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May 2002 |
Gone are the days when IPO alone could earn a business much publicity. Who is responsible for this horrible marketplace? Everyone makes it sound like one sinister person in the form of a Lex Luthor who has thrown kryptonite on the digital world. How else do you explain the fact that Yahoo!’s market capitalisation was worth more than half of the free world a year ago, and today you couldn’t even trade it straight up for Portugal? Fortunately, the driving force behind today’s economy is a return to business fundamentals. This newfound sanity is one of the best things that ever happened to PR. Step back for a moment and consider what business fundamentals mean to the technology industry. Such an approach emphasizes sustainable business models, long-term differentiation, retaining as well as winning customers, and, of course, the novel concept - profitability. In short, we’re back to executive teams putting their efforts into developing strong foundations for their respective companies. Such a path helps PR professionals tremendously. Successful PR requires carrying out consistent communications over a period of time. There’s a winemaking element to the discipline. Cisco didn’t jump into the “power behind the Internet” space overnight. The company devoted years to selling routers, keeping customers happy and communicating messages about being a stellar maker of networking equipment. And this foundation provided the springboard to the high ground. Contrast Cisco with the parade of startups knocking on PR agency doors during the past few years with the single-minded objective: Get us to IPO as quickly as possible. Talk about the wrong tool for the job! Of course, you could argue that spending gazillions of dollars on advertising squandered precious resources as well. The point is, when you rush the PR process and the building of mind share, you end up with hype. I should add that public companies weren’t immune to this hectic syndrome. When Internet time ruled, the feeling ran that if you didn’t keep up, you were toast (of the burnt variety). In public companies, this dynamic became pronounced with the rise of the online investor. In short, PR got saddled with the dubious mission of snagging anyone with money earmarked for the stock market. All the sudden thousands of companies who operate behind the consumer scene – semiconductors, middleware, pipes, etc. – wanted to land their CEOs in front of the camera to reach the masses. CNBC probably contributed more to the rise of the celebrity CEO – powered forehead and all – than all other factors combined. While the objective of influencing the online investor hasn’t disappeared, we’re back to building this connection with the benefit of time. And that’s a good thing. After all, even the crafting of a CEO’s image and associating him or her with broad business issues requires the element of time. Going back to Cisco, it’s revealing to scrutinize the profile of CEO John Chambers during his initial five years on the job. If you dig into the Interactive Journal’s publication database (includes dailies, business publications and wire services), Chambers’ name shows up in only 38 stories during his five year on the job. The next year his name appears in 79 articles, and in 1997 his name still remains at the modest level of 158 articles. (Keep in mind that at this juncture, Cisco is already generating over US$4 billion in annual revenue.) It isn’t until five years into his tenure, in 1999, that he gains star status, with visibility in nearly 500 stories. It’s easy to look at Chambers today and assume he was always schmoozing with likes of China’s President Jiang Zemin and gracing the covers of Fortune and Forbes. But the reality is that his profile took years to develop. From a media perspective, we’re back in a world where it actually takes expertise to garner visibility in daily newspapers and the business press. When the stock exchanges spiked on a weekly basis in the “old days,” firms found their skyward stock prices alone triggered coverage. And because this era lasted so long – the NASDAQ snowballed nearly 400 percent from 1996 to 2000 – people lost what it really takes to build broad-based coverage. Perhaps the epitome of this mentality is the idea that the IPO alone delivers a heavyweight PR event. Stock the trough with stock, pay the investment bankers their millions as they exit and let the public pig out, which causes the stock to skyrocket which, in turn, triggers a media frenzy. Notice the role of PR in this sophisticated image-building strategy. Exactly. Now, we’re back to crafting content and stories that hold up to the question, why should anyone care? It puts a premium on savvy, smarts and a little bit of chutzpah. And with books such as Fast Company, The Industry Standard and Wired looking like they’ve been slurping Slim Fast, the filter to reach the printed page will only become finer. While rank amateurs have had their day, today’s climate rewards true PR expertise. That’s a good thing for those of us who take pride in building awareness and reputations as opposed to Warhol fame. Lou Hoffman is president
of The Hoffman Agency, an international tech and Internet PR firm
with offices in the United States, the U.K., China, Hong Kong, Singapore,
Korea and Japan.
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