ANALYSIS: Tech PROs face future with cautious optimism - News last week of IT firm Detica's stock market flotation has raised hopes among technology PROs that the worst of the sector's troubles are now behind it, says Andy Allen

Technology PROs are quietly confident that the technology sector will soon start to pick up after its downturn. Some even believe conditions are already improving.

A recent survey on tech PR business confidence, conducted by Portfolio Communications, reveals growing optimism among PROs that the market will improve during the latter part of 2002, with 43 per cent believing things will get better as the year progresses. Only 14 per cent expect conditions to get worse.

According to the Centre for Economics and Business Research, that confidence may well be justified. The think-tank reported last week that tech spending would rise 6.4 per cent by the end of the year, driven by the need for companies to upgrade their systems to keep pace with technological developments.

The sense of anticipation is heightened as the industry awaits the first tech flotation in many months, albeit with bated breath. Surrey-based IT services firm Detica is planning an IPO in June - a move widely thought to mark a turning point.

Financial Dynamics, which is handling the Detica IPO, is reluctant to over-hype the float, explaining that the client and all parties associated with the IPO have decided to adopt a low-profile approach.

Their caution is understandable. Only last autumn, conditions in the sector prompted a series of lay-offs in tech PR agencies. Firefly Communications, Grant Butler Coomber, Ogilvy PR Worldwide and Edelman London all shed staff.

However, some senior tech PROs are already noticing an upturn. AxiCom MD Julian Tanner says his firm won £500,000 of annualised revenues in the first two months of this year, mainly from UK-based start-ups.

In the finals months of 2001, Tanner reported, like many other tech agencies, a sluggishness in business. Contracts were being suspended - particularly by US-based clients.

Across the sector, fees and retainers were reduced. Now, he says, 'we're starting to see things revive'.

Cubitt Consulting founder Simon Brocklebank-Fowler agrees: 'It's game over for dot.coms, but a viable and profitable sector for companies that use the internet as a tool for marketing.'

At Mantra PR, there is similar optimism. Joint managing director Debbie Wosskow says recent business wins include a start-up telecoms firm and a non-start-up technology consultancy.

The latter is particularly heartening, she says, because the company had previously suspended all external PR.

Naturally, the new business has a different character. Long gone are the crazy days when agencies would virtually hand-pick clients and demand huge fees. Instead of sealing a deal over a coffee and signing the next day, pitches now can take months, says Wosskow.

Tech companies are re-evaluating how they spend their marketing budgets and analysing communications strategies more carefully. But Wosskow says: 'The business is out there; you just have to look for it.'

This view is backed up by Portfolio's survey, which reports that 24 per cent of IT companies expect to increase their PR budget during the next six months, compared with just 13 per cent last summer.

In the new climate, clients are increasingly seeking project work instead of retainer-based business to ensure maximum value for money.

Demand for media training and - particularly important in an unfavourable climate - crisis planning, remains buoyant.

Meanwhile, many agencies are accepting performance-related conditions for work. Mantra is actively offering new clients performance-related terms. Tanner says Axicom is also accepting similar conditions.

There is a widely-held view that now the upturn is in sight, leaner and meaner tech-specialising agencies are well placed to take advantage of the strengthening market.

Lewis PR chief executive Chris Lewis says agencies have been forced to be more competitive and develop more efficient means of developing new business as a result of no longer having a steady stream of clients flush with venture capital.

Like many, he is confident a recovery is on its way. Lower interest rates will stimulate the equities market and BT's price-cut for broadband services is likely to provide a further boost to the sector as companies embrace a faster, more affordable internet.

Once better times return, PROs should have learned from the mistakes of the boom. Many PROs recall a cynical attitude to buyers in those days that led to over-charging and hyping up what could realistically be achieved through PR. They consider a more realistic attitude will prevail in future.

The IT slump may have been exactly what the tech PR industry needed to come of age.

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