A few years ago, the biggest names in tech were choosing global firms as their AORs. But Andrew Gordon finds that this year, the tech tide is turning toward smaller agencies
That thud heard in July was jaws dropping everywhere over the news that, after nearly a decade with global powerhouse Porter Novelli, EMC had selected OutCast Communications - a 30-person, one-office outfit - as its new US agency of record.
Information-storage company EMC was the latest key win for San Francisco-based OutCast, following TiVo's corporate account and Dell's enterprise business. Many wondered why an 800-pound gorilla like EMC would part ways with PN after a healthy, happy relationship to work with a much smaller firm.
And OutCast's situation is not isolated, as small or independent firms have won many hotly contested tech accounts this year.
They include EDS' regional account, Virgin Electronics, Siebel Systems, Applied Materials, RealNetworks, and many others.
What's going on here?
Picking smaller firms
Some say that small firms have made smart moves in terms of personnel. Others say those who sold their agencies to the major players during the tech boom are now running smaller shops that are giving them a run for their money. And still others say that, when it comes to servicing these tech clients, the big agencies still don't have it right.
Just a few years ago, tech's biggest names - Agilent Technologies, Hewlett-Packard, PeopleSoft, and Cisco Systems - were going with global PR firms. This year that seems to be changing, though that's not to say the well has dried up for global firms. Sony Electronics, LG Electronics, Maxtor, and Royal Philips Electronics have awarded accounts to global agencies.
Global firms argue that they can offer a breadth and depth across regions and practices that smaller firms can't touch. Mid-size and boutique firms counter that they aren't beholden to holding companies whose only interest is the bottom line, and that they can offer account teams with greater senior talent and insight than the larger firms.
But clearly the pendulum is starting to swing more in smaller firms' direction these days.
For EMC, choosing a smaller firm was almost accidental.
"We have a very strong and senior internal team here that allows us to make a choice that might not seem like the safest choice," says Marc Fredrickson, corporate communications VP at EMC. "But when we acquired [software maker] VMware, they raved about the work OutCast did [for them]. And we also heard from analysts and reporters about what an exceptional agency they are. It's not too common to hear analysts and reporters praise a PR firm."
Fredrickson adds, "Had they carried the business card of a larger firm, we'd have been just as impressed. But sometimes smaller firms have a more entrepreneurial spirit. This was an eye-opening experience for us."
For others, the selection of smaller firms is more systematic.
"It's cyclical," says Rich Moore, who recently left Edelman as its global tech-practice leader to seek other opportunities working with smaller tech companies. "We've seen this before. The big agencies often have relationships with big companies, and some new firms come along and win some business."
Moore, who was a cofounder of Copithorne & Bellows and had EMC as a client when that firm was acquired by PN, adds that he feels "the best smaller firms have made some pretty smart and savvy moves, whether that's hiring the right people or opening a new office. And now that business is percolating."
A changing environment
The tech-agency landscape is much different from just a few years ago. Wilson McHenry and Niehaus Ryan Wong are gone, and agencies like Copithorne & Bellows, Cunningham Communication, Blanc & Otus, and many others were sold to global firms just before and during the dot-com boom. But many of those that sold during the boom and led global tech practices have either moved on or have taken less involved roles.
Many of the biggest names in tech PR were absorbed into global firms over the last several years, leaving a void, points out Ted Schlein, general partner with venture capital firm Kleiner Perkins Caufield & Byers. As new firms have filled that void, many companies are recognizing that it's ultimately about the people running the account, not the name on the shingle.
Many such firms have made a conscious effort to stay small in order to keep the quality of the people and work high, he adds.
Not that being a boutique firm is synonymous with high-quality work. But many point out that as a firm gets larger, there is more of a focus on the bottom line.
"It will be hard for the global PR companies to keep a culture of innovation that meets the needs of clients and account people," says Larry Weber, founder of The Weber Group and Weber Shandwick, who recently left the Interpublic Group to start his latest venture, the W2 Group.
"The big shops don't have the formula right yet," adds Sheri Benjamin, president of PRSA's Silicon Valley chapter. Benjamin left WS late last year as president of its US tech practice. She sold her firm to BSMG in 1999. "You need the right mix of talent, creative strategy, good solid tactical execution, and reasonable pricing," she says. "Many big tech companies went with big firms because the pricing was so attractive."
But some clients say they have no preference of sizes.
"We didn't enter the selection process with any predetermined sense of whether we wanted a large or small agency," says Eric Armstrong, director of public and analyst relations at Citrix Systems, which selected A&R Partners. "It seemed like the smaller agencies invested more in the RFIs and the presentations, and consequently, they appeared to have more interest in earning Citrix as a client."
Armstrong adds, "I think that is why smaller agencies are doing well. The client has access to all the top people in the agency, and the agency is quick to respond."
When Sony sought a firm to handle consumer electronics, size was not an issue either, says Gretchen Griswold, corporate communications director. Sony selected Ruder Finn because it presented a team that could handle the work and had the right chemistry, energy, and drive.
While RF's San Francisco office, Ruder Finn/Switzer, is made up mostly of staff from Switzer Communications, which the larger agency bought in February 2003, that acquisition hasn't negatively affected that office's drive, says Griswold.
When EMC first selected OutCast, Fredrickson said the agency had the entrepreneurial energy of a startup.
"I've never bought into the value proposition of the holding company," says Fredrickson. "I am not interested in presentation from the owners. I want it from the account team, who can stand up and tell us their ideas."
Fredrickson adds, "We would not pick an ad agency based on its affiliation with a PR agency.
Porter Novelli held our business based on the merits of the team working with us, not because they were part of Omnicom or had a broader array of services."
Key tech wins since January
EDS (regional account)
Virgin Electronics; Citrix Systems
Siebel Systems; Applied Materials
Blanc & Otus
Symantec (consumer account)
Cohn & Wolfe
Cubitt Jacobs & Prosek
Siemens Business Services
The Hoffman Agency
Phoenix Technologies; Royal Philips Electronics
Lois Paul & Partners
Royal Philips Electronics
O'Leary & Partners
Ogilvy PR Worldwide
EMC; TiVo (corporate account)
Kyocera Mita; Texas Instruments (business media relations)