Hi-tech PR has been a boom industry. Annual fee income increases of
30 or 40 per cent have been common in recent years and some medium-sized
agencies have even managed growth rates of 70 per cent or more.
But with talk of a recession, allied with changes in the IT industry,
many hi-tech agencies are now revising their growth forecasts, either up
or down.
One trend is having a significant effect on the marketplace, and will go
on doing so in the long-term. The convergence of separate technologies
has already resulted in mergers and acquisitions among the major
industry players. This year has seen several mammoth deals, including
the merger of Compaq and Digital and the acquisition by telecoms company
Nortel of data networking company Bay Networks.
’I don’t necessarily believe the pace of acquisition activity is very
different to what we’ve seen before,’ says Tim Dyson, chief executive of
specialist hi-tech PR firm Text 100: ’But there are still grounds for
some very serious mergers to take place by some very serious companies
trying to weld the two worlds of voice and data communications
together’.
IT companies occupying the middle ground could well be left behind.
Brodeur Worldwide chairman and chief executive John Brodeur predicts:
’What I think is likely to happen is that there will be a few global
players that are very strong and have a good chunk of market share and
small start-ups that are also doing very well.’
It is hardly surprising that the consequences of merging technologies
are the subject of hot debate within the hi-tech PR industry. Will it
mean fewer companies and therefore less work? Grant Butler Coomber (GBC)
partner Jill Coomber is optimistic that the sector will continue to
grow.
’As larger companies which tend to have older technologies converge,
smaller companies in newer sectors start up,’ she says.
’There is a wave of internet and telecoms companies sweeping through
now. Companies that are start-ups now could be dollars 200 million
companies doing serious PR two years down the line.’
’There will be more business around and the market will be more
competitive,’ suggests Brodeur. ’There will be more revenue, but fewer
large accounts.
Accounts that are worth dollars 500,000 now might be worth dollars 2
million when you get two or three companies merging’.
Good IT PR agencies who can see the commercial implications actually
stand to benefit from convergence according to Lewis chairman, Chris
Lewis.
’It is a question of waking up to these commercial opportunities rather
than just getting excited about the technology for its own sake,’ he
says.
Convergence will almost certainly accelerate the globalisation of the IT
sector. Large merged companies will be streamlining their worldwide
operations. Smaller specialist companies, such as those in the internet
market, will also be keen to have an international presence.
’Globalisation is a tidal wave. The demand is as strong as I’ve seen in
any other movement in PR in the last decade. It is not just the global
giants - even some of the smaller start-up companies such as those
involved in software or the internet are setting up as global
organisations,’ notes Brodeur.
How best to serve these global organisations is a matter of concern for
PR agencies, large and small. Many are already on the acquisition trail
or looking for suitable partners. The latest example came in October
when WPP-owned Ogilvy PR acquired US hi-tech PR agency Alexander
Communications.
It cited, as the rationale for the deal, ’increasing demand for global
branding and integrated worldwide communications in the technology
industry’.
According to Dyson, Ogilvy PR’s move was ’another sign that major
communications companies are finding the only way to make serious
progress is by acquisition’.
Coomber admits that GBC is regularly approached by bigger agencies
looking for others to buy up, but insists that GBC is not
interested.
’From our perspective, the more competitors that are bought up and join
bigger companies, the better our position is. We’re a strong independent
agency backed by strong partners in other markets, which you don’t
necessarily get with owned agencies,’ she says.
As with their IT clients, it seems that the agencies most vulnerable to
takeover may be those who are medium-sized.
’We’re a reflection of the industry and I think there will be a few big
players and niche players,’ says Brodeur. There will inevitably be more
consolidation in the IT PR industry and he predicts that this will
result in around five or six major global agencies.
Simon Quarendon, chief executive of Words Group, says that the industry
will polarise between large global agencies and niche players.
’Agencies that go global are playing for very high stakes and only
relatively few can play that game. So I suspect that the rest of us will
become more specialised,’ he says.
He also believes that the total number of hi-tech agencies will
mushroom.
’Lord Chadlington said recently that he was not so concerned about the
threat from big agencies but from smaller virtual agencies,’ he
says.
’Senior managers are being shed and are using their pay-offs to form
small virtual consultancies and taking their clients with them. They can
offer their clients drastically reduced prices, and this is all driven
by technology,’ he adds.
Words Group itself is planning to go down the viritual path and has
about 4,000 square feet of office space which Quarendon aims to fill
with as many smaller agencies as possible, with whom Words Group will
form alliances.
One medium-sized agency with ambitious expansion plans is Lewis
Communications.
’We’re ideally looking to acquire any other agency that we see as good
competition,’ says managing director Chris Lewis. He says that the
agency has around pounds 5 million to spend on acquisition but
acknowledges that it is very difficult to find any that are worth
buying.
’It may be we end up working in partnership with a bigger player on the
global stage which can give us access to a bigger market,’ he says.
Lewis believes that smaller agencies could well start making moves on
much larger rivals and those that are not committed to technology,
whatever size they are, will badly lose out on the sector’s
opportunities. ’The expert knowledge and innovative approach new
agencies have brought is a real differentiator and will make them a
force to be reckoned within the turbulent times ahead,’ he says.
As convergence and globalisation exert their influence on hi-tech PR,
there is another factor that could shake up the industry. Recession has
been a word on everyone’s lips and while most experts say we are not
technically there yet, the threat still looms.
Most people in IT PR, however, are resolutely bullish about prospects
whether there is a slump or not. ’There are some instances where the IT
industry has actually benefited from recession. Large organisations are
looking to cut costs and IT systems can help them achieve this,’ says
Oast Communications partner Barry Monk.
And if there’s such a thing as a right time, now and the next five years
or so is it for the technology industry. Most organisations are now
spending millions on year 2000 compliance. ’This means they are not
investing in other areas of technology and a lot of systems are getting
a bit dated,’ says Esme Page, managing director of Herald Germany. ’So
spending will kick in in these areas after 2000.’
One important difference between any upcoming recession and those that
have gone before is that IT now occupies a much more important place on
the corporate agenda. It has moved out from the back office to become an
integral part of every area of business. Whatever is going on in world
economic terms, companies need to reinvent themselves. They are
committed to strategic spending on IT.
Even so, a recession could hit the larger agencies hardest. Those with
lower overheads could feel the benefit of companies quitting bigger
rivals or deciding to outsource their marketing and PR.
’There is always the value for money question,’ Quarandon says. ’When
push comes to shove smaller agencies could undercut their larger
rivals.’
Any tightening of corporate belts is also likely to bring increased
demands for proven high performance. Citigate Technology chairman Suzi
Frith says: ’Clients want to ensure they are getting the best value for
their spend so there will be increased emphasis on benchmarking.’
Another effect could be for companies to review their PR accounts more
often, prompted by heightened awareness of what agencies are up to, and
of the competition among them. Dyson hopes ’this will drive out
mediocrity and increase professionalism’.
The flip side is worrying though. ’It may also push people to go for the
lowest price, which would be sad because low prices tend to mean low
quality,’ he says.
One thing is very clear. There will inevitably be casualties in the
hi-tech PR industry. Periods of growth are notorious for masking
mediocrity.
But, as technologies converge and the pace of development slows, the
competition for getting media coverage will intensify. This will expose
any lack of journalistic knowledge and poor technical expertise. Weak
stories will fail and so too will weak agencies.
INTERPR: TAKING PART IN THE GLOBAL MOBILE REVOLUTION
In May last year, InterPR, a network of European agencies which includes
Profile PR in the UK,won the pitch to handle PR across Europe for
Iridium, a consortium of companies from more than 20 countries which
recently launched the world’s first global mobile phone service using a
constellation of 66 satellites. Burson-Marsteller has been retained by
Iridium in the rest of the world.
Profile PR senior account director Michael Wadley believes it was
InterPR’s ability to demonstrate its co-operative capabilities that
helped it win the pitch. ’Each agency is responsible for its own
domestic market, but the InterPR network carries out PR for Iridium in
Europe as a virtual team,’ he explains.
Conference calls are a regular feature of account management. Sometimes
the client, which has its European base in Germany, uses conference
calls to brief agencies. E-mail is also used for this purpose. But
Wadley stresses that this sort of contact is no substitute for
face-to-face meetings involving all Iridium agencies, which take place
on a quarterly basis in different venues. ’The quarterly meetings give
us a forum to get a lot of information on the table quickly and work
very effectively,’ he says.
All European agencies are regarded as equal and are able to contribute
campaign ideas. ’We’re very proactive and we all generate ideas, and the
client appreciates that,’ says Wadley. Ideas created in one country are
used in other countries as appropriate. For example, a 200 days to
launch party for the press in the UK was remoulded as a 66 days to go
party for the Spanish press a few months later.
Although Profile was a competitor to B-M in the European pitch for the
Iridium account, Wadley says the agencies are now working very closely
together on global PR. ’There is a lot of information sharing. We put
our ideas through Burson-Marsteller and they give us feedback. We also
look at their ideas, and sometimes criticise them, or add to or amend
them’.
Profile enjoys a particularly close relationship with B-M in Washington,
where Iridium has its headquarters.
’A lot of the corporate information comes from Washington, and we spend
a lot of time with Burson-Marsteller getting positioning statements
right and making them coherent across the globe,’ says Wadley.
Conference calls involving as many as 30 countries are also a feature of
global activity.
In the New Year, Profile is set to play an important role in a global PR
campaign for Iridium that is currently still under wraps. ’This will be
a massive campaign kicking off in January. A lot of intricate
co-ordination work with B-M will make it happen across the globe,’
explains Wadley.
CANON: RAISING ITS APPEAL AMONG FEMALES
Women have traditionally been ignored in technology marketing campaigns
that have focused on bits and bytes rather than how technology can
enhance lifestyle.
This summer Canon’s Computer Products division briefed Cohn and Wolfe to
create a campaign to broaden the appeal of its products beyond avid
’techies’ and grow its market share in the wider consumer market,
particularly among women.
Cohn and Wolfe recommended a highly targeted lifestyle-based advertorial
campaign to ensure maximum impact within the selected media. This
approach was chosen, says Cohn and Wolfe associate director Chris Cox,
so that Canon could get across its key messages accurately and avoid the
traditional product-oriented treatment of technology.
Advertorial treatments were specifically tailored to suit particular
editorial environments. A double page spread in Practical Parenting
showed how computing technology could be used to create invitations,
banners, t-shirts and thank you letters for children’s birthday parties.
In BBC Gardener’s World magazine the advertorial explained how computers
can be used to plan a garden through the seasons.
A direct response mechanism was built into the treatments through
competitions and information hotlines which allowed impact to be
measured. Responses show how successful the advertorials were in
reaching target audiences.
In Practical Parenting, 90 per cent of respondents were women, while in
Gardeners’ World 57 per cent were women.
The success of the first advertorials led to Canon running an eight-page
special supplement in the Mail on Sunday’s You magazine in
mid-October.
This showed how Canon products could enhance the lifestyle of each of
the members of an imaginary family. Women made up 52 per cent of
respondents to the supplement.
Following its work for Canon, Cohn and Wolfe commissioned Gallup to do
research looking at women’s attitudes to technology marketing. A
thousand women representing a broad cross-section of society were
interviewed by telephone. Gallup’s research revealed some interesting
statistics. Whereas 68 per cent of women felt supermarkets are generally
sensitive to their needs, only 31 per cent felt that computer companies
are. 75 per cent of women said they wanted advice when buying technology
products. But while 16 per cent of women said they were very interested
and 22 per cent that they were quite interested in internet access, only
four per cent were very confident and 13 per cent quite confident in
buying products in that area.
Jim Murphy, a non-executive director at Cohn and Wolf and a former
director of the Henley Centre, is working on a report which will look at
the findings of the research plus Cohn and Wolfe’s own desk research and
experiences of working with the media and Canon.
’There is a great thirst for advice about technology from women, but the
level of confidence about buying is lagging behind interest,’ says
Murphy. ’This is potentially one of the marketing vacuums, and there is
the need for more supportive PR from companies marketing technology
products’.
IBM: TAKING SYSTEM 390 INTO EMERGING MARKETS
For the last four years Ogilvy PR Worldwide has been coordinating a PR
campaign for IBM’s System 390 mainframe computers across Europe the
Middle East and Africa. At the end of last year this remit was extended
to include Eastern Europe. Then, in May this year, Ogilvy’s brief was
widened still further to include China and India.
’I don’t think there’s another product that’s managed in such a way in
terms of the geographical spread and transcontinental planning,’ says
Tony Hynes, account director at Ogilvy PR.
Hynes coordinates the campaign from his office in London, working
closely on strategy with his client in the EMEA region and with the IBM
manager in charge of emerging markets.
The System 390 account is handled in 32 countries via a ’best of breed’
network. In China and India, that means Ogilvy-owned agencies. Offices
in Bombay, New Delhi, Bangalore and Chennai cover India. In China,
Ogilvy PR operates in Beijing, Shanghai and Hong Kong.
’These markets are very different, although they are all banded together
under the emerging markets umbrella,’ says Hynes. ’We take a lot of
strategic advice from our partners in these countries about audiences
and PR activities.’
Tactics used in the emerging markets are quite different from the System
390 campaign in the West. This tends to concentrate on traditional media
relations with the trade and business press. For example, Ogilvy PR has
found university lecturers to be quite an important audience in Eastern
Europe. IBM has funded summer schools in the US to train them in the OS
390 system. Government communications programmes are also being run in
the emerging markets in conjunction with IBM’s government division.
Ogilvy PR is still able to make the most of its EMEA experience when
dealing with emerging markets. ’We have a bank of thematic approaches
that have worked in the West. Because the emerging markets are behind in
terms of economic development, themes we have used in the past in the
West are pertinent there now,’ says Hynes.
After just a few months the System 390 campaign in the emerging markets
is producing results. The mainframe computing option is being recognised
as a viable alternative to distributed computing.
’We’ve had very positive feedback from sales staff in the emerging
markets, particularly about the success of the brand recognition
campaign. The System 390 is on people’s lists now, when it was not
really in the past,’ says Hynes.
GRAYLING PR: CHANGING THE FACE AND FORTUNES OF EQUANT
Equant claims to operate the world’s largest business telecomms network
and has a presence in 220 countries and territories. This summer, the
company went through a corporate rebranding exercise. At the same time,
it sought an initial public offering on the stock markets in New York
and Paris. Equant asked Grayling PR, which has worked for it across
Europe since early 1996, to co-ordinate the PR for both projects on a
global basis.
Grayling manages Equant’s European PR programme from its London office,
using its network of owned companies and affiliates. It consults with
the client’s corporate headquarters in the US, the main European office
near Slough and with Singapore for the Asia-Pacific region.
The firm has put together a communications manual, Q & A documents and
supporting literature such as position papers and background material,
plus the general PR approach these underpin.
Robert Fenner, a director at Grayling in London, explains: ’Equant
selected us for the IPO and rebranding because they felt this needed
central co-ordination and was too big and important to be handled
separately. We’d proved our worth in Europe and also had regular
consultation with Equant in the US so we’d built up a fund of trust with
them.’ Running the programme for the IPO involved advising Equant’s US
headquarters about the documentation required and strategic advice.
’We worked closely with the company at all levels and in all regions to
ensure that all external communications were not only as open as
possible, but that they conformed to appropriate legislation,’ says
Fenner. Grayling also drafted all non-financial press releases and
briefed key spokespeople.
The concurrent rebranding called for Grayling to explain to internal and
external audiences the benefits of the three operating divisions all
being given the Equant name. This involved preparing briefing materials,
setting up interviews and organising discussions with analysts.
The IPO was a big success. Shares were substantially oversubscribed and
have traded profitably from the first day. Fenner says: ’PR plays only a
part in that, but Equant is now noted as an extremely competitive
company in the network services field.’
He believes the exercise showed the advantages of a centrally managed
global campaign. ’It is co-ordinated and consistent and clients don’t
have to spend time dealing with individual agencies. We had to ensure
that there was a substantial reporting procedure in place so Equant
could turn to us for a one-stop report on progress.’
