Public relations companies wrote all those news releases that helped inflate the Internet bubble, so perhaps it's only fitting that they feel the effects of its collapse. And they're definitely feeling it.
Although virtually every company has reduced its PR efforts on the Internet, leading the cutbacks are the organizations that helped fuel Internet hype: tech companies.
According to the ninth annual survey of public relations clients released last month by Thomas L. Harris/Impulse Research, computer/technology companies reduced the Internet communications portion of its PR budget by 67 percent from last year's levels, even though those computer and tech businesses already spent a smaller portion of their PR budgets on the Internet--6 percent in 2000, compared with 7 percent for all companies. And the average company's Internet communications PR budget fell 47 percent from last year.
In comparison, the tech industry is taking deeper PR cuts than other industries. The Impulse survey indicated that outside of the car industry, the average PR budget fell 29 percent this year--the first time that public relations spending has declined since the survey began, said Bob Novick, principal with Impulse.
And public relations jobs are getting scarcer: This month at least two of the top 10 public relations companies announced job cuts, including Edelman Public Relations Worldwide, which is closing offices in Austin, Texas and Boston that were largely devoted to clients in the tech industry.
"It's really scary right now," said one PR account executive whose company is closing her office next week. "I'm supposed to be working for my client until then, and I have to admit, I don't really feel like it right now."
Back away from the Internet
The dot-com crash opened eyes in many respects, said Larry Meadows, chairman of the national technology group for the Public Relations Society of America. Not only did the PR industry lose an easy source of business as Internet companies went belly-up, but public relations specialists also realized the Internet wouldn't replace or revolutionize traditional means of spreading a company's message, Meadows said.
In a way, the Internet made it too easy to send out news releases. Online journalists can get swamped with hundreds of e-mail pitches a day, many of which simply get lost in the morass.
"The Internet didn't turn out to be something that changed the world," he said. "The Internet hasn't changed the rules for PR."
He should know. Meadows used to be the "Web Relations Manager" for a networking company called Paradyne Communications. Paradyne still exists, but his old job no longer does. The same goes for Paradyne's "Internet Marketing Manager" and "Corporate Internet Manager" jobs, Meadows said.
The recession has done more than push PR communications back to established mediums. It also convinced companies to go back to tried-and-true methods. Forget about those canap?-and-cake receptions for every little product launch; nothing beats the old-fashioned method of calling "influential" people, contacting journalists and other old-fashioned ways of getting the story out, said Linda O'Neill, senior vice president with Waggener Edstrom, one of the biggest technology PR companies.
Although Waggener is best known as the mouthpiece for Microsoft, part of O'Neill's job involves getting PR business from new clients. Nowadays, a prospective customer not only wants to look good, but also cares about how much that image costs, O'Neill said.
"You are seeing firms being more stringent than they had been in looking at results," she said. "Companies don't want (PR that's) being clever just for the sake of being clever...So when we plan PR, we say, 'Can't I do that in a more fundamental way?' It's the right thing to do in this economy."
Distinguishing yourself with a back-to-basics approach isn't as easy as it sounds, especially since there are other large PR firms who are also good at what they do, O'Neill said. Although the shrinking tech economy may have shrunk the total number of firms, the remaining ones are better competitors. And companies that once might have passed up smaller accounts are going after them now, making new business contracts even harder to win.
Which suits O'Neill and Meadows just fine.
"Personally, I think the slowdown is going to be good for the industry," he said. "When you go in to pitch new businesses or even work for existing clients, you have to get more creative. You're much more scrutinized."