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.
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.
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.
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.
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.
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…