It used to be that public relations agencies put on elaborate dog-and-pony shows in reviews as clients sought out the best agency to suit their needs. Now it’s the agencies that are interviewing the clients.
Last year was a heady time for the communications business in general, with newspapers, radio and TV stations, billboard companies and ad agencies pulling in record revenue thanks to a strong economy and the billions being spent on marketing by fledgling Internet companies.
But of all the industries reaping the benefits of the dot-com explosion, perhaps none were as blessed as the P.R. business.
“Frankly, we’re drinking from a fire hose,” said Sue Bohle, whose Century City agency the Bohle Co.’s fee income is up 100 percent this month over January 1999.
Not too many L.A. agencies doubled in size as did Bohle largely because the agency specializes in technology. But most are reporting gains in the double digits, and calls to a dozen or so agency heads turn up a common refrain: Many actually are turning down more business these days than they’re accepting.
Too much work
“In 23 years in the business, I’ve never seen this kind of pick-and-choose among every level of agency,” said Marci Blaze, whose Blaze Co. in Venice grew by 38 percent in 1999 over 1998. “We’re finally coming out of the dark ages, and there’s enough work for everybody.”
Actually, there seems to be too much work for everybody. Jerry Swerling, a consultant who helps companies choose a P.R. agency, says he got a lot of business last year simply because clients were having so much trouble attracting the attention of a P.R. agency on their own. Many firms are just too busy to take on new business.
Rogers & Associates in Century City, which won one of the biggest new accounts of 1999 when it picked up a one-year, $3 million anti-smoking contract from the California Children and Families Commission, imposed a new-business moratorium in October.
“Our big story on dot-coms is, we’ve probably rejected 80 percent of the clients that have come to us,” said agency President Lynne Doll. “If we don’t think there’s a branding opportunity, we’re walking away.”
Such selectivity isn’t just a function of agencies being overworked. A lot of dot-com clients are fly-by-night operations, and taking them on can be risky.
The result is that the initial contact between client and agency, which used to be a sort of interview that had clients query agencies about their skills, has been turned on its head. Now the agency wants to know how well funded the client is, and whether its business model is one that can really survive the long haul.
Doll says some dot-coms ask agencies to work on credit, assuring them they’ll be paid once the venture capital money comes in. But few agencies are willing to accept that kind of arrangement.
“The last thing we want to do is take on something and have it ramp up and then have the business go away,” said Michael Nyman, president of Beverly Hills-based Bragman Nyman Cafarelli LLC, whose business grew by 37 percent last year but mostly because existing clients increased their spending, not because of an influx in new Internet clients.
Role reversal
Dot-com clients are notoriously hard to work for. They expect their agencies to work the same kind of insane hours they do, and they often have unrealistic expectations about what an agency can do for them.
“In many cases, they’re people who are brand new to the business world, and they just have this overarching concern that they need to be out there publicly,” said Ron Hartwig, executive vice president and head of Hill & Knowlton’s L.A. office.
For many dot-coms, “getting out there publicly” means getting coverage in the trade publications that are read by tech investors like Red Herring and Industry Standard. P.R. agencies also are devoting their energy toward getting CEOs involved in seminars and other industry events that are attended by investors.
Some believe the current role reversal, in which agencies pick and choose their clients, is fundamentally changing the status of the P.R. industry. “There’s a certain reverence for your P.R. agency that didn’t exist before,” Blaze said.
Swerling, who calls 1999 the most extraordinary year for public relations in his 20-year career, agrees that the image of the industry is changing for the better.
“P.R. really has matured as a profession,” he said. “It’s no longer a luxury. It’s no longer something that is done if we can afford it. It’s a must-have tool.”
Swerling guesses that industry growth in Los Angeles was between 25 percent and 35 percent last year. Not all was dot-com-related; a strong economy meant businesses in nearly every industry upped their marketing budgets. But most agree that the biggest single cause of the influx in spending was Internet firms.
“The only thing holding the industry back from even further growth is the availability of good people,” Swerling said.
Indeed, a labor shortage means that salaries are skyrocketing for P.R. professionals, especially those with the kind of expertise that dot-coms are seeking. Surprisingly, though, that doesn’t necessarily mean experts in technology marketing.
Because so many Internet clients are trying to raise attention among Silicon Valley venture capitalists and Wall Street, they’re looking for people with expertise in investor relations and financial P.R. High-profile executives with expertise and connections in these specialties can pretty much write their own tickets, many agency heads say.
Assistant Managing Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.
