Following the money

As the upturn continues, technology companies and agencies are eyeing new revenue opportunities.

As the upturn continues, technology companies and agencies are eyeing new revenue opportunities.

When it comes to PR putting money where its mouth is these days, investment is across the board. Technology companies and the agencies that partner with them are investing in numerous areas to help them communicate better - from staffing up in Europe to focusing more on customer case studies to enhancing research capabilities.

Two areas getting plenty of attention are investor relations and financial communications. In an age of corporate scandals, the Sarbanes-Oxley Act, and the eagle eye of the Securities and Exchange Commission, tech companies are putting the dot-com days behind them by growing up quickly and acting like other respectable industries.

"Enlightened companies have realized that you need to have more integrated corporate communications, and that means financial communications and IR can't be in a silo," says Ray Thomas, an EVP with Brodeur Worldwide.

The agency is hiring staff with deeper corporate experience, as well as enhancing its ability to help clients with financial issues from mergers and acquisitions to investor road shows. "I think Sarbanes-Oxley is really the biggest thing driving companies' interest in this," he continues. "They have to be more diligent and conscientious about what they are saying and how they are saying it."

At National Semiconductor, the investment in IR reflects investors' ability to get information on companies from so many different sources, and how "so much of that information can be erroneous," says Jeff Weir, director of worldwide PR.

The answer is to communicate as often as possible with core audiences, including investors. Weir is making sure company executives are spending as much time with investor groups and financial analysts as possible, along with spending more time attending investor conferences, so shareholders and their influencers have an opportunity to see and hear executives in person.

Sending out press releases to investors extolling the virtues of the company is a pretty tough sell these days. "We just want to make sure that when [financial analysts] talk about us, they know what they're talking about," says Weir. "There's been a lot of turnover in the analyst community."

But companies and agencies would be wise not to think financial communications and IR are one and the same, cautions Paul Bergevin, president of Citigate Cunningham. "Many firms in [Silicon Valley] think they're doing IR, but what they're [really] doing is financial communications," says Bergevin. "IR very often means you are communicating with large investor institutions, Wall Street analysts, and securities analysts. Financial communications is about communicating business performance."

Looking inward
PR investment is also proving that there is life beyond shareholders and that one of the most important stakeholder groups around are employees. This may seem painfully obvious to some, but a recent study by research and analyst firm the Meta Group revealed that with morale at an all-time low at IT companies, only 10% of the 650 companies queried for the survey saw employee communications as a way to address morale problems.

But many companies are starting to realize the importance of internal communications. Fuji Photo Film USA and Hitachi America, for example, are not newcomers to the concept. "We believe very much in having informed employees who are knowledgeable about not just their area of the company, but all areas," asserts Camilla Jenkins, Fuji's VP of corporate communications.

"We have several business areas. For a long time, employees lived in those silos and didn't see the bigger picture. "So we've completely redone our employee-orientation program," she adds. "We now have product boot camp, where everyone comes in to play with all the products [so that they] become more familiar and comfortable with what we do."

Employees are just like any other audience and deserve respect, insists Jenkins. "We've really reinvented the corporate communications function over the past three years. And we've chosen to focus on employees as a proper audience that should be communicated to with the same quality and commitment that we [show to] other audiences."

At Hitachi America, the company is helping drive a global branding effort that relies heavily on employee education. Branding is an important means of distinguishing yourself from the competition, but has only been embraced by Japanese companies in the past few years, admits Gerard Corbett, VP of branding and corporate communications.

And when it comes to a company like Hitachi, that is "so large and diverse," most employees, much like those at Fuji, are trapped in the respective silos of their business units. "We have launched internal education efforts, which started in Japan," says Corbett.

"North America has not been as difficult. Folks are more attuned to the importance of brand building. "Employees are on the front line in terms of brand representation," he continues. "And those representatives are touch points with the customer."

Moving into Washington
Companies are also seeking to reach out to audiences they may not have engaged in the past. The public sector is one such market, particularly as the tech industry has begun flexing its muscles over everything from supporting anti-spam legislation to fighting a bill requiring the expensing of stock options.

And in the aftermath of Enron and Adelphia, companies are not only keeping an eye on the public policy that dictates their behavior, they also intend to have a hand in shaping such policy. "We don't want to add our voice to an area that is already cluttered," says Eric Brown, director of worldwide PR for Network Appliance.

"We want to identify issues that our CEO can be passionate about, whether that's speaking out on public policy or testifying on Capitol Hill. But we don't want awareness for the sake of awareness. The policy link to what we sell is going to be pretty clear. But it needs to be something that is more than self-serving. We want to be seen as advocating on behalf of both the industry and our customers."

National Semiconductor's Weir tries to ensure his team is as closely aligned with government relations as possible. "We are emulating other industries that have become more political over time," says Weir. Part of this is also influenced by the technology recession and IT companies' stampede to the government market when other sectors' tech spending dried up.

Lewis PR just opened a Washington, DC, office to not only tap into the local technology community, but to also bring existing clients close to industry analysts and politicians who craft and oversee legislation. And as the tech industry matures, it wants to wield greater influence over legislation that will impact the business community for a long time to come, such as Sarbanes-Oxley, says agency VP Morgan McLintic.

Atomic PR has brought on public affairs consultants to help existing security clients involved in government dialogues on many issues, from e-mail security to network monitoring, says agency CEO Andy Getsey.

"We're developing some customized programs for select clients so we can be a liaison between them and government committees and government-related media," says Getsey. "Part of it is knowing how to speak the lingo. But you also need to understand committee structures, be able to recognize opportunities on dockets of events, and [know] how to best take advantage of those opportunities, whether it's appearing before Congress or speaking at private events."

Such investments are clearly paying off, as Silicon Valley wields influence like never before.

For proof, one need look no further than the politicians who descend on the region looking for campaign contributions. And the industry also flexed its muscles recently when Congress heeded Silicon Valley over Wall Street with its vote to defeat a bill that would have required companies to expense stock options.

Security issues
Perhaps driving this interest in politics stems from an increased interest in security companies. "Security is a very hot topic," says Cunningham's Bergevin. "It's everything from national security to personal security. Agencies are wise to look at this sector. It's not as large as enterprise software or storage, but with so many broader issues, it's a hot growth segment."

Security issues for the business world, from virus attacks to protecting company information, can threaten the very ability for companies to do business, adds Getsey, who, along with Bergevin, is hiring to boost his security expertise. "If someone gets access to your finances through an ATM transaction, they could drain your bank account," warns Getsey.

"Think of the liability issues if your medical records fall into the wrong hands. And the volume and sophistication of attacks on security systems is increasing. It's about more than e-mail going down for an hour. It's about 200,000 credit-card numbers getting stolen. This is about protecting the way the business world does business and communicates."

And with opportunity knocking so loudly, many security companies are looking to promote themselves. As such, agencies are finding plenty of opportunities themselves to work with security clients.

Measuring success
None of this amounts to much, however, if it doesn't provide tangible results. And that's why companies and agencies continue to invest in measurement. If IR programs fail to attract more investors and IT security practices fail to provide salient insight, then what's the point?

Measurement programs at Sun Microsystems cover the gamut, from operations to the company's reputation, making up about 10% to 15% of the company's PR budget, says Andy Lark, VP of global communications and marketing.

Measurement has always been critical at Sun. As the company has gone through "huge amounts" of change coming out of the downturn, measuring program performance - and Sun's reputation - is more important than ever. "We need to know what is in the minds of our constituents," advises Lark.

"Our industry has long suffered from a very narrow view that [measurement] is about press clippings and press books. And many still [see it that way] to this day. And agencies are on a suicide mission if they continue to be measured by the last piece of press coverage. We're much more interested in making sure we have a way of understanding whether perceptions have changed in the mind of the customer. There's no question that measurement of media performance is going through a renaissance right now. And that renaissance is driving companies to look at new services."

Executives are also more aware of the power of reputation, if for no other reason than as a result of simply seeing how corporate scandals have decimated several companies. At Network Appliance, Brown has increased the amount of money measurement programs receive because it has "gone from a nice-to-have to a must-have."

Brown says he rejects ad equivalency and similar programs and is always looking for ways to show that his investments and programs are paying off. "At a company our size, we place a lot of importance on PR," says Brown. "We can't afford the ad budget that a competitor like EMC can. So people expect more from PR."

Brown says that when it comes to media, he focuses not just on the volume of coverage, but also the quality of coverage, tracking against 10 key issues. But he says for a company that has about 6% of the enterprise-storage market, the company garners about 15% of the media coverage for that market.

"If I was at EMC, I'd have a very different way of measuring our success." Agencies are also investing in measurement programs, as clients feel more pressure to justify PR budgets. "Whether or not clients have been willing to pay for it, we've been focusing on measurement for a couple of years," says Barbara Bates, principal at Eastwick, which just formalized its measurement services into a strategic services group in order to better align PR programs with measurable bottom-line benefits. "We really think it pays off long-term with clients."

VP Giovanni Rodriguez adds that it's more important to determine if the right message got to the right audience and did it generate sales leads and close deals.

Todd Defren, a principal at Shift, argues that successful ROI programs depend on marketing and sales teams working together. And the onus is on PR, he asserts, to motivate sales to make sure it accurately reports where sales leads come from.

PR's job is to generate leads, but not close them. That is why sales and marketing need to be much more in sync. ROI programs won't last if they don't help move the needle closer to generating sales leads and supporting the bottom line, asserts Defren, adding that the agency is investing in technology and talent to make sure Shift has the capabilities to present measurement programs that do work.

At Lexmark, Jeannie Talbot, strategic messaging and communications manager for the printing solutions and services division, has made greater investments in services such as Delahaye Medialink to measure the impact of programs and to validate their effectiveness. "For me, it has long been about prioritizing activities," says Talbot, adding that her division, along with consumer and corporate, has made greater investments in services that help with campaign and content management and measurement.

Entry into Asia
Perhaps the growth area most discussed in the technology world is the move into Asia, and specifically China. Oracle recently said in a Reuters story that China is the company's fastest-expanding market, one where the battle against Microsoft and SAP has only grown increasingly intense.

Hitachi recently announced a $500 million new hard-drive facility in China. And Nokia, AMD, and Siemens are all planning to pour cash into the country.

"We believe that in order to be great in Asia today, from a PR standpoint, you have to be great in China," says Lou Hoffman, president of the Hoffman Agency, who continues to build out the senior staff in Asia. "But if you want to succeed, the agency principal needs to make the commitment to understanding the market, and make the rounds by spending time there meeting people. The Chinese culture is so relationship-driven. The US mentality is to plow through things, and that is 180 degrees removed from how [the Chinese] develop relationships."

Weir notes that PR complements the company's manufacturing presence there. With 45% of the company's sales in the Asia-Pacific region, Weir is tapping into the burgeoning tech-trade media that caters to the engineers who are "greedy" for information.

Despite a 10-year presence in China, Logitech is stepping up its PR efforts, and shifting the focus from technology and product-driven PR to more brand and consumer focused initiatives, says Nancy Morrison, worldwide director of corporate communications.

"There is a growing body of consumers buying these products who relate more to the brand and the experience," adds Morrison. "So part of our investment is also about understanding what is driving their interest in brand." So many companies are excited about China because the country has not made the big IT decisions that other nations with global economies have made, says Brown.

Network Appliance is not only focusing on customer-driven and solution-driven communications, but also is enhancing its government relations, as is Hitachi. With so many IT decisions being made by government ministries, developing government relations is essential.

Text 100 began planning its strategy to enter China three years before it entered the market, which it did just over a year ago.

China's development into a more market-driven economy, coupled with its admission to the World Trade Organization, has led to growing domestic demand from a burgeoning middle class, says Andrew McGregor, director of the agency's Asia-Pacific region.

But while Hill & Knowlton continues to invest in China, Joe Paluska, director of the US technology practice, warns against developing tunnel vision. "India is the hottest market," asserts Paluska. "India is a democracy and it is largely English-speaking - multinational companies find it easier to do business there."

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