What dotcom cool down? Bigwig agencies have hardly abandoned the inevitable gloat that seems to ooze its way to the surface of every media interview: "We're so swamped that
we are now interviewing prospective clients and turning away business." While we suspect this thinly cloaked PR ploy is truer in some firms than in others, one thing is certain:
There's a contingency of tech clients who are not impressed with the agency-cum-VC bravado, and they're not bothering to stand in line. Not when there are more nimble shops
around that are leveraging technology to provide better client service.
If Lillian Tsai had had her way when she joined GemStone Systems last year as director of marketing communications, she would have skipped the formalities and hired a small,
"virtual" shop right off the bat. "I came in during the final review process, so I didn't feel like I could include another agency in the race at that point," she says. "But I
resent people who think the only good PR agency they can find is in Silicon Valley."
GemStone, a Beaverton, Ore.-based company that creates Java-based platforms for b-to-b marketplaces, went with a big agency. Tsai gave the firm six months before terminating
the contract. "I've seen it happen so many times. They come in for the pitch, send three or four people to do an impressive dog-and-pony show, say all the right things and
commit to giving your account senior-level attention," she says. "But when it comes down to it, the day-to-day contact is not senior level. You pay a lot of money, and a request
for something as basic as a press release takes two weeks."
In the end, Tsai moved GemStone's business to The Bernhardt Agency, a small Portland firm whose 10 staffers mostly telecommute. "You'd never know it," she says. "Phone calls
to their main number are automatically transferred to wherever their people are, and they are religious about checking voice mail and email. If we don't bug them, they bug us.
That's what I want."
The New Elite
While so-called "virtual agencies" were once snubbed as mere euphemisms for second-class freelance outfits and stay-at-home moms, the business model has gained new respect, if
not outright envy, in the industry - particularly with the advent of Web-based, collaborative software and changing attitudes about "proper" workplace environments.
Consider the high-tech agency Johnson & Co., whose headquarters exist solely in cyberspace. The three-year-old firm has gained notoriety among the digital elite, touting
clients such as Helius, a creator of "data via-satellite" solutions, and Pensare, which provides online learning applications to business schools. "Jo&co" also boasts
strategic partnerships with brick-and-mortal agencies such as Niehaus Ryan Wong and the Benjamin Group.
To be sure, jo&co is no mom and pop shop; it has commanded billings as high as $80,000 per month and employs roughly 20 veteran PR consultants across four time zones (some
are full-time employees with benefits, while others are free agents on contract). The secrets to its success: ICQ instant messaging and a Web-based ASP service known as "E-Room"
in which team members can access and update shared files, schedule meetings on a group calendar and post notes on an in/out board.
"When I log on in the morning, I can see who is at work," says founder Jennifer Johnson, a Novell veteran whose home base is in Salt Lake City. "I do coffee chatter [online]
in the morning. But the biggest thing we use [ICQ] for is collaborating - like booking a press tour that involves multiple people. It gives us the same level of connectivity as
if we were in an office together."
Instant messaging technology also has its benefits in the client service department, Johnson says. If a CEO starts heading into rocky territory during a teleconference with a
reporter, Johnson can issue a "virtual kick under the table" via online messaging, indicating that the conversation should be steered in a different direction.
Faster, Better, Cheaper
And the technology keeps getting better. Last week, the start-up venture Kickfire launched a marcom-specific hosted service which, like "E-Room," offers threaded chat
discussions and a virtual chalkboard for online brainstorming, as well as access to market research, freelance marketplaces and tools like InternetWire. The product resembles the
same supply-chain solutions (developed by companies such as Siebel, PeopleSoft and SAP) that have become standard in sales force automation, HR and manufacturing.
Granted, many large PR agencies tout proprietary enterprise software that facilitates the same kind of collaboration across time zones (indeed, the technology has become a
necessity for global players). But the smaller shops and ASP providers snipe that investments in proprietary systems are costly, and the expense ultimately shows up in the
client's bill. A proprietary enterprise solution starts with a price tag around $150,000, not including the cost of customization and the requisite IT staff support. Kickfire, on
the other hand, is hosted offsite and costs about $100 per month, per user. Its subscription model is similar to cable TV - users automatically benefit from upgrades and new
features, but can also pay extra for premium services.
Although huge agency conglomerates continue to build mass through global mergers, some insiders predict that technology - not size - will ultimately distinguish the savviest
counselors in the communication business. "It's amazing to me how many PR agencies are servicing the high-tech industry using the most antiquated technologies on the planet,"
says Sabrina Horn, whose eponymous agency is currently researching various online document management systems. "We need to look at the industries we serve and use the technology
to help clients. They want great results done faster, better and cheaper."
If this is the case, virtual agencies may already have a leg up in the race - because their very structure forces them to "walk the walk" in technology circles. Former Labor
Secretary Robert Reich predicts that by the year 2020, 40% of the population will be working from home (up from 5% today). Jennifer Johnson predicts that by the year 2010, one of
the top 10 agencies in the world will comprise a band of free agents who - liberated from the confines of real estate overhead and bureacracy - are working from home in their
PJ's.
(Horn, 415/905-4000; Johnson, 801/363-5626; Tsai, 503/533-3888)
Impervious to Poaching?
Virtual shops also are making headway in the PR talent wars, as experienced PR counselors are drawn to the flexibility that free agent life affords. Johnson & Co. boasts a
philosophy of "My-Sizing" in which staffers can dictate the number of hours they work. "Our highest-paid consultant only works 10 hours per week," says founder Jennifer Johnson.
To a large extent, this flexible staffing model solves the retention problem that plagues so many agencies. Johnson recalls one project in which her firm collaborated with the
larger agency Niehaus Ryan Wong: after eight months, the client had lost two members of its account team, and the agency had lost four. All of jo&co's original consultants
were still on board.