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.
