Dot-coms lead surge in public relations use

Firms seen as way for start-ups, others to save on advertising

January 16, 2000|By June Arney | June Arney,SUN STAFF

Tom Des Jardins wouldn't dream of launching his Internet start-up company without the help of a public relations firm.

"All of the dot-coms have a PR firm," said the chief executive officer of Lightningcast, an Alexandria, Va.-based company that plans to place targeted advertising into broadcast and television -- or streaming media -- on the Internet. "I can't afford to not have a public relations firm because then somebody else's message would be louder. The question was always, `When can we afford to turn them on?' not, `Are we going to get one?' "

The company incorporated in May, and Des Jardins was shopping for a PR firm by August. He had chosen the firm by September and signed on two months later.

"Every day that we waited was a day that we got farther behind," Des Jardins said.

Baltimore public relations agencies, like others across the country, are reaping the benefits of the fast-paced, technological world in which companies know they may have only a moment in which to make their mark or face being driven from the marketplace.

Baltimore-based Richardson, Myers & Donofrio Inc., the firm that Des Jardins chose, expects its public relations billings this year to increase 100 percent over last year, said Rosemary Ostmann, a vice president. The firm declined to disclose specific revenue.

"Public relations is in its heyday right now," she said. "The drivers of the trend are credibility and return on investment. Previously, people couldn't easily measure PR. Now with the Internet, every media mention, every analyst report, every speaking engagement, results in people going to your Web site. All of that creates a buzz in the marketplace."

In fact, the Bureau of Labor Statistics reports that public relations will be among the fastest-growing professions in the United States until 2005.

Ostmann said the trend started about three years ago, but she has seen it more acutely within the past two years.

"I think the dot-coms have caused the rest of the world to wake up to the value of PR," she said. "Many of our clients are making PR a core function, in some cases investing more money in PR than in advertising."

Most start-up companies like Des Jardins' don't have $3 million to $5 million to spend on advertising. So, they are turning to PR firms. Typically, that means paying between $20,000 and $30,000 a month as a retainer, according to industry experts. Advertising, travel expenses, collateral development, and trade show booth fees then are charged on top of the monthly retainer.

"My customers are other businesses, so the only way to get my name out is to advertise, which costs a lot of money," said Des Jardins. "But I have a new story. It's actually news. So the PR firm will get our name out.

"Coke has to spend money to advertise because just the fact that they're still selling Coke is not news. We're valid news, so there's no reason for us to pay for advertising until we're old news," he said.

Lightningcast hopes to market its ability to offer advertisers thousands of combinations of ads, tailored specifically to the demographics and geographic location of the computer user.

"Without us, the same ad would play all over the Internet, all over the world, which means that most of the people seeing it would not be the right people," Des Jardins said.

Other local public relations agencies are enjoying the jump in business.

In the past 18 months, MGH Advertising Inc. in Owings Mills grew from six to 30 public relations clients, said Michael P. O'Brien, vice president at MGH.

"More clients are wanting PR and seeking the third-party endorsement that news coverage can get their companies," O'Brien said. "I think people are consistently trying to find ways to break through the clutter. One of those ways is being in the news pages of newspapers. You use PR to get the buzz. Then you hit them with the direct response advertising to move product."

Although the dot-com companies represent a big piece of the new PR furor, O'Brien said there is renewed enthusiasm from a cross section of clients. "All sectors seem to be craving public relations right now, from retail to business-to-business to dot-coms," he said.

Because news has become such a large industry, with the introduction of all-news channels and instant access to information on the Internet, it makes sense that companies want to be a part of that world, O'Brien said.

"News is everywhere," he said. "Companies know that consumers are eating up news all the time. They want to use that as a vehicle to tell their company stories."

Investors themselves are helping fuel the demand for public relations, experts say.

"We're finding our companies are being hired based on the advice of venture capitalists," said John D. Bergen, president of the Council of Public Relations Firms, a trade association formed about a year and a half ago. "That's never happened before. They're also hiring specific firms based on the relationship that venture capitalists have had before."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.