Tag Archives: press release distribution

If Freakonomics covered the pitching issue

The provision of pitches by the PR Industry to the receivers of news would appear to suffer from a significant level of inefficiency in the allocation of resources. This is due to PR suppliers charging too high a price for a given level of demand. Over supply to the most in demand journalists leads to frustration for them, and a lack of productivity and efficiency on the part of the PRs, causing reduced profitability.

To improve this situation the industry needs to invest, either internally or via external suppliers, in ways of reducing the price and/or correctly segmenting the news market such that each pitch can achieve the maximum return for the time invested.

The Price of a pitch

Price in this equation is the Price a receiver of PR pitches pays per story they subsequently produce. Before I expand on this a bit of background. Andrew Smith posted last Friday on the topic of pitching and the frustration journalists experience with activities such as phone calls asking “did you receive my email”, the latest being Charles Arthur at the Guardian.

As well as being a chartered accountant I am also an economics graduate (sad I know) so I thought I would try to provide a Freakonomics like perspective on this issue – hence the equation. (By the way if anyone is as sad as me and wants some more detailed graphs etc relating to this analysis then please just let me know :-) )

Getting your story covered is an issue of supply and demand

Supply – the stories pitched by PRs.

Demand – the journalists, bloggers, editors, publishers and broadcasters need for interesting stories for their readers/audience to help fill column inches, web pages, airtime.

The receivers of news choose to write, talk about or publish- the story and therefore it is they who are making the “purchase”.

The Law of Supply and Demand

In a market supply and demand are brought into equilibrium by the price mechanism.

Suppliers want to supply more product as the price rises. Consumers demand more product as the price falls.

At the equilibrium price (PE), the equilibrium quantity (QE) is produced and consumed ensuring an efficient allocation of resources.

The “Price” of a story is a function of the time invested and interest level

From a receiver of news perspective i.e. editor, journalist etc I would suggest that the Price that the receiver of news is prepared to pay to “purchase” a story is the time I have to spend per story that I talk about or publish i.e. the equation at the start:

 

Investment of time includes the time it takes to review emails I receive, telephone calls made to me – chasing, pitch or otherwise – and meetings, interviews etc.

News market segmentation

The news market though is not a homogenous one. Not all receivers of pitches have the same level of demand.

(It is also worth noting that demand for PR pitches probably shifts on an almost minute by minute basis depending on the availability of other material for articles, blog posts etc but I think I should leave the concept of elasticity of demand and substitutes for another day!)

In demand journalist (Charles Arthur) scenario

The most in demand journalists are highly likely to be generating articles on their own without needing to rely on PR pitches as much for their material. Consequently their demand for pitches is low and consequently the price they are prepared to pay is low – see graph above.

The PR community on the other hand wants the most in demand journalists to talk about their pitches the most and so these journalists probably get sent the most emails, receive the most calls and yet will use the least stories because their demand is low. The effect being that the PR suppliers are expecting this market segment of consumers to consumer a high quantity of product at a high price.

The result – excess supply of pitches in this market segment.

Market implications

In reality there are multiple demand curves as there are many different types of receivers of news.

The best performing suppliers will either be the ones that are able to lower their prices across the board for all receivers and/or ones who segment the market such that they charge the right price and supply the right quantity in each.

For example a publisher of a niche market website publication who has limited in house resources to produce content may see pitches as a good source of material and therefore be prepared to pay a higher price.

Implications for the PR Industry

So how should PRs (and RealWire) seek to improve the situation for Charles and all the other receivers of releases?

Based on my formula above the Price can be reduced by

– Decreasing the investment required of the receiver
– Increasing the proportion of interesting stories they receive

Decrease investment:

To achieve this you need to do things like:

– Make sure they are as relevant as you can make them
– Ensure that the title tells the story effectively, reducing time to establish interest
– That they are in a format that makes receiving easy e.g. no attachments.
– Give them options for how to receive the pitch e.g. RSS

If you have taken the time to do these things well it is more likely that the recipient will invest the time at least reading the subject header of your email. It is then also a question of tracking usage to see if the recipients of your pitches cover any of your stories and trusting that if you have done these things well you don’t need to call everytime.

Effect? Reduced investment on the part of the recipient through reduced emails, less time to establish interest in the story and reduced phone calls.

Increase proportion of interesting stories:

This is clearly a trickier area as a lot is about message, creativity and having compelling stories to tell. I won’t get into what makes for a newsworthy story here as others could cover that far better than I.

However there are other ways of increasing the interest in your story such as using multimedia content – images, audio, video – including links to relevant websites for further information, and including background documents such as technical specifications.

Conclusion

The provision of pitches by the PR Industry to the receivers of news would appear to suffer from a significant level of inefficiency in the allocation of resources. This is due to PR suppliers charging too high a price for a given level of demand. Over supply to the most in demand journalists leads to frustration for them, and a lack of productivity and efficiency on the part of the PRs, causing reduced profitability.

To improve this situation the industry needs to invest, either internally or via external suppliers, in ways of reducing the price and/or correctly segmenting the news market such that each pitch can achieve the maximum return for the time invested.

54% of press releases never get written about!

Not the kind of headline you might expect from the Chief Executive of a press release distribution service! But this is one of the implicit findings of PRNewswire’s research published on Tuesday and commented on by Todd Defren, comparing their news release distribution service with three of their competitors – Businesswire, Marketwire and Globenewswire (previously Prime Newswire).
It was tempting when this story first broke to respond with a post that shouted about how;

1. We achieve much better results than the ones stated in this survey – of course I would say that :) but I can and will prove it
2. The methodology and interpretation of the survey itself are questionable
3. That the arguments about visibility are flawed as they take no account of the relative amount of content (releases) each site has

I am going to address 1 and 3 in a follow up post in the next couple days and others have already pointed out the issues around 2 in the related tweets and comments on Todd’s blog post, so I won’t repeat them here.

But the real story IMHO and the reason why I have waited a few days before posting is I am amazed that no one seems to have focussed on the fact that the largest (?) press release distribution company in the world has just made a “landmark” announcement implicitly stating that 45% of the press releases it sends are never picked up by anyone and that across all four of these services the figure is over 50%. The words elephant and room come to mind.

So in numerical terms what does this mean?

The table below analyses:
1. The approximate number of releases that each of these companies sends per day (based on their main “.com” websites)
2. The % with no pickup (the inverse of the PRNewswire pickup figures)
3. The estimate of the number of releases per day that therefore aren’t picked up
*based on the approximate number of releases on each company’s “.com” website on 23rd September e.g. prnewswire.com

I realise that to give a more accurate figure I should be basing my analysis on a lot more days than one but given the results I think the scale is still likely to be in the right ball park. The result is an estimate of 1,121 releases per day or an average of 54% of releases sent that aren’t picked up. Assuming the vast majority of releases are sent Monday-Friday then a multiple of around 250 seems reasonable to use to estimate the number per year which gives approximately 280,000. 280,000 press releases a year that are sent by these companies to recipients who aren’t interested in talking about them.

When did the PR and media industries become so accepting/jaded that this hasn’t become the real story? Tens of millions of dollars will be being spent on employing these companies to generate hundreds of millions of emails that are of insufficient relevance to the recipients that they don’t want to write about them. How is it that the big wire services are not embarrassed by these statistics?

In the meantime a question needs to be asked:

At what threshold of pickup, or lack of it, are you just spamming people?