MARKET FOCUS HI-TECH: Which way now for hi-tech PR? Clients are asking hi-tech pros to take on new tasks. But not everyone thinks that’s such a great idea. What is the future of tech PR? Rebecca Flass reports

From Silicon Valley to Silicon Alley and points in between, public relations professionals are chanting the same mantra - the Internet changes everything. It changes the speed pros work at, the way consumers view technology, the tools available to promote clients, the geographic spread of the technology sector (i.e., it’s all over the country) and the demand for services that have traditionally fallen outside the realm of PR.

From Silicon Valley to Silicon Alley and points in between, public relations professionals are chanting the same mantra - the Internet changes everything. It changes the speed pros work at, the way consumers view technology, the tools available to promote clients, the geographic spread of the technology sector (i.e., it’s all over the country) and the demand for services that have traditionally fallen outside the realm of PR.

From Silicon Valley to Silicon Alley and points in between, public

relations professionals are chanting the same mantra - the Internet

changes everything. It changes the speed pros work at, the way consumers

view technology, the tools available to promote clients, the geographic

spread of the technology sector (i.e., it’s all over the country) and

the demand for services that have traditionally fallen outside the realm

of PR.



Amid the dot-com craze, the face of the large, cumbersome technology

clients of yesteryear - the hardware and software makers,

telecommunications companies and storage providers - is also changing.

Bricks and mortar are being joined by ’clicks and mortar,’ giving

traditional companies the opportunity to act like entrepreneurial

dot-coms as they carve out new identities.



’Every company is a technology company - from one that sells diapers to

one that makes semiconductors - because of the Internet,’ says Bonnie

Quintanilla, managing director for MS&L Global Technology in Westlake

Village, CA.





Gold diggers



So what does this mean for hi-tech PR pros? ’We’re in a gold rush and

everyone’s digging,’ says Margit Wennmachers, a partner at OutCast

Communications in San Francisco.



And what a gold rush it is. Overall PR budgets for 1999 are up 30% from

1998. The largest amounts are being spent by telecom companies, with an

average of dollars 13.4 million each, according to the latest

Harris/Impulse Research Public Relations Client Survey. PR spending by

information tech companies weighs in at dollars 5.3 million, just behind

energy, consumer products and food and beverages.



But along with increased PR spending comes increased scrutiny. The work

once done behind the scenes has been thrust into the spotlight, where

journalists alternately commend and lambaste PR pros for their work,

with the latter occurring much more frequently.



PR pros are still smarting from comments made by Alex Gove, a former

reporter with Red Herring, who criticized them for inserting themselves

into strategic business development. Even the one firm - OutCast, which

Gove singled out as ’really smart PR folks’ - was not too happy with the

article.



’There are more of these articles popping up,’ says OutCast partner

Caryn Marooney. ’We all know how crowded this market is, and there are

many repercussions. It’s harder to be a PR professional because it’s

harder to make a difference and be heard. It’s also harder to be a

reporter who’s contacted by all these companies trying to get

attention.’



James Daly, editor-in-chief of Business 2.0, ’the magazine of business

in the Internet age’ says, ’There are too many outgoing e-mails with no

thought put into them. Clients that have a good story are not getting a

lot of value - they may be paying dollars 10 ,000 to dollars 15,000’ for

careless work.



Daly also says that companies relying on PR agencies for business

strategy do not have a strong, sharp vision of what they’re doing, the

product they’re producing and why they should exist. He attributes an

increased need for business strategy from PR firms to the rapid growth

of the hi-tech industry, which has enabled people with little business

experience to become CEOs.



’There are too many PR firms trying to position themselves as strategic

firms, and they ignore the value they can provide by putting PR pros in

contact with journalists,’ says Andy Miller, chairman and CEO of

Boston-based Miller Consulting Group, which does both PR and business

consulting.



’They do good press relations, media training and speaking bureaus, but

they don’t do strategy very well. They need to re-evaluate their

business model before they can do that.’



But it appears that the clients are asking firms to branch out into

these other services. Pros report requests such as being put in touch

with venture capitalists, what new hires they should be making,

customer-relationship management and evaluation of sales teams. (Clients

are also looking for a cross-discipline offering, including IR,

government relations, public affairs and employee communications,

according to Marijean Lauzier, president and CEO of The Weber Group in

Cambridge, MA.)



PR pros defend their new role. ’The public relations field has evolved,’

says MS&L’s Quintanilla. ’We still do public relations, but we realized

that we needed to change and migrate along with our customer’s business

and provide counsel to achieve overall business objectives rather than

just communications objectives.’



In addition, the way messages are tailored has changed. In hi-tech PR,

’We used to tell people things that they didn’t know they needed to

know,’ says Brian Cohen, CEO of Global Comm Group in New York. ’Now,

we’re so hungry to talk to a public that wants to know more.



Technology used to be a board with chips on it, but rarely do clients

talk in terms of chips and technology, because they expect that the

average customer is the consumer.’





PR as strategic weapon



The good news is that PR is valued as a strategic weapon for start-ups

’They used to have (only) start-up budgets, but that’s becoming less and

less the case,’ says Carl Furry, a partner of Catapult in Austin,

TX.



Still, the rough and tumble of the online world doesn’t offer much

stability for PR firms. A September 23 Gartner Group survey predicts

that 75% of e-business projects will fail. Those aren’t very good odds

for the agencies that represent those clients. ’There’s a lot of funding

for companies that are absolute and total gambles,’ says John Metzger,

CEO of Metzger Associates in Boulder, CO. ’A year or two ago all you

needed was something with dot-com in its name and the investment

community was very optimistic. In the future, it’s going to be

harder.’



Prospects might be brighter for those working in the b-to-b

environment.



’I think instability applies more to the business-to-consumer Internet

portal sites, like the Yahoos, that are all competing against each

other,’ says Miller. ’Business-to-business is much newer, and there’s a

lot of room for innovation and growth.’



Working for dot-coms poses other challenges (see sidebar). Aaron

Kwittken, EVP and GM of GCI’s New York office, says that the biggest

obstacle the agency faces with web businesses is trying to explain the

differences between strategy and tactics and between marketing,

advertising and PR. He says that 80% of the time, first agencies do not

survive their relationships with dot-coms due to unrealistic

expectations.



Kwittken adds that ego management sometimes has to be a core capability

in the space, as agencies work with very entrepreneurial, strong-minded

managers.



And in the world of here-today, gone-tomorrow start-ups, PR pros have

learned to charge clients their retainer fees at the beginning of the

month to ensure that they get paid, says Julie Scopazzi, VP of Carter

Israel Advertising & Public Relations in San Jose, CA.





Web domination



Still, with more dot-coms starting up and traditional companies moving

online, web-site businesses are taking up a larger portion of hi-tech

agency business. Miller Consulting reports that 80% of its clients are

involved with the Internet, either as a dot-com or a company that

provides Net services. Manning Selvage & Lee and Cohn & Wolfe say that

the majority of their hi-tech clients are web sites. Andrea Carney,

president of Brodeur Porter Novelli in Boston, says that of its top 30

clients, at least half are midway through developing e-business

components, and the other half are beginning the process.



Pitching for the business of these technology companies is not being

done in the same way as it has in the past. Kristin Gabriel, a partner

at virtual agency ecom Communications, says that in past two years the

firm has rarely done a face-to-face new-business pitch. Instead, it

bases its decision on what clients it works with on phone conversations,

and may not meet the clients until months later.



The crowded market means that agencies can be choosier when taking on

new clients. But agencies also need to use judgement as to what

constitutes competition with another client, and communicate potential

conflicts.



Sean Conway, communications manager for Internet start-up NeoPlanet in

Phoenix, says he was happy with the company’s PR agency. That is, until

he received a phone call from a journalist informing him that the agency

was pitching a client that was a direct compete with NeoPlanet, which

integrates Internet services into one application.



’The reporter forwarded the actual pitch letter to me - and the language

was literally cut and pasted from NeoPlanet’s pitch, leading with ’If

you found NeoPlanet interesting, you’ll probably like this too,’’ Conway

relays. NeoPlanet fired the agency, Conway says, but not before an

onslaught of articles ran that mentioned NeoPlanet and the competitor

side-by-side.





Hi-tech capitals everywhere



Another shift is that every city wants to be known as a hi-tech capital.

While Silicon Valley and Boston have generally been the two centers of

hi-tech PR, that too is changing. Some of the newer hi-tech hotspots

include New York, Denver, Washington, DC, Atlanta, Chicago and

Austin.



’Technology markets are maturing very quickly,’ says Metzger. ’It’s no

longer who builds the best mousetrap, but who has the best people and

the best marketers. To get the best people you need to balance work and

life better than in the past.’



Of the DC-area hi-tech scene, Steve O’Keeffe, founder of O’Keeffe &

Associates in McLean, VA, says, ’The market has really changed. It used

to be a market dominated by companies selling to the government.’ Now,

he says, the area is seeing more Internet business.



But as the market becomes cluttered with more dot-com companies, and

with more mid-level employees making the leap from agency to in-house,

senior management agency ranks may be difficult to fill in the next few

years.



’There’s a magnet-like quality to the carrot of stock options,’ says

Lauzier. ’We have to look at business in a fundamentally different

way.



Instead of getting mad at companies that offer stock options, we need to

offer our employees an alternative that is as compelling.’



Several agencies, such as Brodeur Porter Novelli, Weber and MS&L, say

they are looking at some options that would allow their employees to

share in client revenue through profit-sharing pools.



The influx of dot-com start-ups is providing PR pros with more

opportunities to help build companies from the ground up. But as large

and small agencies alike are swept along by the entrepreneurial current,

many are forced to admit that the tide could just as easily turn against

them. And as the Internet shakes out inferior sites, only the PR firms

that have chosen their clients wisely will make it through the dot-com

jungle unscathed.





DOT-COM BLUES: some Internet start-ups aren’t as cool as they seem



Web-based companies are supposed to be the height of hip these days.



But as these PR pros attest, working with them is not always all fun and

video games.



Here are some sad tales from the new world of hi-tech PR.





BUT IT’S MY BIRTHDAY



Aaron Kwittken, EVP and GM of GCI’s New York office, says one client

insisted that the company launch on his birthday. ’Forget the fact that

the service wasn’t ready, and his birthday fell on a Thursday, which is

not a good day to announce news.’ Kwittken says it took three to four

conversations before he was able to convince the client to hold off.

’The best argument you can make is common sense - if a client doesn’t

take your advice, move on. It’s what they hired us for, and we can’t be

order-takers.’





I KNOW PR



Birgit Spears of ecom Communications in St. Louis says in addition to

having high expectations, one client decided that he knew PR. ’The press

release was edited to the point of ambiguity. There were 12 edits of the

final release, and a week before the launch of the product, they changed

their positioning from a technology tool to a service site.’ Ecom got

the company coverage on a nationally syndicated radio show, a syndicated

newspaper, two interviews with trade magazines and coverage in the San

Francisco Chronicle. Meanwhile the client, who was from another country

where tech companies get more attention, informed the agency that it was

not satisfied. Although the client was on a six-month retainer, the two

parted ways four months into the program.





WHAT KIND OF COMPANY IS THIS?



John Metzger of Metzger Associates says his agency had one company that

changed its business model seven or eight times. ’They started out as an

Internet training company, then they became a media training site, a

travel and tourism site, an ISP, a company that allowed other media

outlets to become ISPs, an international ISP, and an ISP consultant.

They were smart enough to realize when they had to change their business

strategy, but we were always having to play catch-up.’





EMPTY PROMISES



Scott Testa, now a co-founder and EVP of Mindbridge.com in Fort

Washington, PA, left his job as an analyst at Dun & Bradstreet to become

VP of sales and marketing for a start-up. ’They gave me all these

options, and if it had succeeded, I would have had 7% to 8% of the

company. We were told all these great things - they said they had

investors, but were under NDA not to disclose them, and they kept making

up these stories. Then we came to work one day and they had changed the

locks, had a sign on the door saying they were no longer in business and

had changed their phone numbers.’ The company left him with no

explanation and no severance pay.



Testa’s company Mindbridge.com is slated to go public within a year.



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