Reliving the Dashed Dreams of Days Gone By

The Wall Street Journal just published an article about the boom now sweeping through the Silicon Valley’s public relations community as Web 2.0 start-ups clamor for market attention.  Some PR consultants are even back to accepting equity as payment for their services. 

This is pure craziness.  It’s absolute lunacy.  Good heavens… it's officially 1999!    

Strategic Communications Group (Strategic) went been down this path a decade ago.  We represented such dot com darlings as OnlineConversatory.com, OnScreen Interactive, iAutoMortgage.com and aTelo. 

Never again!  If a company cannot explain in plain English their business model and how they generate revenue, they are not in a position to derive value from any external communications activity.

Why these Web 2.0s may seem exciting, most represent unsustainable business for any public relations shop.  I know exactly where this ends because I’ve lived it -- broken hearts and unpaid invoices.

Experience to be Thankful

My three-year-old was ready to start his day at 5:30 AM this morning so I’ve had some time to consider what I should be most thankful for this year. The answer: experience.

Let me elaborate. When I shared with my parents the plan to launch my own public relations consultancy my father gave me this perplexed look. “You’ve only been in your field for a few years,” I recall him saying. “You don’t have any experience.”

Like many twenty-somethings I believed the value of experience was overstated. I was willing to work hard…to be aggressive…and to do whatever was needed to be successful.

Fast forward 14 years and I sure have a greater appreciation for the role experience plays to determine business achievement and, in some instances, mere survival.

Strategic Communications Group (Strategic) has been through a lot as a company. We lived the dramatic rise (and fall) of the dot com era. We’ve been led by three management teams, each of which brought a unique perspective to the business. We took several stabs at trying to create a perceived differentiation in the market, only to conclude public relations is a commoditized professional service.

And through it all we have been fortunate enough to represent nearly 200 technology, software, security, systems integration, satellite, wireless and healthcare clients - each presenting a distinct market situation and challenge.

So, as the Commerce Department now officially confirms the US economy contracted during Q3 I thought I’d share my perspective on management in a time of recession.

1. It all starts with the business model. Does the structure of the organization allow you to deliver services profitably, while staying in-step with client expectations? Can you quickly add or scale back resources? Do you recognize the difference between good business and an unhealthy client contract? All important questions to answer prior to execution of a business plan.

2. Focus on the core. Strategic continues to invest in growth, yet in a measured way. Unlike some agencies that subscribe to being “all things to all people,” we are committed to providing a specific set of services to a certain type of organization at a defined point in their maturation. Yes, it limits the size of our addressable market. However, we believe it makes Strategic very competitive.

3. Keep the goals of the business simple. We have two of them: a) great work for great clients; and b) a commitment to work/life balance for our employees.

4. Don’t fall in love with what you see in the mirror. A well known agency executive recently sent me this missive in an Email:

“So, over the past two years, we’ve positioned NAME WITHHELD in terms of resources, capabilities, talent and case histories to be able to claim that we are unique and unsurpassed in our ability to provide totally seamless integration from advertising to research to media training…crisis, grass roots, branding … name it …we’ve built the team of people who can do it…people with unbelievable credentials and personal reputations…”

Passion and belief in the business are important, yet it’s equally critical to constantly review, test and challenge your approach.

5. Keep it fun. A former employee was fond of saying that “work is a job, not summer camp.” Yet, there needs to be enjoyment and emotional reward in what you do.

Lessons from Dot Com Turkeys

About ten years ago Strategic Communications Group (Strategic) began an exciting growth phase as a public relations provider to venture capital backed start-ups.

Unfortunately, our fall was just as dramatic when the rules of the game changed and private equity firms actually expected their investments to make money. At the time, it was referred to as establishing a “path to profitability.”

We represented a number of dot com turkeys. They were companies that had no game plan for how to monetize their technology or the communities they had created. They shut down…quickly. Strategic was left client-less with uncollected fees.

Fast forward to today. I am all for social media technologies and believe they present an exciting channel for companies to communicate and engage with influential audiences – customers, partners, employees, investors and the community.

Yet, the market is still figuring this all out. What is the ROI for an executive blogging program? How about creating a personalized social community? Or perhaps establishing a corporate page on Facebook?

We’re simply not sure yet and that is OK. It just means that we are going to be measured in our approach using these tactics and the recommendations we provide clients.

As for the social networking companies, it’s important for their management and investors to visit the dot com graveyard so as not to repeat the mistakes of the past. In business, you have to establish a clear value proposition for customers. It’s not about community. It is revenue and profits.

Here’s a great blog post from Jordon McCollum that looks at this issue within the context of Facebook’s financials.

Will Social Networking Ever Make Money?
http://www.marketingpilgrim.com/2008/02/will-social-networking-ever-money.html