Is Outcome Relations the future of communications? (featuring Matt Rizzetta)

Exploring a new approach to the agency-client relationship with the founder of N6A.

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In this episode of Chats with Chip, Matt Rizzetta, founder and CEO of N6A, discusses a new model he calls Outcome Relations, designed to provide measurable accountability to clients.

Matt explains the benefits of Outcome Relations, how the workforce has changed over his career, and how entrepreneurs need to make mistakes and innovate incrementally over time to be successful.

Quotes

  • Matt, on the impetus for starting his own agency: “I always had a little bit of an entrepreneurial mindset, I saw some things that I liked in the agency world, I also saw some things that I didn’t like. And I thought that it would be neat to strike out on my own and put sort of a unique kind of spin on PR agency culture, which I thought really needed an injection of energy and innovation at the time.”
  • Chip, on how youth can be an asset for agency owners: “It really sounds like you sort of set out to build a better mousetrap. And as is often the case with younger entrepreneurs, you don’t know what you don’t know, you don’t know what’s not supposed to work. So you get to be much more creative and inventive.”
  • Matt, on why agencies have to transform how they sell themselves: “It’s very difficult nowadays, in the world of immediate measurement and accountability, to be able to sell a product or a service that really has an intangible value to a client the way it once did. So I think it’s incumbent on PR agencies to try to shift, to transform, to reinvent themselves, and to innovate, in a way where they’re not just selling intangible value, they’re selling value to a client that, they’re selling a result to a client that has a tangible value on the P&L.”
  • Chip, on the better way to judge success: “I’ve been on the the media and monitoring and measurement side of the business a lot over the course of my career. And so I’ve often talked to clients and others about the need to focus on outcomes and not output.”

About Matt Rizzetta

Matt Rizzetta has served as CEO since N6A’s inception. Under his leadership, N6A has been ranked as the #1 fastest-growing agency in the United States in its revenue category by O’Dwyers, as well one of the 50 most powerful agencies in the United States by the Observer. Matt has been instrumental in creating N6A’s “Compete and Care” culture and “Embrace the Pace” atmosphere, which have been lauded as the most rewarding, collaborative and unique in the agency world by Forbes, Monster.com, New York Post, Chief Learning Office Magazine, Entrepreneur, and others. N6A was named a finalist for Digiday’s Most Innovative Culture Award, and as a winner of PRWeek’s Best Places to Work. Matt serves on the Alumni Board of Directors at his alma mater Iona College, and resides in Westchester County, NY, with his wife and three daughters.

Resources

Transcript

CHIP: Hello, and welcome to another episode of Chats with Chip. My guest today is Matt Rizzetta. He is the founder and CEO of North 6th Agency based in New York City. Welcome to the show, Matt.

MATT: Chip. Great to be here. Thanks for having me.

CHIP: It is fantastic to have you here. I know we’re going to talk about Outcome Relations, which is a new approach that you’re taking. But before we do, can you give us a little bit of background about your agency?

MATT: Sure. So North 6th Agency or N6A, as most people know us, is based in New York City, we are a PR firm and the creator of the Outcome Relations model, which I know we’ll get into in a few minutes, we’re about 50 people or so based down in Soho, we also have an office out in Boulder, Colorado to service some of our cannabis clients for a cannabis group that we formed a few years ago. We’re 10 years old as a business. We work with about 50 clients or so spread across many different industries. It’s been a really great ride for us Chip, you know, we’ll get into a lot of earnings and our experiences through the years. But it’s been a great ride, you know, it’s entering a decade in business, and we’re looking forward to the next chapter.

CHIP: That’s great. So how did you come to founding an agency? Obviously, different people have different approaches, some came to it accidentally, some set out to create something, What’s your story?

MATT: So I was you know, a pretty young guy at the time, was about 26 years old, when I founded N6A, Chip. I had worked for about three or four years, both on the agency side, and in house – actually got my start in house working for Sony BMG. And always had a little bit of an entrepreneurial mindset, I saw some things that I liked in the agency world, I also saw some things that I didn’t like. And I thought that it would be neat to, you know, to strike out on my own and put sort of a unique kind of spin on, on PR agency culture, which I thought really needed an injection of energy and innovation at the time. And that was really the impetus behind it. You know, we named North 6th Agency after North 6th Avenue, which was the street that my grandparents immigrated to from Italy. And you know, I grew up very close with my grandparents, they taught me a lot about work ethic, and you know, life values, and just the typical immigrant story of having to work twice as hard to get one time the outcome. And I just thought it would be neat, you know, as a dedication to them to, you know, give this thing a shot. I thought I was at the right age, I was, you know, young and naive. But I also had a ton of, you know, a ton of energy. And I think my lack of entrepreneurial experience at the time actually probably served me well, because I think that I really, back in the survival days probably helped me get through a lot of those, you know, early bumps when we were first when we were first getting started. And that’s that that’s how we got started. And here we are 10 years later with just under 50 employees based in New York, and it’s been it’s been a great ride.

CHIP: Yeah, so it really sounds like you sort of set out to build a better mousetrap. And as is often the case with younger entrepreneurs, you don’t know what you don’t know, you don’t know what’s not supposed to work. So you get to be much more creative and inventive.

MATT: A hundred percent, a hundred percent. Some, some would tell you that I probably still, I probably still haven’t learned my lesson 10 years later when it comes to naivete and experimentation. But you know, my stubbornness is still alive and kicking 10 years later.

CHIP: Well, certainly your innovation is still alive and well, right? Because you’ve just recently announced a new approach called Outcome Relations. So why don’t you talk a little bit about that?

MATT: Sure, Chip. So we, you know, we’ve been in business for 10 years, and we sat in front of all sorts of different prospects through the years, you know, primarily CMOS, and CEOs and founders and senior level marketers, and those tend to be the primary audience that we’re, you know, that we’re selling to, or that we’re talking to in the, you know, in the pitch process. And, and one of the learnings, one of the biggest learnings through the years was that no matter what type of company they were, you know, startup emerging company, enterprise company, and no matter what industry, they were in, the vast majority of the buyers all shared a common, you know, pain and dislike for the PR agency search process. They thought that it was a painful process. The agencies they met with traditionally were not very fluent, when it came to business outcomes, they weren’t very comfortable being held accountable for driving business outcomes. You know, agencies sort of historically lived in this world of vanity metrics, and, you know, weren’t comfortable really delivering results and putting their name next to those results against the client’s business outcomes. So, no, we sort of internalized this after about eight or nine years at the time of being in business and meeting with all of our prospective buyers, and it got us thinking about, you know, there’s got to be a way that we could create an iteration of doing PR, that’s much more aligned and accountable for driving specific business outcomes. And that’s where the whole thing started. And, you know, we spent about a year or two studying case studies from, you know, eight years in business, and we figured out a way to find commonalities in the business outcomes that the prospects were looking for, we were able to get those outcomes down to six categories: revenue, recruiting, m&a, enterprise value, capital rates, competitive outcomes, and then there was all types of different sub outcomes within those that the buyers were looking for. And that’s how the whole thing started. And then we came up with a model of six steps that included the six step process, you know, dashboards and analytics behind it, that we believe our, you know, the first way of doing PR that is truly aligned and accountable for delivering specific business outcomes to the client. So that that’s how the whole thing started.

CHIP: So does Outcome Relations change how you work with the clients? Or does it really change more how you’re asking them to assess you?

MATT: So it’s a completely new and unique way of servicing the client, and it combines – it starts with PR, you know, in its, in its traditional sense, which we’ve productized as credibility assets. So what we found in time was that, you know, obviously, with with, with certain exceptions, but the vast majority of clients who engage a PR firm, what they’re really looking for, is they’re looking for credibility assets, which really will, which really, for most brands, you know, and I am, you know, at N6A we’re no exception to this. I mean, we’ve seen credibility assets and the power that they can bring to our brand in action, there’s really no more valuable asset that a brand can have than a credibility asset. Now, the credibility asset could be anything from earned media coverage to speaking opportunity to an award to a broadcast to, you know, to a byline article, you know, traditional results that would be incumbent on a PR firm. But what we found was that, number one, we were able to productize those results under the under the guise of credibility assets. And there’s a manual of about 60 credibility assets that we offer clients. And then what we found was that PR firms really were not amplifying those credibility assets properly to drive outcomes. So we go out and we get a client, you know, in the Wall Street Journal, most PR firms at the time, you know, would just say, wow, you know, we did our job, you know, now it’s over the client to figure out what the heck they’re going to do with that asset. Outcome Relations, takes it to the next step, where we actually amplify that asset – could be across digital media, it could be through newsletters, it could be through paid media, you know, there’s about 50 different amplification assets that we specialize in. But we take the credibility asset, amplify it in front of whomever the target audience is to drive this specific outcome of the client across whatever one of the six categories they choose to engage with us for.

CHIP: Now, is this is this something that you see as… I mean, obviously, in the near term, it’s a competitive differentiator for N6A, but is this something that you see as the start of a trend where you think that the entire industry should be looking at this as either an alternative to or replacement for traditional PR?

MATT: I think it kind of has to be, Chip, I mean, you’re looking at… it’s very difficult nowadays, in the world of immediate measurement and accountability, to be able to sell a product or a service that really has an intangible value to a client the way it once did. So I think it’s incumbent on PR agencies to try to shift, to transform, to reinvent themselves, and to innovate, in a way where they’re not just selling intangible value, they’re selling value to a client that, you know, they’re selling a result to a client that has a tangible value on the p&l. Now, you know, in our case, with Outcome Relations, our argument is that that value can live in any one of six categories, it could, it could be on the top line, you know, with regard to revenue, it could be recruiting outcome, you know, we have even our mid size and startup clients that we work with are spending, you know, well into, you know, $400,000 or $500,000 a year on recruiters and on, you know, recruiting related functions. If they can spend a fraction of that for a PR campaign that can generate the same outcome, they would gladly spend it. So I think that, I think PR firms need to be a lot smarter and more comfortable when it comes to holding themselves accountable for specific business outcomes. If you get the client the result in the New York Times, yeah, that’s, that’s great. But you haven’t finished the race for the client? What, you know, why, why did that, why did that result help the client? You know, what outcome did it help them achieve? I think there needs to be a level of accountability and fluency, and understanding the relationship between that asset you’re securing as an agency, and how that’s actually impacting the client’s outcome, and then holding yourself accountable, getting the outcome.

CHIP: Well, like I, you know, I’ve been on the the media and monitoring and measurement side of the business a lot over the course of my career. And so I’ve often talked to clients and others about the need to focus on outcomes and not output. So, you know, obviously, there’s a lot of appeal, from my perspective in this approach, but, you know, what are you seeing from your clients and prospects? How are they responding to it? Is it resonating with them?

MATT: Yeah, absolutely. I mean, the initial response, first off, Chip, from our clients has been phenomenal, I think the big, the big thing is, just to take a step back, forget about, you know, PR or any other any, if you’re building a business, a really smart business model is focused on trying to get one step ahead of where the customer wants to be. And we see the PR buyer, the CMO, the CEO, the founder or the marketer, whomever that is, going in this direction, you know, there’s only so long, so much longer that you know, CMOs are going to be able to fight for an intangible value on their p&l. Now, if they’re fighting for a value on their p&l, i.e. a PR firm that’s holding themselves accountable for demonstrating some sort of relationship between the assets they’re delivering and an outcome that the client is interested in, you know, now you’ve become very sticky. That’s a sustainable model. I think that’s a model that really is paving the way for the future. So that’s the bet. That’s the bet that we’re making here at N6A.

CHIP: And, you know, obviously, you’ve had a lot of success over the last decade in business having grown to, to, I think you said nearly 50 employees, right, that’s, that is a huge accomplishment in the agency space. But I imagine you’ve had some challenges along the way, can you share, you know, one or two of those with the listeners? Because I think it’s always helpful to learn from what others have faced.

MATT: Yeah, I mean, if we, if we have, if we have four hours one day, I’ll tell you, I’ll tell you all of them. But you know, there’s been, there’s been so many. And I think, look, I think the beautiful thing about entrepreneurship is improvement and progress. I mean, you’re sort of always making mistakes. And, you know, I think there’s a lot to be said about entrepreneurs and founders who have the courage to go out and play in traffic a little bit and experiment, and, you know, and strike out on their own, if you will. And, you know, for me, I mean, I’m no exception to that I tell people all the time: N6A is nothing more than 10 years worth of experiments and, you know, mistakes and incremental improvements, and, you know, plugging the holes on those mistakes over the course of 10 years, and you can build a really special company doing that. In time, you know, you don’t feel that there’s no light bulb moment, there’s no kind of aha moment where, at least in our experience, where you make a mistake, and the next day, you become the world’s best PR firm, you know, it’s all about incrementalism, at least in our experience. It’s, you know, it’s first off, having the conviction and the courage to go out and to experiment and to try new things out and to kind of go against the grain and to do some things that other competitors might not be willing to do. And then it’s also to have the courage to fail, and then learn from those failures. So you know, that that’s really what I tell entrepreneurs all the time, it’s just, you got to go out, you got to experiment, you got to be comfortable doing it, but you got to be very comfortable holding yourself accountable and plugging in the holes, you know, after you make the mistakes, which I think is where a lot of entrepreneurs tend to fail.

CHIP: I agree, I think, you know, being flexible, learning from everything that you’re doing, whether it’s a failure or success is incredibly important in any business. You know, how have you seen your agency change over those 10 years? I mean, obviously, you’ve, you’ve introduced Outcome Relations now. But you know, what other shifts have you seen either in the industry or within your own agency in the course of that time?

MATT: Well, the first thing I would say is the workforce has completely changed and transformed, and I was 26 years old in 2010, when we started N6A, and I was like the big brother, basically to our, you know, our first batch of employees, you know, they were 22, 23, 24 years old, and then I was basically, you know, like their big brother. You know, 10 years later, I’m kind of, you know, as scary as it sounds, I’m kind of becoming the, the wily, you know, cagey old veteran, in a sense, but I think the workforce has changed dramatically. I think what motivates employees today, and today’s workforce is dramatically different from the way it was, you know, back a decade ago, when we started N6A. I don’t think there is a one size fits all approach to management. Not that there ever was, but certainly there’s no way you can get away with a one size fits all approach to managing employees today, I think employees are motivated by completely different things, you know, it could – and this is kind of the impetus behind pace points program, which I know, you know, we had, which I know, we haven’t discussed, but I I just think the way that the way that employees are motivated, incentivized, the way that you know, the mentality of, of today’s employee is far different from it was 10 years ago. I think, on the client side, there’s a completely different shift in terms of what you know, what they associate value with. I think 10 years ago, there was still a level of acceptance for PR firms not being held accountable for specific outcomes, I think they could pitch – PR firms were able to get away with hanging their hat on vanity metrics and on, you know, data that wasn’t necessarily relevant to specific outcomes. I don’t think that’s the case anymore. I think now, it’s incumbent on firms to really demonstrate a fluency and business outcomes and be held accountable for it, which was the impetus obviously, behind the OR model. So I think those are the two things that come to mind, at least on a client and on the employee side,

CHIP: Now, you’ve obviously demonstrated a real willingness to take risks and be innovative, you know, you brought this Outcome Relations idea to the forefront. If if you’re talking with another agency owner, who is, you know, thinking has a big idea, something that they’d like to try, but they know there’s some risk in it. What advice would you give them as they’re evaluating whether they should go forward? And then once they decide to go forward? You know, how do they make the most out of it?

MATT: Mostly you have to think incrementally, usually, innovation does not happen. Most people think innovation, Chip, happens in business with like, an aha moment, it really doesn’t, it’s really the best innovation usually comes from incrementalism, you know, you, you take an idea, you experiment a little bit with the idea, you know, you do a post mortem on it, you know, you make a couple of tweaks, then you do the same thing again, and then you do it again, and then, you know, three or four years later, what began as just a tiny little idea, because, you know, you kind of made so many tweaks to it and tested it properly, and you demonstrated rigor and discipline around, you know, those ideas, then those become the most innovative programs, and really the best, the best ways for you to differentiate your business from others. So I would say that would be my first piece of advice is, you know, the big ideas are great, but before you before you just kind of bet the farm on your big idea, you know, test the big idea out in a small way, you know, commit to, you know, making incremental improvements, and then 2, 3, 4 years or whatever, you know, don’t even put a timetable on it. Whenever the idea is ready for prime time, that’s when you launch it. And that’s what, you know, that’s what Outcome Relations was for us. I mean, we spent a year or two testing this out talking to clients of ours, soliciting feedback from staff, we went through a rigorous, you know, six session training process to make sure that our staff was very fluent and understood these business outcomes, which, you know, by a PR firm standards usually are way over the heads of most PR professionals. So, you know, I would just say, think, incrementally and commit to running post-mortems and making improvements along the way.

CHIP: And how responsive or receptive, I should say, has the staff been to this new approach? Obviously, you know, as someone who’s, who’s run teams a lot over the course of my career, I know, sometimes they can be a little bit resistant to change at times, you know, how have they taken to this one?

MATT: Well, it’s been great, because there’s no ambiguity around the model. So the whole premise of the Outcome Relations model is to create full alignment and transparency between us as a service provider, and the clients as our buyers. So Outcome Relations does that, you know, it addresses that head on. And I think that historically has been one of the most difficult challenges for PR firms to overcome, which is that the firm, you know, feels like they’ve done a good job. And by the way, the client might even feel like they’ve done a good job relative to the scope of work and what the client paid the agency to do. But, you know, ultimately, when the client sits down, and reviews p&l, and looks at the ROI on that PR spend, historically, it’s been very difficult for that client to justify or to show the alignment of the spend against a specific business outcome they were, and the end result is that the agency could get fired, they might get fired on, you know, very amicable and, you know, good backdrops and with a handshake, but nevertheless, the outcomes of the agency is they get fired. I think the OR model has been really well received by the staff, Chip, because it takes that away, you know, you know, from day one, what the client’s hiring us to do, you know, we’re super aligned and married with the client’s business outcome. And from that point forward, it’s, you know, ud arm in arm, you know, with the client married to the same outcome. And if we do a good job, and the client gets that outcome, you know, that they hired us for, there’s never any ambiguity around it, we’re going to stay, you know, a service provider for them for a very long time to come.

CHIP: And his this focus on OR changed the types of clients that you’re trying to pursue? I mean, are you looking for greater alignment with people who are really focused on the outcome within their own business, in addition to with their agencies?

MATT: Well, so a couple things on that, Chip. Number one, we found that Outcome Relations really leveled the playing field across all businesses. So no matter what business, you know, large, small, startup, you know, enterprise, no matter what industry they’re in, chances are, there’s going to be at least one, usually more than one, of those six outcomes that they’re going to be looking to achieve. So that’s number one. Number two is, and I think this is the most important thing is that it also puts us in a position where we don’t always have to compete against our direct competitive set, you know, i.e. other PR firms for accounts, because, you know, I’ll give you an example, we were just talking to a major Fortune 500 company in the credit processing space a few months ago, and, you know, obviously, this is a huge enterprise company, you know, they have dozens of agencies, you know, servicing all different aspects of their business. So we didn’t, we’re not even trying to get into what, what relationships they have with other agencies, we’re just trying to have a conversation with that client about, hey, what sort of business outcomes are you looking to achieve? And in that dialogue, you hear incredible, get incredible insight and visibility into what that client wants. In this particular case, you know, there were they were looking to recruit talent at a higher level in certain regional markets. And they were, you know, there was, so that would fit into the recruiting outcome category for us. There was a revenue category that they were interested in, where one of their newly launched products wasn’t gaining the adoption they wanted to when it came to their sales teams’ close rates in certain vertical markets. So, and their PR firm, they had 10, or 12 PR firms, none of whom were even thinking or aware of any of those outcomes, not that it was their fault, it just was never even thought of as part of the, you know, the crux of the engagement between the client and the firm. So we could come in right there and say, okay, you know, keep all your other agency relationships intact, you don’t want to interfere or play in any of their sandbox, just carve out, you know, just carve out an outcome or two for us on a project basis, in recruiting and in revenue in this case, and show you what we can do. So I think this really created separation and isolation for us in a way that certainly helps our business, particularly at enterprise client level.

CHIP: Well, that’s great, Matt. And, you know, I think this has been an incredibly productive conversation. Unfortunately, we’ve crept up to the end of the time that we have together today, but if someone is interested in learning more about N6A, or Outcome Relations, are you, where would you like them to go?

MATT: So our website is N6A.com, feel free to check that out. And we, we also have competeandcare.com, which is our recruiting portal, if there’s any of your listeners who are interested in a career at N6A, be sure to check us out at competeandcare.com – goes through all of our culture and you know, innovation programs. And I think they’d get a kick out of some of the some of the stuff we have on the site.

CHIP: Great, and we’ll make sure to have links to those in the show notes so if you’re listening to this while you’re out jogging or in your car, fear not, you can go right there and we’ll have the link in the show notes. So Matt, thanks again for joining me today. This has been a great conversation. Again, my guest has been Matt Rizzetta, the founder and CEO of N6A in New York City.