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'.