Bill Gates, where are you?

The search is on to find the next Bill Gates according to a poll carried out by 463 and pollsters Zogby. People polled believe the next Bill Gates has been born so I guess all that remains is to find them. That search is more likely to bear fruit if people look in China or Japan than it will if they look in the US according to the poll.

The poll also asks Americans if they are ready to switch to citizen journalism for their news and while the result was a negative on that, it did reveal that 25% of 18-49 year olds would pick Citizen video for their daily news. Given how new this space is, that's pretty amazing and should worry the major TV news networks.

The full poll can be found on 463's blog at: http://www.463.com/463zogby_poll.html

In 2006

1. Google stock went to $500 much to the delight of realtors in Santa Clara County
2. Dick Cheney accidentally shoots a friend in the face and moves into the background politically
3. Google buys YouTube for $1.65Bn
4. Microsoft founder Bill Gates announced his retirement from Microsoft an the stock goes up
5. Al Gore became a movie star and may have finally shifted American sentiment on environmental issues
6. Toyota starts to sell more cars than Ford (see number 5)
7. Donald Rumsfeld steps down after months of pressure
8. The DJIA reached a record high
9. Blog and wikis became mainstream and old media continued to decline
10. WSJ announced major redesign as readership drops (see number 9)
11. HP gives a lesson in how not to handle a boardroom crisis
12. Oil prices start and end the year roughly unchanged but in between boy did they go on a roller coaster ride

What's reality?

Lord Bell, Chairman of Chime is credited with the saying: “perception is reality.” I’m wondering if we now need to shift that to: “Google is reality.” I’m being a touch facetious here but I just had a call from someone who is trying to get a reference on a person who works for one of the large technology businesses (a very large one in fact). They had tried to look them up on Google and found nothing. What was interesting was their view was that if this person didn’t show up on Google they can’t be that important. It is worth noting they were doing the research for a friend so it could be they had their name spelled wrongly. I actually found myself feeling sorry for this person and have reached out to several other people to see if they know of anyone with a name like this that works at the unnamed company. I wonder at what point will people start to add Google search links routinely to their CVs/resumes? For the record this person probably isn't that important.

Customers and color

It seems that if you want customers to like your latest piece of consumer technology then you should paint it white. At least that seems to be the case with customers shopping at Circuit City for the new Microsoft Zune. I just did a search on this new product because I was curious to see how easy it was to get one. I own several iPods so I'm not likely to buy one. What stood out when the availability results came back on the Circuit City site was the customer ratings for this product varied by color. Highest was white with a rating of 4.8 out of 5, while brown scored only 4 out of 5. Black, meanwhile, did slightly better at 4.4. To reiterate the point, these are the SAME products in different colors, yet the rating varies quite considerably. For the record, I looked on the same site at iPod ratings, regardless of color the Nano scored 4.4. Am I the only one that thinks this is odd?


CLASS%20-%20GAMES&cm_ite=135146%20PURCHASED%20KEYWORD-ZUNE&cm_keycode=338347">http://www.circuitcity.com//ssm/MP3-Players-iPods/sem/rpsm/catOid/-12952/Ntk/All/Ntt/zune/rpem/ccd/categorylist.do?WT.mc_n=338347&WT.mc_t=U&cm_ven=PAID%20SEARCH&cm_cat=ADVERTISING.COM&cm_pla=CATEGORY%20-%20GAMES%20&%20TOYS->CLASS%20-%20GAMES&cm_ite=135146%20PURCHASED%20KEYWORD-ZUNE&cm_keycode=338347

The emotional side of PR

I found myself being a PR person’s nightmare this week. To put it another way, I found myself refusing to believe (or at least not wanting to believe) a news story even though it was being covered by a number of pretty credible news outlets such as the FT, WSJ and Economist. The story was about the US dollar’s rather precipitous drop against other leading currencies. Now I didn’t want to believe it for a few reasons. First, because I run a business that reports in sterling and a fall in the dollar is just downright annoying. That said we use various currency products from banks to mitigate that problem. The second reason, is that I live in the US and I didn’t like the assertion that the US economy was actually weaker than the European economies. In truth I’m still not sure I follow the logic used by the Economist on this story but that’s not really the point of the entry.

My point here is that if someone has both a rational (runs a business that can be technically affected by a change) and an emotional (lives in the country that is said to be doing poorly) reason not to want to believe a story, it can be awfully hard to change their opinion. The emotional reason is the toughest to shift just because it’s so… emotional. In this instance I want to believe in the American economy for a host of reasons, not least that I have kids and I want them to grow up somewhere where they’ll get a good education and rewarding career. If the US economy has the kind of cancer that the Economist argues, then I should move my kids to France tomorrow where they will at least get great schooling. See my point? It’s awfully easy to get drawn away from the story and in to your own world. This reminded me that for PR people trying to fight issues on behalf of their clients that a good consideration of the emotional impact of a story may well go a long way towards finding a solution.

To put this thought in to perspective, if I were the US government right now and I wanted to counter the arguments being made, I’d focus on the great talent this country is producing in all sorts of areas AND the talent this country still attracts. It is after all people that make up economies and with great people you can have great economies. And who are these great people that I refer to? Well my kids of course!

Is Big Tech Back?

If you told people Google’s stock price had risen 25% in the past quarter nobody would be that shocked. But if you told them pretty well all the major tech stocks had had equally good quarters it may take some believing. However, when I just checked, the facts are that the following stocks rose by the following percentages:

Dell 10% (yes Dell, the one that is said to be struggling to find new growth and with that annoying battery problem)
Microsoft 15% (the one that has been criticized for delays of Vista and whose Chairman retired)
IBM 20% (I can’t actually think of a reason why ITS stock would suffer – truly)
Intel 24% (the one that is being challenged by AMD)
Oracle 25% (the one that has run out of companies to buy)
HP 25% (the one with the dysfunctional board)
Apple 32% (hasn’t everyone bought an iPod by now?)
Cisco 34% (the company that was the dot com darling but pundits said had had its day – clearly wrong)

Indeed the NASDAQ Computer index is up 18% in the last quarter. That means if you’d invested in pretty well any tech stock you should have done pretty well in the last three months. Now I know, the tech industry has been producing some good numbers (Cisco certainly has) but in truth they’ve been producing good growth for a while. I wonder what made the markets wake up?

Blogs versus news

You may think I’m getting obsessed with Google News these days. I assure you I’m not but I did think it was quite revealing that when I searched on ‘Edelman Walmart blog’ I got twelve news responses. When I used the site to search for blogs with the same criteria I got 1,458 responses. That means for every news item there were over 120 blog mentions. Going back to my HP item the ratio was more like 1.5 blog mentions to each news item. I guess this shows how the blogging world works.

Has HP taken control?

It seems HP may finally have a handle on its pretexting crisis. A quick search on Google News shows there have only been twenty six news items in the last week. Given the pace that news was pouring out a few weeks ago (nine an hour) this is quite a change. It is worth noting that there hasn’t been another big tech story of similar importance, so one can only assume that either HP has managed to put a lid on things or the media (and public) has simply moved on.

Text 100 to tell the Truth

The inevitable truth that is. Today Text 100 is launching its Clean Tech Practice which will aim to help organizations in the areas of energy efficiency and renewable power. The team already has some good client experience with people like: PARC, Philips, GE Wind Energy, Altran, npower renewables, National Physical Laboratory (NPL), TOTAL, Envirowise and Whirlpool. I also note their release talks about how much VC spending is going into this scetor. There is no doubt that fear of global warming has put some heat (pardon the pun) into the sector...

Gootube?

So the Wall Street Journal piece today saying that Google is in talks to buy You Tube has understandably got quite a lot fo attention. A few things pop out here. First if You Tube does sell then Google really is the most logical buyer. Google's cutlure and business model is ideal. The other potential suitors seem less of a fit andf have already put forward alternatives. I'm referring to the likes of Microsoft and Yahoo!. I guess the question is will they sell? If you were a founder would you cash in now? The same questions were clearly in the minds of the Skype guys. In their case eBay paid $2.3Bn for the business. At that price I think it was likely an easy decision. You Tube is apparently being offered $1.6Bn. This seems relatively cheap to me (the emphasis being on the word 'relatively'). Truth is the numbers at this level are not tied to sales or profits they are tied to 'how much can you justify to investors.' It is very clear that You Tube is a high growth company in a high growth area. On that score if this deal were to open up a rapidly growing $10Bn market for Google then a price of between one and two billion dollars doesn't sound that bad. Does it?

HP crisis keeps on rolling

Two weeks ago I posted a piece on this corporate drama and of course today has been another eventful day what with the resignation of their General Counsel. Anyway when I wrote my last piece a Google News search on 'HP and pretexting' brought up around 4000 news hits. Two weeks later that number has jumped to just over 7000. That's an average of over 200 new stories a day or roughly 9 new stories per hour. HP will be relieved to know it still lags well behind the Iraq War which is generating 100s of posts an hour on a good (bad) day.

Content gets a longer tail

There has been quite a lively debate about the ‘Long Tail’ since Chris Anderson first wrote his article in Wired back in 2004. In today’s Wall Street Journal a couple of news items caught my eye that provide tools for content to wag their own long tail. And where there’s content there is usually something PR people should pay attention to. Specifically the news stories were: Cisco’s move to create a B2B video messaging service; and a piece by Lee Gomes that talked about how companies like LiveOffice are enabling people to store podcasts of just about any conference call they hold. In both these cases companies (well people actually) can find a permanent home for content that would ordinarily have died a death pretty quickly. This is potentially interesting for the PR industry in that it creates some further resources to help editors and analysts but also tools that can communicate directly with communities or individuals. No longer will people have to dig around in the store room for that old footage of their CEO talking about… whatever he was talking about, or the tape of their CFO explaining the way they are going to reorganize the business. Of course it also means that the opinions we put forward are going to be there for all to see and hear for many a year to come AND they'll be easy to find...but that’s no bad thing. Is it?

HP lurches from one crisis to the next

Like many PR people I've been wondering why the crisis gurus have not been able to get the HP board under control. Surely the board doesn't want the entire saga to be played out in the media? Right now though, every move of this mess seems to be getting air time in one media outlet or another (Google news has about 4000 news stories on the topic already). Having said that this seems to have been a recurring issue for HP - remember the whole Walter Hewlett saga?

Going back to the current problems, if the media circus continues and it shows no sign of stopping yet, then the very man that appears to have turned the business around (Mark Hurd) could be the one to pay the biggest price. Patricia Dunn meanwhile could end up with a cozy non-executive seat (I'm curious as to why she's being allowed to stay on btw).

I can't blame HP's internal team for this situation. Company boards are notoriously tough to deal with and will rarely take good counsel even when offered. That said, when matters escalate as they have here, they usually listen to some crisis management expert. For HP's sake I only hope someone is able to take control soon or the blood on the carpet may start to get thicker.

Financial Dynamics Takes a Different Path

The news that Financial Dynamics was being acquired was hardly the world's biggest surprise. Indeed there'd been speculation in the trade media about a deal for some time. What was unusual was the buyer: management consulting firm, FTI and of course that $260m price tag. This news should be welcomed by those in our sector as it shows other industries value the PR world. It also shows that the PR world isn't necessarily destined to be owned by WPP et al. Indeed the deal shows that there is an alternative out there to the 'integrated marketing' message being touted by the large agency groups. That alternative would seem to be based more on integrating a company's ability to reach specific communities – where communications is just a part of the process. At the heart of this new approach would seem to lay the need for 'focus' or specialization. Few would argue that FD was a pretty focused business and it would seem their skill in helping companies manage their profiles in financial circles is to be married to FTI's skill in helping firms solve commercial problems and set strategy. Combined they should be able to offer businesses a way to strategically review their business, undergo the changes that review proposes and manage the communication of that change to the world. Put another way what FTI gets through this deal is the chance to squeeze every last consulting dollar out of some pretty large engagements. It certainly has logic on its side. If they pull this off it could herald a new wave of M&A activity for the PR sector – presuming of course that agencies remain sector focused AND remain connected at the highest levels within their client base.

Best UK PR Consultancy to Work For?

The Holmes Report in the UK has just published its 'Best consultancy to work for' list. I have to congratulate Rainier PR for winning for the second year running. However, it does raise an interesting question: does this list actually mean anything? I ask this not be rude to the winners or to Paul Holmes but because none of the top twenty are the top agencies in the UK. Now if this list was a predictor of which agencies would become the top agencies then again I can see its value but it doesn't seem to play that role either. Of course it could be that it shows that if you want to work for a good employer or if you are a client that wants to hire an agency that treats its staff well then this list will act as a good guide. However, again this either shows that not many clients care about how staff are treated (or these agencies would be growing like crazy) OR that staff don't care how they are treated (or these agencies would have a waiting list for jobs). The one common link in the list would seem to be that the agencies listed are all small or medium sized firms. Either this means these types of firms are better places to work (seems logical) or the bigger firms just didn't engage. Of course it could be that these winning agencies are good at getting staff to say what great employers they are. Given two of my agencies (August.One and Bite which are both wonderful places to work!!) are in the top 20 I hope you see that I raise these questions out of genuine interest and not because 'we didn't win.'

Online news consumption is all about sports...

I hadn't looked at this in a while but Akamai has been tracking how many people access online news for some time now. It paints an interesting picture of online news consumption. For example the vast majority of the news hits are US driven. So much so that other regions don't really impact the end results. Sadly the vast majority of news this nation consumes seems to be sports related. Indeed out of the top ten news days they've recorded seven were sports related (the world cup being a huge factor it seems). The other three? Two were related to terrorism and the other to Katrina.

If you look a little closer you'll see that of the roughly 3m news hits today, 2.6m were in the US, 300K were in Europe and the remaining 100K were spread around the rest of the world. That seems amazing to me and perhaps explains why concerns about the death of print media don't seem to be taken as seriously outside the US. At first glance I wondered if the consumption outside the US were abnormally low today but the Akamai system actually shows whether this a high, normal or low news day and while it is a moderately high day in the US it is at worst normal in all the other regions.

I guess the end could really be in sight for print media at this rate. As long, that is, as they make sure they offer good sports news!

Link: http://www.akamai.com/en/html/industry/nui/news/index.html

Economist discusses death in the family

I need to thank Drew B for pointing to the Economist article on the death of newspapers. As ever the Economist does a good job of educating its readers on the big issues. I'd like to see this piece followed up on though as it really only serves as an introduction to the topic. Nevertheless it's worth a quick read.

http://www.economist.com/opinion/displaystory.cfm?story_id=7830218

Client conflict

I hear on rumor mill that the Council of PR is about to come out with a new statement on the thorny issue of handling client conflict. Like me, it seems some at the Council feel PR agencies are judged by inconsistent standards at best. Now it seems some agencies do a better job on conflict than others. Take Edelman who works with both Adobe and Microsoft. Indeed Edelman seems able to manage this level of conflict for a number of big brands. I take my hat off to them for their nerve and their ability to convince clients that these conflicts are OK. Indeed I write this not to be critical of Edelman's approach. Instead I just wish there were some clear standards on what was deemed an acceptable way of managing conflicting clients. Perhaps this is what the Council needs to work on? I think a strong statement on conflict is an excellent start but I'd also encourage them to develop (if they have not already) some clear guidelines on the ways conflict should be handled. This should extend to the construction of teams; the way information is received and stored and so on.

Of course if you look at the professional advisors used by most large firms such as law firms, accountancy practices, management consultancies etc they nearly all have conflicts. These firms don't have the same issues it seems. Is this because they are hired by different people in the business? Is it because they have a history of doing it? Is it because they are considered a profession? Whatever the answer it's clear that these advisors are held to a different standard. While that may be a touch frustrating for PR people, it's a fact and one we need to accept. However, it is also something we can do something about. As I say I'm pleased the Council of PR has taken up this issue. I only hope that the topic gets significant attention in the PR media and in other circles so that clients can be better educated on how conflict can be managed successfully.

What does the Pew Study really show?

I just read Nick Carr's blog on the state of Online News following the Pew Study that came out this week. To cut a fine story short he effectively says that while people have moved to getting their news online they are not necessarily:

a) consuming more news - indeed he suggests that the decline in traditional media consumption is being matched to a degree in the online world
b) about to kill off traditional media - his view from the Pew study is that while this media is declining it is more often than not read by those that consume online news. In other words it will only really die off if everyone stops reading news altogether which seems unlikely.

His piece ends by saying that: "The report is not good news for newspapers, but it does show that the reports of their imminent death have been exaggerated. The real division is not between the audience for online news and the audience for traditional news - they are the same audience. The real division is between the people who are interested in the news and the people who couldn't care less. In fact, it looks very much like online news media are now merging with traditional news media, as the two come together in a symbiotic relationship to serve the same set of customers. They are not competing with each other so much as they are competing together against nonconsumption."

I would contend, as I pointed out yesterday in my piece about YouTube, that what the world wants is for the Internet to enable a whole new way to get content. What Online news outlets have done so far is simply 'automate' the delivery of content. Perhaps this is why after an initial surge in viewing of online news it too is starting to flatten off and potentially decline. My contention is that this is because there is a distinct lack of innovation taking place in online media (what a generalization I know). Maybe this is what the Pew study is really showing...

YouTubification - is this what the media needs?

I have to say I’m a big fan of YouTube. What is clever about this site from my point of view is not that there is great content on there (which there is) but the way it keeps you clicking and digging deeper. It makes me wonder if what they’ve created here is a better model for the media now that the Internet has become the common way to access news and information. If you go on the site to see a specific piece of content when you are done you will immediately be presented with other related content you may enjoy. In other words it redraws the content around your search. If you compare this to most news sites it seem light years ahead. Take Google News as an example; on the news site you can view a news story but then when you click the back button (which is your only way of being returned to Google News) you are presented with the same headlines despite the choice you made. This is pretty well the model of all news sites. In essence they have buckets of content that stay in the same place regardless of what you do as a user. Imagine however a news site that once you clicked on a news item, then reselected the content on its homepage based on the choice you just made. So for example you click on a news item about United Airlines returning to profit (which is a miracle in my opinion but that’s whole other story). Once you clicked on the news at the side would be other travel related news items, item by the same journalist from the last few days, previous articles on the topic etc etc. When you returned to the homepage the content would also be slightly different. The closet I’ve seen to this is on BBC's site where they have links called ‘related articles.’ These links tend to be pretty straightforward though. From where I sit a YouTubification of the media has to be the way forward if they want to keep our attention.

Oh and while I'm at it, anyone care to guess how long it is before someone like Google buys YouTube?

Only in England

Let me first say I'm British and proud of the fact. However, there are things only the British can do and today I discovered a truly wonderful Britishism. In the UK there is a government institution called Companies House. Well the web site says:

The main functions of Companies House are to:
1. Incorporate and dissolve limited companies
2. Examine and store company information delivered under the Companies Act and related legislation
3. make this information available to the public.

For anyone wanting to find out about a UK business it is wonderful resource. Through the Companies House web site you can buy copies of people's filings such as their latest set of accounts. Anyway, this is where the Britishism comes in. This wonderful example of ecommerce in action is only available from 7am to Midnight UK time. Presumably the security guard switches off the computer when he leaves.

The $10,000 PR problem

This seems like a crazy problem, but it seems Silicon Valley is again awash with money and wants to spend it on PR - sadly though it would seem there is a shortage of people who they can spend it with - this particularly the case for those companies that want to spend about $10,000 a month. Before all the relative newcomers to PR dash out to set up PRismybag.com and soak up all this demand they should understand the real problem. The real problem is that the people who want to spend all this money want 'experienced' PR pros. This is of course where the catch lies. So many good people left the industry when the bubble burst that there are not that many great people around who have more than 5 years of experience (which is in turn driving up salaries). In addition the problem with most of the start ups that want to spend this kind of money is that they want at least $15,000 worth of service. The last of the problems is these businesses want lots of media attention and sadly since the bubble burst the media they can reach has shrunk. In any other market than Silicon Valley this problem would seem ... as silly as it sounds. Perhaps this might encourage some of the start ups to launch in another market where their $10,000 a month will go a lot further such as China or good old fashioned Europe.

Toyota thinks outside the box

There is a computer game out now that requires you click on a veiled object to move to the next level. That object turns out to be a Toyota Yaris. This is all a part of Toyota's effort to reach the youth market. I learned this from a NPR story this morning. There are also a string of games out now that have billboards inserted at certain locations in the game. Nothing exciting about that except when you play online, these billboards check your IP address and where possible other sources and then load billboard ads that are more targeted. Imagine, it's 8pm and you're locked in battle with some alien on your computer. OK, I can't quite imagine as I'm not a gamer but if I was then it would make sense that an ad on the building I'm approaching which houses the alien I'm trying to kill would be for the local pizza place. I mention all this for the simple reason that as traditional advertising dies along with traditional media, the creative minds being applied to interactive ads are coming up with some great thinking. Is the PR industry applying similar thought? I've seen glimpses of it but I worry that at a time when PR could be taking a bigger slice of the marketing pie we are not being creative enough.

AOL - this call was monitored for quality assurance purposes

This is a great example of the power of blogs and one of those rare times when the call was monitored for QA purposes by... the customer. The story is simple: It seems a normal guy wants to do something normal - cancel his AOL account. When he tries, they do what all struggling businesses do, they try and stop him by asking him a million stupid questions. Only in this instance he recorded the conversation and put it on his blog. The story then ended up on CNBC. Seems the rep at AOL lost his job...

http://www.cepro.com/news/editorial/13792.html

NYT publishers get desperate

The New York Times plans to begin running ads on the front page of its business section starting in July, according to a spokeswoman today. The news is yet another sign that traditional media is struggling and yet another sign that they don't really know how to solve the problem. Fundamentally this is a sign that the NYT wants to generate more ad revenue from its print publication. This would make sense as a move if the circulations of media like the NYT were rising but it's not. Surely therefore slapping ads on the front of the business section is like putting a Band-Aid on the Titanic. At what point do publishers realize that consumers want a different product? Don't get me wrong - I believe they want the content; they just want it delivered in a different way.

WSJ shows the way (the wrong way)

PR people are meant to be nice to hugely important publications like the WSJ. Sadly I can't resist taking a pop at the WSJ today. Why? Well today it proudly published its D supplement (they even have special stickers on those newspaper vending machines announcing its presence). In the supplement are a host of interviews with top execs including Bill Gates. There are articles on such racy topics as E-Commerce (does anyone use that term anymore?) and Laptop security. Think about that for a second (or two). There is no content here that is truly going to get the world excited. Certainly no content that is going to get people talking. I just can't see people huddling round the cooler saying: "wow that piece in today's journal was a real eye opener." Let's assume that the readership of the Journal is the investment community for now. If I were a fund manager, I'd hope I already knew the stuff in the Gates interview or the E-commerce article. Take the following question posed to Billg: "When are you going to ship the new Vista Operating System?" I don't think I need to tell you that he said we're on track to ship it in January. I have to say that it's content like this that is getting traditional media into trouble.

Coblabberation

This is hopefully not one of those posts that is designed to say "I read the Wall Street Journal today." Instead it is designed to add to your vocabulary a great new word that Jared Sandberg introduced through his column 'Cubicle Corner' today. The word was actually used in a quote by Harvard Graduate School professor, David Perkins. He was endorsing the general view of the column which is that most brainstorming is ineffective and that if anything you need people to think alone and then bring their ideas to a group - otherwise you get 'coblaberation.' While he doesn't specifically explain the word, it's pretty clear that he means you get a lot of people talking and nothing much happening. Does that sound like a PR brainstorm you've been in lately? Anyway, read the piece, it has some good observations that may help your next visit to the collective white board.

Spin Bunny reborn?

A site with the same .... attitude as Spin Bunny has popped up. Called "the World's Leading' which is presumably a jab at the fact that just about every tech PR press release seems to open with company X being the world's leading...

We'll surely find out if this is Spin Bunny if it starts attacking Lewis Communications.

Tech stocks are hard to index

I just spent some time looking at the relative stock prices of major technology companies versus both the DJIA and the NASDAQ composite over the last six months. Result? I couldn't find a single stock that came close to tracking these indices. You have stocks like Google that have jumped around all over the place and have ended up 8% down compared to the DJIA. Then you have Intel which has steadily declined a staggering 33% over the same period. There are bunch of stocks such as Microsoft, Yahoo and Dell that have declined just less than 20% and others such as IBM and Apple that are down 10%. At the other extreme I can find a few stocks that have risen relative to the DJIA. These include Oracle and Cisco at around 12% and AMD up about 18%. What does this tell you? Well in part it tells you that roughly three in every four major tech stocks are falling at 10% versus only one in four rising at a similar rate. While this is not the most scientific study on the planet it does suggest that as a group the major tech stocks have some work to do to convince investors they have growth potential. If the sample had produced a more random pattern I'd suggest that the problem lay with the individual companies and their IR but I think the challenge is greater than that. As I've said before on this blog, I believe the challenge is sector related. Until the sector works together to solve this problem, generally poor stock performance is on the cards.

Daily?

I just read the New York Times piece on today's down day on Wall Street. One sentence stood out: "Shares of Wal-Mart dropped $1.35, or almost 3 percent, to $48.30, after the retailer said its May sales growth would be at the low end of its expectations." Think about this for a moment. This mammoth retailer is giving monthly guidance on its sales! I run a small public company and I know how hard it is to predict sales with any certainty. To be giving monthly guidance seems crazy to me and reflects the way stock trading has changed since the bubble. It seems we now expect companies to be able to report by the minute how their business is performing. Why? Because it can be done of course. Not because it actually means anything. I can all too easily see how with the use of technology companies will have their stocks traded 24 hours a day seven days a week. To feed this constant market, they will be expected to report with ever-greater frequency. This is simply not a good thing. It drives businesses to run on shorter and shorter cycles. This means they stop investing in the long term and start responding simply to the latest analyst forecast. I'll be honest the only solution I see to this problem is for all companies to adopt the stance taken by Google that has been so widely ridiculed by Wall Street - namely not go give guidance. If everyone stopped giving guidance and simply let the analysts try and figure it out, we'd have a few rough quarters while they learned how the businesses they watch really work and then my guess is we'd end up with a much less volatile market full of businesses far more focused on the really important issues - like their customers.

As another door opens..

In recent months there have been some unusual announcements in the technology industry. Only on Friday we had the surprise departure of Tom Perkins from HP's board. What made it surprising was that nobody gave a reason, not that he actually left the board. The resounding but thoroughly unconvincing 'no comment' from HP made it clear that something ugly must have happened but the PR people were clearly told to stick to the classic rebuttal. Even though it's clear even a poorly trained PR person could have come up with something better. "He felt his job was complete now that Hurd has clearly got HP back on track," would probably have done it.

The other surprise news last week was that Intel finally lost its stranglehold on Dell. After years of trying, AMD finally secured a foothold in the PC giant's line-up. What interested me is that it's not that long ago that Intel secured its first place in Apple's lineup. Does Dell know something Apple doesn't? As the saying goes, ‘as another door opens...’

IPG - when not if

As Interpublic continues to struggle, the question becomes: "When will they get taken out?" rather than if. It's quite clear from IPG's most recent set of poor earnings (they've had a string of them), that the business is not about to turn the corner anytime soon. To try and correct matters the group has made significant changes to the management team and its corporate structure. None of which would appear to have worked. Revenues are sluggish compared to its peers and profits are, well.. they don't make a profit and haven't for some time. Reuters last week described the business as being in a 'tailspin." A mixture of accounting scandals and client defections is at the heart of the matter. The former has ratcheted up the accounting costs for the company putting it in to loss, while the latter has weakened the foundations of many of the Group's businesses.

All of this points to the prospect that WPP, Publicis or Omnicom will take out IPG. Of course you may argue that they don't need to. IPG would seem to be giving away their business right now. That said the business does still have sizeable revenues (around $5Bn a year) and would surely do better as a part of one of these Groups. I can only imagine then the pressures IPG shareholders are placing on the IPG board to find a suitor and get a deal done. So in my mind the question is definitely 'When?' not 'If?' and of course 'Who?'

IP and PR

Every so often the PR industry heads get rightly annoyed by clients that effectively steal their IP. It happened to me earlier this year when a pretty big company took some pretty extensive thinking done as part of a pitch and simply used it without paying for it. Now in this instance it was hard to actually go and charge the prospect for the work without looking cheap but a principle was being broken which was hard to sit back and watch. But like most agencies we sat back and we watched. Sadly you tend not to get paid for sitting back and watching.

This event has troubled me for some time, not because the client effectively stole the IP but because the client didn’t even think it was a problem. In truth I’m not sure many clients realize where the IP we as an industry create starts and ends. After all, it’s tough to describe most work as being truly unique, especially when most campaigns are in effect a rehash of an idea used for another client. That’s a pretty harsh but in some cases fair description. Indeed, if you spend any time judging awards in the PR industry you will notice the same ideas being used time and again for different types of companies, with different effects. Looking at this another way, what the industry is really doing is taking the same common ingredients and then cooking them in a different way to produce a different dish. Of course a chef will staunchly defend their ‘unique’ recipe for a certain soufflé, yet a PR pro will struggle to defend their unique approach to a product launch. Here-in lays the challenge to protecting IP in our industry.

Price it
A critical element to protecting IP is finding a way of charging for it. I recently met with a firm in the UK that charges clients for the value of an idea, not for the time it took to create. The argument here is that a client should take the best idea, not the one that took the least or most amount of time to dream up. On this basis the agency won’t discard the first ideas they generate for fear they’ll only be able to bill the client for 10 minutes of brainstorming. Instead, they can hold an exhaustive brainstorm and genuinely pick the ideas they truly believe in. I personally like this approach but in talking with some of my industry colleagues who’ve tried it they’ve often found clients baulk at the concept. It seems their procurement departments fear that by accepting there is IP being purchased they will open the door to ongoing charges for use of that idea. Now of course such practices are common in the advertising world. Perhaps this is what the procurement people are trying to prevent.

Document it
Another critical element in the IP struggle is the documentation of the ideas. Now in truth the law says that you don’t need to register copyright to own it. All you have to do is to be able to show that you documented your ideas first. That’s assuming of course your fear is that your ideas will get stolen. Of course this is easier said than done. I’m pretty sure that I could come up with a derivative of an idea that would sound pretty different to the original. While this is technically covered by the law, I’m guessing the originator would struggle to make a claim given the sheer costs of taking legal action in this country.

Educate
In truth I think the biggest issue in the IP battle is one of education. By this I don’t just mean the education of our clients, though I do believe this to be critical, I also mean the education of our staff. If they don’t appreciate the true value of the work they’re doing how can they expect the client to do the same?

The missing link (to business processes)
By truly understanding the value of our ideas and thinking we open the door to solving the IP problem. After all if we recognize that our IP is simply a good tag line or creative stunt, then we have to expect the client to pay accordingly. Great IP is more than this. Great IP is a set of thinking that links to business processes – it may even create them. If we educate our people to come up with thinking that links to the way clients run their businesses, or better still improves the way they run their businesses, then there is a far greater chance the client will appreciate the full value of the ideas being presented. This in turn will shift the needle away from PR being commoditized and towards being a tool that really builds businesses and brands.

So if PR wants to become a true form of consulting it needs to think long and hard about the ways it links to the client’s business and stop thinking just about how many hours were spent on a particular program. While the latter should get paid for, in the long run the real opportunity is to use our skills to significantly improve the fundamentals of clients’ businesses. Now that’s what I call real IP.

Ketchum is hiring

Don't ask why Ketchum thinks I'd be of help or interested but they emailed me (spammed me) twice today about the vacancy they have in San Francisco for someone to run their consumer tech business. If anyone knows anyone that wants the job do call Nabil Khatib at 415-984-6123.

When good news sparks a crisis

In the last week the major oil companies including Exxon, Chevron and ConocoPhillips have all been announcing record profits and revenues. Good news for those that invested in these businesses. But it's interesting to see how this relatively good financial news has worked against them. Earlier this week Senator Byron Morgan announced his desire to see a Windfall tax imposed on these oil giants. You can see why such a suggestion has been made but most economists seem to feel it would be counterproductive and only lead to them finding ways of reducing their profits to avoid taxes - such as even higher pay deals for their CEOs.

The other side effect of the news as been a raising of people's consciousness about how much it really costs to drive a typical car in this country. It's still a lot less than it costs in Europe but if things continue as they have the gap will be gone in less than 18 months. This is forcing people to rethink their lifestyles and choice of transport. This morning on NPR they ran a feature showing how many people are now looking at car pooling or public transport simply because of the increase in gas prices. In other words, the gas companies are in danger of having customers finding ways to avoid buying their product. That's not something most businesses want to see.

So if you couple the great earnings news with the CEO pay scandal that emerged around Exxon's CEO and then add the fact that consumers are starting to rebel you get a great PR and potentially real commercial crisis brewing. It's rather interesting at that level. Most crises are driven by bad news such as product defects, plunging sales and crime ridden management teams, not businesses that have managed to hike the price of the product and make super profits. Perhaps this is why the oil industry is struggling to deal with an issue even our Pro Oil President is starting to get angry about. Only today in a piece the Associated Press ran entitled "As Profits Soar, Oil Industry Unapologetic," Bush was said to be "outraged" by the profits the oil companies are making.

Of course the fact that the profit margins being made by the oil giants is actually pretty modest is getting little coverage or sympathy. Why? Because even though they are only generating around $9 of profit for every $100 in sales, compared with the roughly $20 of profit eBay and Microsoft make on similar revenues, the scary part is not the margin but the sheer amount of profit, coupled with the fact that every consumer is starting to feel it impact them directly. Not everyone buys and sells something on eBay every day but most of us get in a car that regularly.

Time for a good old fashioned crisis plan to be brought out by the oil barons I feel. But it needs to start from a very different place of course.

PR is back

If anyone was wondering, it should now be pretty clear from this week's UK and US PR Week league tables that our industry is experiencing its best time since the dot com boom. Indeed if you look at the US top 40 companies the average growth was 13%, with only four companies either going backwards or standing still. The highest growth came from our own Bite Communications at 63%, but equally there were 18 of the top 40 (that's almost half for the none mathematicians) that produced growth of over 20%. Of course these league tables don't include the numbers from the real top 10 agencies such as Weber Shandwick, Fleishman Hillard et al due to their parent companies refusing to take part on SOX grounds a reason/excuse I still feel is rather feeble. Looking at the top 10 in the PR Week US table, the growth rates were less impressive. Only APCO and Schwartz beat the 20% growth rate and half the firms either standing still or growing less than 5%. This would suggest that the sweet spot for agencies right now is for agencies with around 60 people and revenues of around $10m.

The other piece of data that caught my eye in the US table was the revenue per employee. For the top 40 this averaged an impressive $188,000. There were several firms that blew past this such as Sloane & Company who averaged $309K, Levick Strategic Communications at $276K and Integrated Corporate Relations at $293K. I wonder how many of their clients are now checking their hourly rates. At the other end of the scale were firms such Schwartz that averaged a mere $126k. Interestingly again there is a big difference between the average for the top 10 and the top 40. For the top 40 as I've said it was $188K, whereas the top 10 was a less impressive $170k. To confuse matters more, out of the firms that grew 20% or more the average revenue per employee was just below the average for the top 40 at $184k, suggesting that growth has been achieved thanks to offering a slightly more competitive rate. However, if you look at the firms that grew 30% or more their average revenue per employee is slightly above the average at $191K. In other words, all this figure really tells you is which agencies charge the most to their clients and which agencies potentially pay the most or least to their staff.

I guess all of this goes to show that even if the really large agencies don't take part there is still something to be gained by having these tables.

Innovation doesn't equal stock market success

In its last two issues Business Week has produced cover stories on two great topics. The first was the poor stock performance by America's largest companies despite some impressive performance over the last five years. The second is the current issue's coverage of the "World's most Innovative Companies." The thing that caught my attention was that there were actually a number of companies that feature in both stories. Of course the second story makes no reference to the first because if it did it would have to point out that sadly investors don't give a hoot about innovation (assuming the research is true). There are of course some notable exceptions. Among Business Week's top 10 most innovative companies are Apple, Google and Toyota. In all cases their stock has done well in recent years. Also in the list however are GE ( stock is down 30% over the last five years), Microsoft ( stock has declined 20% in the last five years) and 3M (stock is unchanged for the last two years). In Business Week's current issue they applaud GE's move to challenge its reliance on six sigma, in the previous issue they lament the fact that despite the company's great performance its stock is, to put it crudely, in the toilet. Of course what is clear from these two articles is that many of the companies that have embraced innovation are performing very well as businesses and perhaps that is something that sooner or later Wall Street will accept and give them credit for.

PR should take a leaf out of the advertising book

I read an interesting article this morning on how advertising is using technology. The piece focused on how billboards are getting smarter and gave examples such as how in the future they be able to beam coupons to your car as you drive along for stores close by. What struck me after reading the piece was that I don't hear much about how people are embracing technology to the same degree in the PR world. Of course technologies such as Vocus and Biz360 are gradually becoming more common but forgive me for saying that these are really just tools to automate existing ways of doing things. They don't enable you to do something you couldn't have done before. This in turn made me question how technology could disrupt the PR world. My first thought was to look at the sales process customers follow. Right now traditional PR influences certain parts of the sales cycle through news, product reviews, case studies etc. Through Blogs PR has picked up the opportunity to talk more directly to customers if it so wishes. But what if we took a leaf out of the advertising world's book and used the very same technology they are thinking about to get PR generated content into the hands of customers instead of advertisers? So instead of a billboard sending a car a coupon, how about as you arrive at Best Buy you get sent (to either your phone or blackberry) an abstract or a podcast of a product review comparing your client's products with that of its competitors? How about when you register your new product instead of receiving annoying offers online, you get news or feature articles relating to the product you bought? Put another way I think there's a real opportunity for the PR world to engage in a dialog with the advertising industry to embrace the great thinking that's taking place on the use of technology and broaden its use to encompass PR. In fact the only problem I can see with this is that the ad industry may not want to talk for fear they will loose out on valuable marketing dollars in the future.

PR doesn't rank as academic

It might not come as a complete shock but PR isn't considered terribly academic, at least not when it comes to search results from both Google and Microsoft's new academic search tools. Google's scholar tool produces hundreds of thousands of search results (as it does for almost any topic) but sadly nothing of any value appeared in the first ten pages I waded through. Microsoft's Academic Search produced a few but only a few interesting articles. That said I didn't expect any given the search tool is really aimed at the computer science, physics, electrical engineering, and related subject areas.

A new bubble?

In the last few months I’ve heard a number of people suggest we may be experiencing dot com bubble 2.0. Certainly in the PR space, we’ve seen a rush of new start up clients all keen to make their mark before they need to raise their next round of funding. We’ve also witnessed the VC firms raising money with relative ease. Put another way, money is not in short supply which is perhaps why so many have said it feels ‘bubble-ish’. While I too am slightly concerned I see some signs that this time around things will be different. Firstly, last time around many of the so called startups were little more than a set of PowerPoint slides, albeit slides about a really cool idea. This time around they have real technology and they have real customers. Second, last time rents were skyrocketing along with stock option grants. This time around, the economics seem to be in control. For example, all the startups I’ve seen this time actually feel like startups – there are very few Aeron chairs these days. Third, last time around you simply had to get some customers to get on track for an IPO. This time things are different. Indeed the data from 2005 shows Initial U.S. public offerings fell by 39 percent, to 41 during the year from 67 in 2004, according to VentureOne. And of the companies that went public, they collected $2.2 billion from their offerings, down a massive 56 percent from the $4.98 billion raised in 2004. And let’s remember 2004 was hardly a good year. So IPOs are few and far between which is good and bad news. The good news here is that this means people are much more focused on building real businesses. The bad news is that if these real businesses need serious capital injections to take them to the next stage, then they don’t have the public markets to go to. So while I may be guilty of not wanting to believe there’s another bubble on the way any time soon, from where I sit I don’t see the same pressures building, which may of course simply mean the bubble will be a different shape...

Google has clearly upset Chirac

Google must wonder what the French have against them. First they openly challenge its library book project then they fine them in a trademark case and now they fund the development of a new European search engine. They originally had the backing of Germany for this rather significant technological undertaking but that appears to have been withdrawn. Nevertheless the French are pushing ahead with Quero, a search engine that one of its developers described on the BBC today as being different from Google by offering ‘serendipity’ through its searches. I bet that’s not the word Google is using.

IXCO still stuck at 1000

Back in January I wrote about the NASDAQ ticker for tech stocks, IXCO, and my hopes that the tech sector would have a break out year. Two months later..the breakout has yet to happen. The IXCO has retreated to 900s having broken above 1000 for a while. This is despite an economy that's doing well, despite the major companies all reporting solid numbers and even despite RIM settling its lawsuit, thus keeping the Blackberry addicts online.

Now I spent the weekend with a VC whose optimism is addictive and whose ideas for new devices and services seems to filter into every conversation. Indeed, I woke up this morning convinced that the problem the technology industry faces is not a lack of opportunity. If only a fraction of the ideas I heard this weekend come to life the tech industry will be twice the size it is today. No, the problem is that Wall Street has not been convinced that the market really is going to get that much bigger. I firmly believe Wall Street views all the new ideas not as new markets but simply more competition for the existing one. It's no shock therefore that the stock prices of Microsoft, IBM, Oracle, Intel, Cisco and Dell have either stayed flat or have even retreated. Indeed only Apple, Google and HP have showed any signs of life. Google's stock has been very volatile of late, Apple seems to have stalled and HP is really only getting back to where it should have been. Not a great report card.

I don't believe the reason for this is poor performance by the tech vendors. Indeed, out of the companies I've mentioned all have reported revenue and earnings growth in the last twelve months. No, the problem it would seem is, as I've already said, Wall Street doesn't view the tech market as one that is going to grow, or at least not one that is going to grow fast enough. This is of course counter intuitive. We all know that there are still large parts of the world yet to be brought online. We also know that our personal consumption of technology has far from reached its limit.

Solving this will require the tech titans to promote messages of market expansion far more aggressively. It will also require Wall Street to listen which may prove to be the hard part. After all, they heard this message a few years ago only to see it turn out to be an 'overstatement'.

Spin Bunny - gone again?

Is it me or has Spin Bunny gone again? If it has it has nothing to do with the post on my blog. Maybe it was Mr Lewis who took offense?

Tom Foremski stirs the pot

Tom Foremski, formerly of Financial Times fame and now champion of Silicon Valley Watcher has been letting people know for some time that he feels the PR industry is about to go through a real shake up as traditional media outlets die and blogs and podcasts fill the void. On January 12th he wrote a piece entitled" "Disruption in mainstream media but where is the disruption in the mainstream PR industry?. . .it's coming." Word has it PR Week followed up on that piece and has interviewed him with a view to producing a profile on the man. I'm encouraged to hear this as it shows PR Week is thinking about the very real challenge our industry faces with the rapid decline in traditional media.

http://www.siliconvalleywatcher.com/mt/archives/2006/01/disruption_in_m.php

Spin Bunny is back

I'm pleased to see the return of Spin Bunny even if it is poking fun at my inability to make an entry for the month of December. Any bets on how long it is before it's taken down again by the lawyers?

Steve Jobs - President of Silicon Valley?

I saw a couple of pieces in the last few days suggesting Steve Jobs really is the biggest celebrity in Silicon Valley these days. The piece I link to in the Merc talks about him making a bigger splash than Ellison and McNeally did at events held the same day. I also noticed a piece in, the ever so well written, Palo Alto Daily that suggested Disney is considering buying Pixar and making Jobs its Chairman. It's a wild idea you have to admit. What is clear is that Steve Jobs is the hottest property in Silicon Valley these days. The fame is clearly not without good reason. Since returning to Apple he has given them a great product strategy, got them back on terms with Microsoft and now he's managed to make the switch to Intel - a move that in his first tenure as CEO would have been unthinkable (remember the Apple ad with a snail on an intel chip?). All this will likely take Apple's stock to $100 by the summer. Given the competitive nature of the tech market I can only imagine the conversations taking place in the boardrooms of other tech giants right now.

http://www.mercurynews.com/mld/mercurynews/business/13598836.htm

Tech Flaks are Back?

I just noticed this piece on Drew B's blog so thanks for highlighting the article. Some of the facts in the piece are wrong but the market is definitely much better than it was a few years ago. So much so that some firms I thought would crash and burn seem to be surviving thanks to the up-tick. What's clear to me is that the market in the Bay Area is not really being driven by the larger tech firms. On the whole they appear to be holding their spend firm. What's increased is the number of startups who are out spending. Those of us who went through the dot com bust are watching this trend with some caution. Hiring, yes but only for clients we really believe will be around in year's time.

Have you been Abramoffed?

I gather DC's K Street community is keeping a low profile right now, hoping that the Abramoff scandal will soon blow over and allow them to get back to work. I'm curious to learn whether any PR work has been affected by this affair. There is an argument that PR agencies will benefit as funds are redirected and an argument that they'll suffer simply because of PR's association with PA. I've seen no evidence yet within my business of either but I'm nevertheless curious. Has anyone yet had their budgets 'Abramoffed?'

A New Year for Tech or another year of ups and downs?

If like me you keep an eye on NASDAQ's symbol for its computer sector stocks (NASDAQ:IXCO) you will have noticed that in the last year this index has moved around a great deal. Currently it's sitting at 1050 (ish). Back in April of last year it was sitting around 850. That may look like a good trajectory until you realize that at the start of '05 it was at almost 1000. The reality is that in the last couple of years this index has risen and fallen with the peak always being at the end of the year. Only back in 2003 did the index show a steady rise from the then low of around 500. Put another way the index (and one assumes the industry) is looking to break out of the cycle. In my humble opinion this will only happen once the sector gets firmly on a new course.

If you look back to the 80s the tech industry grew at an alarming pace as the PC took off and the revolution started. In the 90s the Internet gave the sector an even bigger horizon which of course the market has since dialed back. However, since the Internet backed boom we've not seen a solid new 'big opportunity' for tech. We've seen several firms try and create the next wave but in general the market is rightly skeptical. What the market wants is something solid to latch on to. This means a new technology, not a new marketing slogan. We appear to be some way from a radical shift in technology such as would be created by say a move to nano technology. Yet there are two important trends that I'd point to. First is Google. It may seem obvious but Google is the new Microsoft in the eyes of the street. In the same way that Microsoft cornered the PC market, Google is deemed to have cornered the Internet. The difference between their model and Microsoft's is simply that you don't have to use Google, you just tend to. This makes them far less prone to the legal problems Microsoft has faced in the last ten years.

The other equally obvious, but no less important, trend is wireless. Every single device on the planet is going wireless. Right now people are making things that are wired wireless, phones, PDAs etc. In the next generation we'll have a raft of devices that are going to be born wireless. The interesting part to me about this market is that nobody has cornered it...Yet. RIM aka Blackberry, has made a good attempt but Palm has fought back thanks to the ever so unreliable but quite functional Treo. At the same time, rumors abound that Apple will enter the space. If they do we can expect them to do well, given the success of the iPod. To my mind there is a technical barrier that needs to be overcome which is bandwidth. The really hot wireless technology will emerge once the pipe is big enough for interesting applications. In Europe 3G has already been launched with mixed success it seems. I'll confess to feeling that this is because people are applying the bandwidth to the wrong application - namely the phone. If we all wanted a video phone why don't we have one on all our land lines?

My summary is therefore that Google will undoubtedly have another blow out year. I saw one stock analyst has already said there shares could hit $2000 (that's each btw). Such a valuation may seem crazy but think back to what happened to Microsoft's stock. Therefore I think the smart brands in '06 will be the ones that can figure out how to ride the Google wave. My other prediction centers around the gaping wireless opportunity - right now I believe RIM has a great chance of owning this space, assuming it can come up with a) an exciting vision b) some slightly more innovative devices (i heard from one source that RIMs CEO refuses to incorporate an MP3 player in the Blackberry - to that I say to him go sit on an airplane and look at what people have with them) and c) a settlement on its troubling lawsuit. If they can't execute well here someone like Apple may well step in and eat their lunch and grasp one of the most interesting markets for the next five years.