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Starting last summer, clients and prospects started listening to our proposed ideas...and then started funding them. This was a major sea change.
Now, any conversation I have with a prospect starts with how we're going to integrate social media into their traditional PR campaigns. And yes, this means more budget...which, so far, has been forthcoming. My clients aren't typically start-ups. My experience so far has been more budget to fund BOTH traditional PR and social media, rather than a trade-off.
My two cents...
Jeff
I hope that more PR firms get into social media and charge appropriately like Jeff above. I also hope that both they and advertising firms realize that you can serve ads on Facebook that target people based on their workplace.
I am running a campaign for my venture that targeted people at companies like The New York Times, Associated Press, MTV, Nike and others (the campaign focused on an article that called my venture the "closest thing to a Caribbean MTV on the web") and the click-thru response was good. Hopefully it has increased awareness of us within those organizations and could result in something big down the line (an article, an advertising contract, strategic investment, etc.).