
It's it's it's basic.
Speaker 1 (23:48):
Yeah, and you're making you think of too. I was
looking this morning. I was scanning Fortune CEO Daily and
they were quoting that or was Wall Street Journal's CEO Brief,
one of those types of newsletters, and they're quoting a
Deloitte leader. I think it was the Deloitte CEO talking
about recent research they did with CEOs in general, and
he was just talking about two of the most important
(24:10):
things of this pivot is really human mindset. It's a
growth mindset, and it's kind of leaning into the ability
to change and emotional intelligence. So that growth mindset and
emotional intelligence, interestingly, both randomly and I guess happily, both
things we've been focused on here this year very intentionally.
(24:31):
But this is very much a human challenge. So you've
got the core skill sets of the business, you've got
the training on the business of the business, and then
you have that training on being a manager and a
business leader and how you bring your best self to it.
So I find that really interesting. Switching over to some
of the other trends, revenue and profitability, it was really
interesting to me. And there's a million different details in here,
(24:53):
but there was this donut effect that you've guys found
that smaller firms and larger firms, and there was numbers
associated with them, tend to be outperforming whatever we see
as mid size and I think larger firms were typified
as over one hundred.
Speaker 3 (25:08):
Was that right in terms of staff? But how would
you and I feel like you've seen that.
Speaker 1 (25:14):
Effect before in earlier studies in different years, But tell
us a little bit more about that doughnut effect and
what you noticed about it.
Speaker 4 (25:22):
Yeah, I think there are a few things that account
for that, I mean certainly, and the devil's in the details. Look,
there are a lot of very large firms that have
had massive layoffs this year and are continuing to have them.
So it's not like, you know, larger firms have all
the answers and are immune from all the kinds of trends,
(25:45):
the uncertainty, the you know, you know, clients asking more
for less than anybody else. But they do have, you know,
a larger revenue base to put against their expenses, so
I think that has helped them in some way. You know, again,
(26:10):
as a monolith, you know, do a little bit better
than the mid size at the you know thirty and under,
which we called you know, smaller, not small, small but mighty.
You know, remember the tueboat can also pull the ocean liner,
so it's not it's not big as not always best,
but you know. I think the reason for this stronger
(26:33):
profitability at the smaller firms is they tend to be
laser focused. They tend to be very much focused on
an industry, and you know, this is a hard time
to be all things to all people, so I think
the specialization has become more important than ever. And whether
(26:55):
you're a firm over one hundred or a firm that
is smaller but nimble, I think knowing and understanding your
competitive advantage where you're going to make your investments, being
close to you know, particular or or more than one industry,
but having some laser focus in those industries and envelop
(27:19):
all the service offerings that are relevant for that industry,
you know, can really be very helpful to drive both
revenue and profits and actually also grow you know, your
clients internally so that there's a stronger connection with them.
You're not only you know, doing their media relations, you're
doing their content creation, you're doing their events, you're doing
(27:41):
their thought leadership. You know, you're doing their data analytics.
And you know, sometimes firms have had to acquire different
talent or even do smaller acquisitions to be able to
bring in a capacity to get more heavily involved with
an industry or a client so that they're not they're
(28:01):
using their relationship to build the strongest connection to that client.
Speaker 1 (28:05):
Yeah, it's very It was helpful and heartening to read
some of this data and also here right now what
you're saying. We've been having a lot of conversations about where,
especially in the world of AI, right where is the
human and where's the machine? And there needs to be
a symbiotic relationship there. The PR Council recently put out
a framework that I really liked, and it was more
(28:27):
about the writing side, but it was looking at how
do you understand a framework? So you're very intentional about
this is all human, this is all machine, but this
is where on the spectrum they merge mostly human, mostly machine,
et cetera, et cetera, and being intentional about that. But
the reason I bring that up is that where is
the human essential as counselor so sector expertise, deep knowledge
(28:50):
of an area or an industry, really going deeper into
areas or service sets that are fueled by technology underpinned
by AI a tool, but then overlaying with human analysis.
I mean, I think this really puts a sharp point
when you look at it from like the revenue and
profitability side, puts a sharper point to you know, as
(29:11):
you can dig into the details on how we need
to be thinking about what why someone needs a counselor
at this point, why do they need someone outside their walls?
Speaker 4 (29:19):
Well, you know, I'm the the analogy to law, you know,
rings true to me because there was a time in
the practice of law where a lot of attorney's business
cards said attorneys and counselors at law, and that, you know,
really was a reference to the English legal system where
(29:43):
there were two distinct roles that lawyers provided. One was
transactional and that was you know, the solicitor, but there
also was the barrister, the counselor, the the the you know,
advice and counsel role. And I think actually that has
become more important than ever in a lot of professional services,
(30:06):
certainly in strategic communications and public relations. And i'd argue,
perhaps even in law.
Speaker 1 (30:12):
That is an excellent metaphor. Are we in what we're
seeking to do? When are we the solicitor and when
are we the counselor or the barrister. I think that's
an excellent, excellent analogy. So in your trends and when
you're talking about training, you mentioned something I wanted to
get into, which is the persistence of the retainer and
retainer billing. Obviously we're both in professional service. It's a
(30:34):
common construct, as you well know, in our industry. There's
been talked for so so long about this buzzword of
value based pricing, and my observation and I'm not the
only one, has been easy to talk about, difficult to do.
I think by other names, it might be consulting, or
it might be project or there might be other words
(30:57):
for it. But it's been a buzzword and a bit
of a cudgel times where it's kind of beating agency
leaders over the head, like, hey, dummies, why haven't you
done moved to value based pressing? Yet, when oftentimes the
corporate side really needs that retainer model or would prefer
a model that's sort of legible and understandable. What's your
take on the persistence of the retainer model, and what
(31:17):
are the things you're seeing now that are interesting relative
to how pricing may shift over time. If you have
a POV on that.
Speaker 4 (31:25):
Yes, my point of view is it's the wrong discussion
to think about it as an either or. I like
to have you know, clients, either early in the process
of onboarding a new client, or sometimes even in the
you know, end of the pitch process, or maybe when
it's time to renew the contract, say okay, what does
(31:48):
your home run look like? We're going to do all
these things and that's going to give you, you know,
great results, great outcomes, you know, to use maybe a
sports analogy, just for a moment. There'll be some great
you know, singles and some great doubles, might even be
an occasional triple. But what does your home run look like?
(32:08):
And you know, if I think there's a no lose
scenario to that discussion, even it may well be Okay,
home runs are rare, but if I can deliver against that,
would you be open to at least having a placeholder
in the contract. So at year end we have a
(32:29):
discussion as to whether or not that success fee is
warranted for the home run. It might even be given
that we now have you know, a lot of data
tools on our hands, setting an objective measure for how
to measure not solid work, but spectacular you know, outcomes.
(32:50):
And you know, I would like to think that either
for new relationships or one where there's a history of trust,
that you know, those conversations can be had more frequently. Look,
there are not there are a number of ways to
also do this. Maybe it's okay. I understand that you know,
(33:13):
corporate won't allow you know, this kind of success fee,
But how about this the next time one of your
brands you know, wants to do a RFP for new work,
can we basically have a most Favored Nation status and
not have to go through the RFP process which costs
us blank thousands of dollars? You know, I think it
(33:36):
just elevates the debate about we want to hit the
home run for you and if you know, to use
the analogy again, if economics drive behavior, we want to
align our incentive with your preferred you know, home run.
Speaker 1 (33:51):
Yeah, and I think you're really talking about it both
and in a way which I think we need to embrace,
which is not all pricing models. It doesn't need to
go way. Something doesn't need to go away in favor
of only one model. One thing we've been talking a
lot about on our leadership team is kind of having
freedom to operate across different models within the same entity,
(34:12):
and that even within the same client, especially with AI,
there may be aspects of the program that really need
one kind of contract structure and another aspect of the
program that needs a different one. And it's not like
this is unheard of in our field. I just think
that there's been a lot of angst about trying to
get away from the hourly bill, which I agree, you know,
(34:33):
billing by hours, especially as now there will be things
that will be more commoditized, there will be things that
the machine should do more of, and we then, whether
it's senior people or more junior people, become the orchestrators
of agents of colleagues that are machines. But I think
we're going to have to be really open and nimble.
(34:54):
And I love your idea about how do you look
at other types of value add that may not be
just a monitor Harry out come too. Yeah, let's talk
about the AI of it all.
Speaker 3 (35:05):
That's what I liked the AI of it all.
Speaker 1 (35:09):
I was very interested in what you're saying about these
gaps between it's almost like a governance and behavior gap.
How does it relate to the client. What are those
governance structures, what are the ethical structures, the legal structures,
what's the risk matrix? As you've talked to various firms.
I know you were just at the Provoked Summit speaking there,
(35:32):
but what have people's reactions been to the gaps you've
identified in around this sort of AI practices.
Speaker 4 (35:40):
I think people have really responded like a bit of
a oh yeah aha, And I think people have it
has resonated with them, and I'm a little humbled by that.
But you know, one of the things that really struck
me also when I looked at what I call closing
the gap and the different between strategy and actually how
(36:04):
it's being executed, is when we asked the question about
are you using with clients? Have you modified your contracts?
Most responded that they had not had the conversation with clients,
but those that did responded in a very high percentage
that the clients were receptive and were open to the
(36:27):
conversation when proactively, you know, brought up by the agency
and that actually told me a lot, which you know,
one of my favorite quotes from Louis Pasteur is chance
favors the prepared mind. And you know, you know, being
passive about something is probably a worse set of state
(36:53):
of mind when things are moving as quickly as they
are in this industry than frankly ever before. But you know,
having to use your word intentional conversations with clients about
let's talk about why I think we can get better
outcomes with you, for you, for your brand, for your
(37:14):
objectives if we use AI in this way, these platforms,
for these tasks, and this is the ROI we expect
from it. And that ROI is not just measured by Okay,
we're going to save you a few nickels here and there.
It can be about we're going to have a much
(37:35):
better crisis plan in place because we're going to be
using this to help really, you know, look at experience
for similar kinds of situations to help use data to
guide your next strategic moves. And that's you know, a conversation,
(37:56):
yes advisory and nature and yes strategic. You know you're
using the AI to maybe you know, empower you if
I may to have the conversation, but it's only the
starting point. And I think clients are looking for their
communications firm to be you know, good stewards of their
(38:17):
trust and frankly, you know, this is their area of
expertise and the client, frankly, I think will respect and value.
There's that word, the kind of advice and counsel that
is not just relegating the function to execution. And I
(38:40):
think that's a big mistake that the business some firms
make more than others. And if we were to look at, frankly,
the firms that are defying gravity, to use the analogy
from the Wicked song.
Speaker 3 (38:57):
Very timely every time.
Speaker 4 (39:00):
Yes, we're all waiting for the release on I guess
Thanksgiving weekend of Wicked for good. You know, I think
it's firms that are really you know, playing at a
higher level. They they're leveraging off you know, their their
(39:21):
value and playing not just the execution you know, aspects,
but also the strategic advisory as the threshold that then
guides the execution.
Speaker 1 (39:36):
I couldn't agree with this conversation more. I have a
few observations. It was interesting in the research to see
I have it here the sixty three percent of respondence
to the trends reports that clients are cautious but open
to integration. I would say that it really depends on
which clients you're talking to, and I would say some
of the corporates are really starting to chat ahead and
it's radically different than a few months ago. And so
(39:58):
one of the things I enjoy about being out and
about in our industry. And it's not just the agency side,
it's not just PR. It's a broader integrated marketing communications.
It's both corporates, agency side, nonprofit academia venues like Page
pre Council. What's really helpful that a venue like Page
is that it's very self selected about who is decided
to be in that room. Not only are they senior
(40:20):
communications professionals and leaders and counselors, they've also said that
their commitment to the industry and professional development is such
that they want to make that time. And I feel like,
and I'm sure Michael you agree. When you're in those
kinds of rooms, you hear how quickly a sect of
the organizations out there, sectors of them and categories of them,
(40:41):
are leaning in and starting to find acceleration and looking
at what does this mean? For our FTEs in house,
our partners out of house, you know. And so to
build on what you're saying, my feeling is that I
say to my people, when it comes to AI and
our clients show them work, we need to go intentionally
(41:02):
and be the ones to bring up this conversation and say,
we want to first of.
Speaker 3 (41:05):
All, show you our AI policies.
Speaker 1 (41:07):
This is how they're in our contracts, this is how
we're thinking about it. These are how all the levels
at which this is how we're doing peer to peer
discussions and council are tech stack because there's so much
focus on generative AI through the large platforms and the
language models, but there's a transformation of our entire tech stack,
a lot of which are technologies that we carry and
(41:28):
use on behalf of many of our clients to lower
their cost basis. But if we don't know how AI
is tracking, but then from there, how do we have
those discussions to say, this is the ethical framework we're using,
this is how it's making us smarter, this is how
we're getting to value. Because, as I've said many times
to my peers, if we don't lead that conversation, eventually
(41:49):
the call comes from procurement and the procurement professionals are
going to be under huge pressure here, and I see
them already trying to interpret what this change means and
how they pull value back to the organization. Sometimes that
can be a blunt instrument. I think there are some
very nuanced conversations going on. But I love that you're
bringing this up, because if we don't come forward ourselves right,
(42:11):
then we are being I think you use the word passive, right,
That's that's not a good place.
Speaker 4 (42:15):
To be, right, No, And I'd even take it one
step further. Not only can't you be passive, you can't
stand still. The rate of the change has been so dramatic,
you know that, you know, I think more now more
than ever, staying still is really falling behind. And that's
(42:38):
definitely not a good place to be. So, you know,
anticipating the conversations, thinking through the ROI that you can
explain to the client, making sure that you're not you're
approaching the AI conversations with the right client contract adenda,
with the right internal policies, that you're not setting yourself
(43:02):
up for a breach of contract because you're using it
in an unauthorized ways or disclosing confidential information of the
client in a in a non in an open platform,
or or worse, infringing on uh intellectual property of a
third party. So there are lots of let alone, you know,
(43:26):
having you know, issues that could lead to you know,
bias and the results or you know, using it in
a way that's gonna lead to a deceptive practice. So
there are So it's a combination of the you know, frankly,
the artificial intelligence and the human intelligence. You know, one
of our colleagues used the expression that, you know, the
(43:51):
public relations professional of tomorrow is going to be a
data engineer. I like to think of the analogy of
the toolkit. You know what, what tool from the toolkit
you're going to pull out to advance the clients objectives.
And that's not an automated function. That's based upon your
(44:12):
skill and experience and your knowledge of the client and
your knowledge of the industry and everything else that you do.
Speaker 1 (44:19):
Yeah, when you talked about not standing still reminded me
of another Broadway reference, which is a song move on
from Sunday in the Park with George. You've got to
move on, you know, You've got to find that next thing.
So as we wrap up today. You know, we talked
early on you talked about those three takeaways. We dug
into many of them. If you had one piece of advice,
not just for agency leaders but other senior communicators that
(44:42):
are working to transform or or work with counselors, you know,
what would be maybe one or two things you really
want folks to think about going forward.
Speaker 4 (44:51):
You know, I'd say, you know, maybe a reverse engineer.
You know, you know, if you had a magic wand
what would you like to achieve for your agency and
its clients?
Speaker 2 (45:03):
And then if you.
Speaker 4 (45:03):
Know that you know that goal, it's easier to achieve it.
And then frankly, try to think about what are the
barriers right now within your organization to getting there. And
you know, it's almost like in the M and A context.
We typically will tell independent firms to flip your hat
around and if you are buying your firm, what would
(45:26):
you want to find and you know, build towards that outcome.
Flip the hat around and what would you want the
outcomes to be, and whether that's on the people side,
you know, build your compensation system that reflects what you
want to achieve for that practice group, for that office,
for that whole firm, and if it's on the training
(45:50):
and development side, we'll think about what's missing in that
equation and why you're not, you know, getting where you
want to be and what you need to do to
get there.
Speaker 1 (46:00):
That's great advice. I love that well, Michael, thank you
so much for joining us today. I'm building brand gravity
and people can easily google the report. Go to Davis
and Gilbert look for the Public Relations thirteenth Annual Trends Report.
We'll put a link in our show notes. And thank you.
It's always good to see
Speaker 4 (46:16):
You, my pleasure, and it's great being with you.
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