EDITORIAL: Battle for HP account belies tech sector ills

Those who enjoyed the excitement of the IBM agency consolidation will be happy to watch as a dozen firms battle for HP's consolidated business.

Those who enjoyed the excitement of the IBM agency consolidation will be happy to watch as a dozen firms battle for HP's consolidated business.

But the pitch, though huge, is in many ways a distraction from enduring hardships in the tech sector. Tech agency reshuffles have dominated tech agency news for the past 18 months. SAP, BEA, and PeopleSoft are among the big companies that saw fit to change agency relationships, but do not represent examples of the industry's growth. New business remains elusive, and confidence in the tech sector continues to flag.

The National Venture Capital Association (NVCA) last week reported that, for the first time ever, VC firms gave more money back to partners than they raised in the second quarter of 2002. This means that VC firms will invest only cautiously in new companies, and fewer companies will be buying PR services. Big and small agencies alike report a continuing decline in the number of business leads coming from the start-up community.

But according to NVCA, the trend is towards "positive restructuring in VC businesses, and that this "generates goodwill with limited partners to help future follow-on fundraising efforts. In other words, the atmosphere is too volatile, and rather than try to meet unrealistic expectations, VCs are telling partners to hang on for better times ahead.

PR firms should embrace a similar outlook. The companies actually getting funding are generally conceived on better business propositions than those that were begging to be added to an agency's roster two years ago.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.