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Leavitt Communications Business Model

Since its inception in 1991, San Diego County-based Leavitt Communications has instituted an innovative business model that has generated proven results for fledgling companies, large corporations, public agencies, and municipalities. Heres an article that encapsulates our philosophy:


Reprinted from Marketing News

The Internet made virtual PR agencies possible, but only time could prove them viable. Now that the innovation - a public relations firm that employs a network of account executives that for the most part communicate with colleagues, clients and one another only via phone, fax and Internet - has had a decade to mature, PR professionals and clients say it poses tremendous advantages over the traditional, office-based agency.

"On average the client (of a virtual firm) can save anywhere from 30% to 60%" across the account, versus the largest (in terms of revenue) 10 to 15 PR agencies, says Neal Leavitt, president of Leavitt Communications Inc., based in Fallbrook, Calif., near San Diego, which has followed the virtual business model since its founding in 1991.

Leavitt has 25 associates in Arizona, California, Georgia, Massachusetts and Washington, and strategic partnerships in place with marketing/PR firms in Brazil, China, France, Germany, Hong Kong, India, and the United Kingdom.

"Having worked for a large multinational firm, I have a good idea of how much they charge," Leavitt notes. "They have a lot more overhead because of their multiple office locations."

"We are about one-quarter less than the cost of a traditional agency," due to lower overhead, says Chris Perkett, president and founder of PerkettPR Inc., based in Marsh- field, Mass., a virtual firm since its founding in 1998. PerkettPR employs seven people working in Massachusetts.

Perkett says her experiences working for a large PR agency in the Northeast made her realize that many agencies simply spend too much money "on making the office cool and classy." She says feedback from clients indicated to her that results and lower fees were more important to them.

No one tracks the total number of virtual agencies or how many make a go of it, but virtual agency directors say their business model is gaining acceptance because they offer clients discounts of up to 40% over traditional agency fees by sharing the money they save on office space.

Also, virtual agency directors say they are gaining respect by creating a team of their far-flung executives using ASPs, intranets, Web conferencing services, e-mail company newsletters and conference calls, coordinating their efforts to attract and serve clients.

As both clients and professionals become more comfortable with the technology - as the lack of face time becomes less of a hurdle agency directors say their lower fees, compared with those charged by traditional agencies, will remain one of their biggest selling points.

How much of the real estate savings gets passed on to customers varies: Dick Grove, CEO of Kansas City, Mo-based virtual PR firm INK Inc. says he passes on 100% of his office space savings to clients, while Leavitt says a "significant portion" of those savings is passed on. Others declined to be specific.

"The real key to a virtual agency is you can keep your overhead lower and pass that savings on to your clients," says Leavitt.

Marketing agencies of all types could adapt to a virtual business model, Leavitt added, and clients in any industry could benefit from and be comfortable with virtual PR counsel, although he acknowledged that companies that are themselves decentralized - with branch offices, traveling employees and consultants in multiple locations - may be more open to the idea initially.

Claire Collins, public relations manager for nCipher Corp. Ltd., an Internet security firm based in Woburn, Mass. and a PerkettPR client for the last year, says her company has saved about 30% to 40% on PR agency fees since switching away from traditional, office-- based PR firms.

"We were paying exorbitant fees to traditional agencies," says Collins, who says she gets the same level of quality in her PR representation since switching to a virtual firm; nCipher uses PerkettPR for most of its media and analyst relations work, as well as some strategic planning. When choosing a new firm last summer, "It was not important to us to see what kind of desks they had or what their lobby looked like to gauge the level of their work as PR professionals," Collins says.

Another reason the virtual business model is gaining acceptance, PR executives say, is because they are successfully sharing information and working as a team via the Internet.

Perkett also finds that e-mail newsletters are effective at keeping her far-flung group of PR executives working together as a team. Perkett produces and sends out a monthly newsletter to her seven remote employees featuring such content as links to pertinent trade magazine stories, descriptions of successful PR tactics by fellow PerkettPR employees, and a "get to know your colleagues" section where she asks PerkettPR employees to share information on their backgrounds and current interests.

And of course the virtual firms rely heavily on conference calls to facilitate a group effort in the absence of live brainstorming sessions.

"Conference calls are very beneficial for creative team brainstorming", Leavitt says. He contends amid many skeptics in the traditional PR world - that the conference call sessions are often better than live meetings. "There is a certain discipline on the phone" that keeps people's minds on the meeting, Leavitt says.

Perkett frequently uses Web conferencing services to cultivate that team sensibility. While her employees are all logged on to their Web conference site, Perkett says she can show them any file on her computer while they are talking on the phone, as well as walk them through PowerPoint or other software presentations during the call.

Intranets are another popular tool for sharing information among virtual PR firms. Grove says his firm's intranet allows his geographically dispersed executives to "access every bit of information on every client we have."

Finally, to help avoid being characterized as nothing but a loose group of freelancers (a criticism frequently leveled at the virtual agencies), Perkett says she insists that her employees work exclusively for PerkettPR clients and avoid the temptation to take on other PR jobs. Grove says he also requires that his full-time employees shun freelance projects outside of INK Inc.'s client list.

Executives at traditional PR agencies, meanwhile, emphasize that for many clients and prospects, seeing is still believing. Greg Matusky president of Gregory FCA Communications, a PR firm based in Ardmore, Pa., says the office visit allows a prospective client not only to see the office layout, but more importantly to meet the whole agency team in person, and get an idea of how well they work together.

"We could attract business without office visits, but we make it a priority" to invite prospects to tour the office, Matusky says. He says such visits often play an important role in signing new clients.

Gregory FCA has a staff of 19 employees in its home office. And ultimately, the work-at-home executives at virtual agencies will likely never convince PR traditionalists that they can really match the same level of camaraderie and team spirit as those who work together in the same office.

Robin Russo, president of Robin Leedy & Associates Inc., a PR firm based in Mt. Kisco, N.Y. with nine employees, says, "I still think a lot of the creative process comes from being around other professionals involved in your day-to-day business."

For example, "We just had a lunch together to celebrate the end of a big project," Russo says. "It wouldn't have been the same to celebrate via conference call."