Opinion: News Analysis - Thriving dot.coms turn heat up on financial PR/The rapid financial life-cycle of internet start-ups is putting pressure on hi-tech agencies and financial and IR specialists alike. How will they cope?

Last week, a mere 12 weeks after it was set up, new community-based ISP Totally announced its IPO, without even having an operational web site. The financial life-cycle of dot.com businesses is compressing at a rate that borders on the arrogant.

Last week, a mere 12 weeks after it was set up, new community-based

ISP Totally announced its IPO, without even having an operational web

site. The financial life-cycle of dot.com businesses is compressing at a

rate that borders on the arrogant.



As the internet bubble inflates, more and more PR operators are having

to work in the financial PR arena, and traditional financial and IR

agencies are being forced to deal with a burgeoning IT-based PR

marketplace.



US agency The Stephenson Group, which specialises in financial and

e-commerce PR, this month opened a London office to support the

expansion of its clients into new markets across Europe, the Middle East

and Africa.



Hill and Knowlton has also recently announced its own dot.com offering,

with clients including loot.com, internet stockbroker e-trade and

electronic ’currency’ site beenz.com.



H&K combines on- and off-line specialist skills at all stages of the

dot.com life-cycle, from idea though to IPO and beyond. In addition, IT

and e-communications specialist Buffalo Communications is in the process

of creating a new financial division.



But while the internet sector is all good news at the moment, with

fortunes to be made by young e-millionaires and the media on a feeding

frenzy, how will newer and smaller PR operators handle future

change?



’In a different environment, when they encounter a crisis or the fashion

moves on to the next dot.com business, will they have the necessary

experience and breadth of contacts?’ asks Edward Macquisten, account

director at the technology group of Ludgate Communications.



The simple answer is probably that some will and some won’t. Survival

will depend on hiring in specialist skills and knowledge. Buffalo

Communications managing director Kerry Hallard freely admits that she

needs to bring in new blood to offer a financial services and IR set up

for clients.



’Our existing consultants simply don’t have the contacts or the in-depth

financial expertise,’ she says.



However, other larger IT players, such as August.One Communications, are

not even tempted by the spoils on offer from financial work. ’We work in

partnership with financial agencies and do an increasing amount of

general media relations and industry analyst work for dot.coms,’ says

managing director Tariq Khwaja. ’But true financial PR is such a

different discipline, that you have to do it properly or not touch it at

all.’



So, where do traditional financial PR agencies fit in? Do they have

anything to fear from the raft of new players seeking to enter the

market?



’I would think not, but equally we are not complacent, as the dot.com

arena moves very fast,’ says Macquisten.



In addition, while some of the traditional financial players claim that,

sector issues aside, dot.com work is essentially no different from any

other financial project, others see things differently.



’The cosy world of financial and investor relations is breaking down,’

believes Anthony Payne, a board director of Hill and Knowlton UK. ’The

reality of dot.coms is that they are very fast-moving, so you’ve got to

be incredibly flexible and have a wired culture with individuals who

know how to run extranets and so on.’



Unlike smaller e-business agencies looking to move into the financial

arena, H&K has the infrastructure to handle European capacity. And, in

contrast to the larger established financial players, which Payne

suggests tend not to get involved until the IPO stage, H&K is just as

interested in talking with venture capitalists at the initial funding

rounds.



If the US market model is anything to go by, dot.com PROs will need to

prepare themselves for an even greater explosion of both private and

institutional investors with a huge appetite for backing the latest hot

tip.



In addition, with so many start-ups looking for funding, dot.coms will

need to communicate their business ideas effectively to stand out from

the crowd. To an extent this means targeting investors directly, with a

web site that delivers evidence of sustainable growth, and a host of

facilities including on-line roadshows.



But it would be foolish to suggest that the traditional financial PROs

are not geared up to compete. ’We have made the transition from covering

the old electronics and technology companies to the IT and internet

sectors of today,’ says Nick Miles, chief executive of Financial

Dynamics.



The agency has the advantage of dealing with the sector on a daily

basis.



It has hefty clients in the dot.com sector, including auction site

QXL.com, the 365.com group of sport and music sites and the launch of

Street.com.



And, with a dedicated IT team headed by director Giles Sanderson, it has

advised on some impressive flotations, such as IT business services

company Morse Holdings, which launched with a market capitalisation of

over pounds 305 million.



Miles is not worried by the prospect of new PR operators muscling in on

the dot.com arena. ’I think its a factor of the sector and its potential

rather than a PR issue,’ he says. ’The growth is really exceptional and

that’s something to look forward to, not look over our shoulders about.’



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