PR firms must sift through dot-coms seeking agencies

Companies reject many Net start-ups for fear they'll fail

Public relations

July 04, 2000|By June Arney | June Arney,SUN STAFF

The CEO of a start-up company visited a Baltimore public relations firm as a prospective client in May and laid out his expectations.

"One of the first questions he asked was: `How quickly can I be on the "Today Show"?'" recalled Chuck Fitzgibbon, executive vice president of the Baltimore office of Shandwick International, a global public relations and communications firm. "Their business is operating at Internet speed, and they expect the media placement to also happen at Internet speed."

Fitzgibbon and his staff tried to slow the executive down, telling him there were other considerations in deciding whether the "Today Show" was realistic or even appropriate.

But the man was unwavering. Shandwick declined the account.

"We said, given his expectations and eagerness to pursue that kind of goal in the short term, probably the fit wasn't right," Fitzgibbon said.

The proliferation of Internet-related companies and their passion for hiring public relations agencies has allowed agencies to be more selective than ever about their clients.

"The knocks at the door are coming faster," said David M. Imre, president and chief executive officer of Towson-based Imre & Associates LLC. "There's not very much proactive marketing going on in PR agencies, because most are acting like order takers."

The frenzy for representation was most extreme during the last quarter of 1999 and the first three months of this year, said Peter Himler, a managing director at Burson-Marsteller in New York, the public relations division of Young & Rubicam Inc.

"For a while there, I'd have a conversation with a CEO on the telephone and he'd hire us on the spot, sight unseen," Himler said. "I'd never seen anything like it, and I've been in the business 21 years."

Start-ups bring uncertainty

But start-ups, by their very nature, present unique challenges. Public relations firms have to sift through companies at such an early stage of development that in many cases a business plan has not yet emerged. As a Shandwick executive put it: "a business plan written on a cocktail napkin."

Imre experienced the phenomenon firsthand in a Washington-area dot-com that he dropped as a $100,000-a-year client after three months because the business plan was in such flux.

"They were changing their strategy so much it was giving us whiplash," he said. "We didn't feel we could be an effective counselor or tactician with their constantly changing business model."

His firm has seen about two dozen dot-com prospects this year. Of those, he culled fewer than 10.

"We're here for the long term, and we want clients that are also," Imre said.

The abundance of business has been similar at other area firms.

David M. Petrou, president and co-founder of Eisner Petrou and Associates Inc., a Washington--based public relations firm with an office in Baltimore, said he turned down at least nine potential dot-com clients this year.

"I venture to say we've turned away as much business as we've entertained," he said.

The clients that he rejected ranged from a dot-com dating service to a medical referral practice "that seemed more like snake oil salesmen than medical professionals," he said.

At Richardson, Myers & Donofrio Inc. in Baltimore, President and CEO Chuck Donofrio said his firm meets with anyone who's interested in talking - about 45 dot-coms this year alone - and then uses a required retainer fee as one way to help weed out those businesses that aren't ready.

The firm turned away about 15 prospective clients, and decided another 15 weren't ready yet. The remaining 15 became clients for either project or more comprehensive work, he said.

Internet-related clients represented about $30 million of its $92.4 million in annual billings in 1999, Donofrio said.

Nationwide trend

Although slightly slowed in recent months due to market changes, the deluge of prospective clients is similar across the nation. So is the need to be selective in order to survive.

In New York, Burson-Marsteller, which handles more than 150 Internet-related clients, turned away at least one out of two prospective clients during the peak of demand, Himler said.

"Public relations firms today need to be very careful who they get into bed with, if they want to succeed," he said.

The glut of new business is making some public relations experts urge caution for another reason.

"We've gone from having to go out and find our own business to having people line up out the door," said Rosemary Ostmann, director of Internet technology for Middleberg Euro rscg in New York, a leading communications company in the Internet sector. "It's only natural that as an industry we could become too comfortable and rest on our laurels. I've already seen some hints of this at some agencies."

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