Category: Technology PR

According to today’s PR Week.

One interesting stat was that overservicing levels in agencies are soaring. Apparently 33pc of agencies have reported an increase in overservicing. This compares with 26pc last year.

Says PR Week: "The new business climate has become increasingly quiet, while overservicing of accounts by its members is at an all time high."

Let us remind ourselves what PR Week said back in April: "the fact that 90pc of the (PR Week) top 150 have seen fee income rises year on year is testament to an ever-more mature and reassuringly vibrant profession.”

As I’ve said many times before, increasing top line revenue is meaningless if there is no corelation with rising profits. The PRCA themselves say: "Overservicing at 33pc is unsustainable for most agency business models." (I’m curious to know under which business model overservicing is sustainable).

So is an industry that tolerates this level of overservicing really "more mature and reassuringly vibrant"? Quite the reverse. Overservicing means either a) services are being mis-priced (which isn’t very mature) or b) agencies are too scared of clients to ask for the renumeration they believe they deserve (ie a lack of confidence).

Hence why the debate now being stirred by Andy Lark and others is so important.

This piece from Forbes magazine answers the question why there is such demand for PR from start ups in Silicon Valley:

"In the second quarter of 2006, venture capitalists invested $6.73
billion–5% higher than last year. More than $2.4 billion of that came
from VC firms in the Bay Area, up 13% over last year." So there you have it.

The article also focussed on the recent AlwaysOn conference – essentially a cattle market for start ups looking for VC money. As Forbes says: "Each would-be  Sergey Brin or  Larry Page had just six minutes each to pitch a roomful of about 100 venture capital investors and potential business partners."
It quoted Woodrow Wilson’s maxim: "If I am to speak ten minutes, I need a week for preparation; if an
hour, I am ready now." (This is of course a variation on Mark Twain’s earlier comment to a friend: "I’m sorry I wrote you such a long letter, I didn’t have time to write you a shorter one").

So how did these start ups fare?:

Some CEOs in the enterprise and information technology services
categories suffered from audience jargon fatigue. The terms
"recentralized infrastructure," "enablement" and "back-end data
services," lulled the audience. Rick Tinsley, CEO of  Silver Peak Systems, even stayed behind his lectern while uttering those words.

"If
you only have six minutes, what VCs really want to know is who you
built your product for and how you’re going to make money," says Tim
Chang, a partner at Gabrial Venture Partners who served as a judge for
11 CEO pitches. At Stanford, a loud beep signaled the passage the first
minute, then the sixth minute.

"Don’t spend your time talking
about your technology and what’s wrong with the world–we already buy
into that and give you the benefit of the doubt."

Chang expressed this sentiment loudly when he asked  Ragnar Kruse, CEO of wireless data delivery company  Smaato,
"Who cares?" after Kruse finished his pitch. "I really didn’t mean it
flippantly," Chang says. "I just literally wanted to know who their
customer base was."

It made me think that this could be applied to the PR pitch process. What if clients had to give agencies on the pitch list a 6 minute presentation on their business and what they wanted PR to achieve? In turn, agencies would have 6 minutes to pitch back to the client.

If this principle was applied more widely, it would certainly help to focus the minds of both prospect and agency. If a start up looking for potentially millions of dollars of investment can do it, why can’t agencies who, mostly, are talking about tens of thousands?

Andy Lark picks up on Tim Dyson’s orignal post about the $10K PR problem.

Stuart Bruce in turn has added his critique of Andy’s views on the matter.

There are a number of issues raised in all of these posts and associated comments – and I disagree with some of the points made in all of them. Here’s my summary:

Andy Lark: "I don’t want $15,000 dollars worth of service. I don’t even know what that is! I want results. I don’t care what it costs or whether an agency has to
under or over service to deliver it. I just want results against the
agreed budget. You commit, I commit, we all commit together."

I think Andy is being disingenous here – he knows what service is – its just that there is a big difference between service and value delivered. Any agency can show you they delivered $15,000 worth of "service" (here’s the timesheets and the list of deliverables). However, can an agency show they have delivered $15,000 worth of value to the client business? And of course, every client wants more (much more) than a simple cost to value eqiuvalence. Part of the problem is that most clients have an expectation that the value delivered will be far in excess of the cost of service. But what constitutes an acceptable ratio of cost to value – 10 to 1, 100 to 1? There are no accepted benchmarks of what is a good return on service (ROS). So clients have a vague, unmeasurable notion that PR should be able to deliver value far in excess of the service required to deliver – so we end up with the usual attempts at trying to demonstrate that value – which many clients either don’t understand or choose not to.  As an aside, I’ve always found it curious that most marketing directors accept that out of all the elements of the marketing mix, PR is the one that potentially can deliver the greatest value to the business – and yet they resolutely refuse to invest more in it compared to advertising et al. Then again, perhaps the inability to demonstrate value lies at the heart of this.

Andy Lark again: "Finding a great agency is bloody hard work. They are few and far
between. At any billing rate. Few CMOs I know get the value of PR or
AR, let alone the value of a good agency… I accept we are part of the
problem, but…
finding an agency that gets your business and has a real
enthusiasm for contributing to the growth of the business – harder
still".

My issue here is with concept of "great agency". What constitutes "great"? They have a number of big name clients and a big client list? Just because an agency represents a Microsoft or a Dell, does that mean they are "great" for the prospect sitting in front of you? Companies that hire an agency based on hoping they’ll do for them what they do for their big name clients are probably in for a disappointment. Indeed, if the subject is a start up, then the job they need doing is very different to that for a well established brand. I’d hazard what prospects are really looking for are the "right" or "appropriate" agency for them ie the teams that has the right combination of brains, grey hair, personal chemistry and executional ability to deliver what they need. Of course, how prospects goes about trying to find the "right" agency is no easy task – but might be made easier if they used a different selection criteria.

On the subject of "getting" a client’s business, it must be said that some client’s don’t even "get" their own business – which makes the job even harder of persuading them of the right course of action.

Andy again: "Finding an agency that understands that great ideas get funded –
near impossible. They are caught in the conundrum or belief that ideas
require budget prior to being generated. Bullshit. (and I am talking
about real ideas, not those regurgitated from the last pitch)."

This is the old "opening the kimono" problem – what level of opportunity cost is the agency prepared to stomach in order to win the business. And with start ups, the level of risk involved for the agency is  always greater (witness the agencies that got stung in the dot com boom by businesses that tanked owing thousands in unpaid PR bills). I’m sure most agencies would have no problem with coming up with fantastic ideas for prospects if they felt there was a reasonable expectation that they would get paid for their effort (eventually) or at least some kind of commitment that they’d get more business in return for overservicing in the early days. (How many prospects offer the agency the lure of more work down the line in return for "more for less" in the early days – but when pressed to put that into some kind of binding contractual agreement, run a mile?)

Andy: "What is needed is a new kind of agency. One not built on billable hours
and 10k budgets. Maybe one built on the power of ideas to drive a
startup’s growth curve? One with the courage and conviction to
articulate a value proposition that resonates with the CMO of a
start-up and ability to explain what the budget should be."

I agree that the billable hours model for many clients is definitely past its sell by date – but until the value question is solved (see above), the demand for "a new kind of agency" as described by Andy sounds like code for "I want an agency that will do more for me, but I have to pay them less."

And finally, Stuart Bruce: "During the dot-com boom I achieved massive international media
coverage for a client because I had a great idea. The whole project
took just one and a half days and cost the client less than £1,000. The
objective was to attract the attention of about a dozen specific
organisations in order to secure meetings with their senior people.
Direct approaches had previously failed. The result was that eight of
the 12 actually approached the client and meetings were eventually
secured with all 12. Should I have charged them more just because it
achieved fantastic results? Of course not, that would have been
dishonest."

I don’t see why Stuart couldn’t have gone back to the client and pointed out the far greater than anticipated ROI – and ask for more money. Whether he got it or not is another matter – but I don’t see that as a dishonest action. Again, if PR agencies got better at defining what constitutes sucessful outcomes and the value they deliver, perhaps there might be a tighter correlation between the work they do and the reward they receive. And no, I don’t have all the answers to any of this – but good to see that people are at least trying to grapple with these meaty problems and do something about it.

Or rather, the legendary Troy Club – as detailed here: Rupert Goodwins’ Diary – ZDNet UK Comment.

Even if many of the beer soaked nights spent there can’t be recalled clearly, the place itself will not be forgotten.

Hacks and PRs looking for a late night drink in SoHo must now look elsewhere.

Which must say something about the popularity of MySQL in Web 2.0 businesses.

MySQL: http://www.mysql.com/why-mysql/awards/

I don’t know about other people, but keeping up with Web 2.0 applications is a full time job – you could easily spend your entire working day trying out and using things like Flickr, Writely, etc.

However, something tells me JotSpot might be on to something. In short, its a free, Wiki creation and management tool (though you do have to pay for it if your user and page numbers go above certain levels – even then, the charges are hardly onerous).

So why does it seem quite good? Namely because it does make it v. simple to get your own Wiki up and running. The promise of collaborative working via the web has been with us since the beginning – but no one has really cracked it – perhaps, that is, until now.

I’ve only had a brief play around with it – but it is easy to see how this could be put to good use – it’s like Lotus Notes for Web 2.0 (albeit a much simpler and way cheaper version).

Dennis Howlett has long touted the benefits of the Wiki approach – I’d remained more cautious because I didn’t think the tools for building and managing were simple enough – but JotSpot certainly seems to be making a good fist of it.

If anyone else out there has begun playing with JotSpot, I’d be interested in their comments.

Chris Edwards vents his spleen here about getting press invites to meet a CEO (or presumably any other senior exec), on the (apparent) basis that they just happen to be in town.

Charles Arthur picks up the baton here. 

As someone who has had to organise this kind of thing on many occasions in the past, I’m well aware of some of the issues involved. I have to say, most companies are savvy enough not to want press meetings set up for the CEO just because he happens to be coming  UK/Europe, usually for reasons other than meeting the press eg conference, customer meetings, troop rallying, etc. However, there are times when the sales guys can’t come up with enough customer meetings for him (or the UK management team don’t want the CEO hanging around with nothing to do), and somebody has the bright idea of getting him to meet with some journalists. The in-house marketing or PR person is duly leant on, who in turn leans on the PR agency to "organise something" (and no doubt at very short notice).

Agencies should of course ask the tough question of "why are we doing this?" Occupying the CEOs time is not a good enough reason to get journalists to take several hours out of their day unless they can justify it.  The other questions that should be asked are:

– is a face to face meeting the only way in which we can deliver this story/information to the journalist? As others have pointed out, the vast majority of information can (or should) be available in others ways eg web site, email, blog, podcast, hey, even a phone call.

– does the story/angle/opinion/information really have value to the journalist (or more importantly, the journalists readers). Even assuming you do persuade the journalist to turn up, will they actually write anything – journalist attendance is not a result in its own right.

Another typical issue is that the journalist is expected to fit around the CEOs schedule – not the other way round. So the time slots for press meetings are  secondary to things like customer meetings – hence the arm twisting to persuade the journalist to turn up at a precise time eg 2.15pm to 3.15pm. Or the frantic call to try and shift the time of the meeting when a customer meeting gets changed and trashes the original agenda.

(I’d hazard a guess that big important customers would never get treated like this. Journalists are a special kind of customer – so should be afforded the same courtesy. Saying: "We think you are very important" is one thing – if your behaviour doesn’t mirror your words, it sends the wrong kind of message),

Having said that, there is no question that the tech PR industry still lays great store by the face to face press meeting. And under the right circumstances, it can be very valuable for all parties concerned. Though Chris Edwards does seem to have been at the receiving end of a particular ill considered invite.

Many thanks to Renaissance Chambara for this one.

Tim Dyson reports on the uptick in demand for PR in Silicon Valley – the return of the $10K a month start up spender. As he points out, the catch is that start ups want experienced PRs working for them – and they typically want $15K worth of service value.

On the first element, as we’ve documented here previously, there is a dearth of experienced, senior PR talent – both in the US and UK. Tim rightly notes that the last 5 years has seen an exodus of good people from the tech PR arena – so there is a mismatch between what clients want and what the industry can supply.

On the second point, clients everywhere are demanding more for less. Effectively, an immediate discount. 

With my basic grasp of economics, I’d always understood that when a commodity was in scarce supply, its value went up – however, the reverse appears to apply here.

Nevertheless, that is the challenge facing tech PR companies. Somehow, I don’t see the supply of experienced PR personnel growing rapidly overnight – something tells me the people who have left the industry won’t be coming back any time soon – and besides, so much has changed in the last few years, their experience might be a little rusty anyway. And it’ll be a while yet before the bright young things of today have gained the level of experience demanded by clients – assuming of course that they too don’t quit the game early – given that investment in training in PR still seems to be in the doldrums, then don’t hold your breath.

My thanks for to Rupert Goodwins at ZD Net for unearthing this gem:

And while we’re dallying in the land of press releases, here’s a lovely little piece of marketing-speak. EMC has had a bumpy time of it
recently: it overestimated demand for one product and underestimated
that for another. You or I might call that sort of cock-up a mistake.
Not EMC: "This issue was a self-induced execution failure on our part.
There is no excuse", said chief executive Joe Tucci. I shall treasure
that for the next time I’m being carpeted — "I cannot tell a lie," I
shall say. "This issue was a self-induced execution failure. Can I go
now?"