2000: The End of PR as We Know It?


Generic brands may be cheaper in the supermarket, but not in cyberspace. Last week the domain name business.com sold for a whopping $7.5 million. Now the URL PublicRelations.com is scheduled to hit the online auction block Dec. 21, and industry speculators are already wagering as to what kind of price tag it'll command. But the outcome of this digital real estate deal could shed light on a larger question: Who owns public relations? After all, there is no guarantee that the highest bidder will be a PR firm. The greater likelihood is that it will be a wealthy holding company (thus bringing advertising and a mess of other disciplines into the fold). Maybe the site will be snagged by a media conglomerate with visions of sugar "portals" dancing in its head? Or could the buyer be - dare we say it? - a management consulting firm? This is isn't so far-fetched, especially considering the recent industry grumblings about management consultants moving in on PR territory (PRN Dec. 6). As Ketchum CEO David Drobis pointed out at the September ICO Summit in Europe, "We're already seeing this in the advertising world. Management consultants have taken over marketing strategy discussions that were once the domain of the agencies. Now we're seeing firms like PriceWaterhouseCoopers offering reputation awareness services. And the HR consultants like Towers Perrin are building communications strategy practices. All appear to take dead aim at public relations." Can't Beat Em? Join Em. Last week, PR NEWS looked at why so many PR counselors are bracing themselves for a new wave of competition from consultants. This week, we explore another philosophy. There are those who believe that mutual back-scratching is a better strategy than antagonism. "We're actually trying to align ourselves more closely with [consulting firms]," says Mike Spataro, senior VP for interactive PR at Shandwick in Boston. "It's almost like an analyst relations program." Spataro has even gone so far as to help Deloitte & Touche market itself. He recently wrote a special report for inclusion in the firm's "Fast 50" media kits (the kits profiled the fastest growing tech firms in the U.S.). Of course there was a benefit for Shandwick in the deal. The kits showcased Spataro's expertise and were distributed to thousands of potential customers. It just goes to show you that even for Web-savvy communicators, the word "networking" still holds its traditional off-line meaning. "Clients want in on the business relationships we have," says Spataro. "The management consulting piece is very important to us because it broadens [our] relationships." No Kissing Cousins And yet, as in all relationships, there are boundaries. While the sharing of contacts is en vogue, you still don't see PR firms entering into formal business partnerships with management consultants. The reason for this isn't so much a competitive issue as a regulatory one. "We've had discussions with several PR firms on how we might work together," says Harold Kahn, a partner with PriceWaterhouseCoopers in New York. "But we are strictly bound by SEC requirements in the form of independence rules. Many PR firms now are subsidiaries of major multinational advertising firms that are clients [of ours]. So we can't do joint ventures or share economic interests with them." Kahn adds, however, that there have been occasions in which PWC has collaborated with a PR firm on behalf of a common corporate client. "We just have separate contracts," he says. The Sincerest Form of Flattery Adding another dimension to the consulting dance, some PR agencies are two-stepping with the next best thing - consultants' consultants. The DC-based public affairs firm APCO Worldwide seeks counsel in organizational benchmarking from a Harvard Business School professor (not by coincidence, the same prof who counsels firms like McKinsey and Ernst & Young). APCO also boasts a business model that CEO Margery Kraus likens more to a consultancy than your typical PR firm. "We can pull people from anywhere in the world, any 'home room,' as I call it, to come work on a client matter," she says. "There is no bureaucratic impediment to that." Visit the opposite coast, and a similar transformation is occurring at Cunningham Communications, based in Palo Alto, Calif. Two weeks ago, the Silicon Valley agency announced plans to morph its capabilities into six operating companies (of which PR represents one) under the umbrella of a single holding company. The firm's newly-defined practice areas focus on PR, branding, custom research, organizational strategy, venture communications, and start-ups/IPOs. Each of Cunningham's companies now delivers services based on its trademark methodology known as Momentum Management - a means of measuring a company's leadership potential. Maybe it's a PR firm, but it sure sounds like consultant-speak to us. To top it off, Cunningham just hired as its chief financial officer Gary Wohl, formerly a CFO with the New York consulting firm, the Oram Group. "We really believe that the need for communications strategies goes way beyond PR," says Trish Willcoxon, VP marketing for Cunningham. "PR is undergoing quite a change with the advent of the Internet. Relationships you have now are directly with customers, as opposed to influencers." The challenge to PR firms isn't coming simply from management consultants, Willcoxon adds. The Web is changing business on a much broader scale. "The [agencies] that are going to win now are those who shape their core substance around the new economy," regardless of what they call themselves, she says. Spataro agrees. "Our clients want a heck of a lot more than PR. They want marketing, new business development, sponsorships, relationships, affiliate programs online, etc.," he says. "The technology clients of a new generation don't look at you as just their PR agency. They see you as a full-fledged business partner. PR may be what they come for originally, but what agencies now deliver is far beyond public relations." What's in a Name? Could it be possible that the very phrase "public relations" has become a misnomer for the industry? The answer is a resounding "no" if you ask veteran counselor Daniel J. Edelman. Speaking before the Atlanta chapter of PRSA last week, Edelman urged the audience to "build recognition and respect for public relations and never discard that term." But many firms have already scrapped the term in favor of other descriptors. "Labeling something as an ad agency, a [PR] firm, a design studio or an interactive company is difficult to do without an asterisk to explain how the label doesn't really fit," says David Baker, principal of ReCourses, Inc., a Nashville-based management consulting firm that provides counsel exclusively to the above-mentioned fields. "The most accurate description is integrated marketing communications," he says. "But that isn't a very sexy term, and it doesn't have a long history." Public relations, on the other hand, is one term that has, if nothing else, a history. Who wants to be master of the domain known as PublicRelations.com? It really depends on who wants equity in the name. And that may or may not be someone whose history is rooted in PR as we know it. (Ketchum, 212/878-4600; Shandwick, 617/351-4117; PWC, 212/596-8170; APCO, 202/466-6002; Cunningham, 650/858-3700; ReCourses, 615/831-2277)

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