P.R. agents to startups: Keep quiet!

Public relations pros aren't exactly known for keeping quiet. But with dot-coms folding and the Nasdaq crashing, the P.R. machines that helped inflate the tech bubble have gone silent. The byword these days in new-economy P.R.: Shhhh!

Take Sparkpr, a boutique agency in Palo Alto, Calif., that specializes in launching startups. Its marketing materials still tout its skills at "message development" and "media placement," and its focus on "getting hits" for clients. But these days Spark execs focus more on keeping industry analysts at investment banks up-to-date, maintaining good relations with the few reporters they trust and cautioning clients to maintain a low profile.

"The expectations have changed completely," says Sparkpr partner Shannon Mollner. Before the Silicon Valley economy collapsed, she says, every startup thought it deserved to be on the cover of Time. While Spark clients still "believe they're great companies with great stories to tell," says Mollner, "now they're more savvy about it. They're realizing it's OK not to be in the paper every day. I tell them to look at the top stories on a news site. When they see that there are maybe 13 top stories and 12 of those are negative, that's part of the education."

Sarah Boatman, marketing director for Bang Networks, a business-to-business startup and Spark client, concurs: "We'd love to tell the world what we're doing. But if we'd gone out earlier, we would have been lost in the general negativity. So we decided to be pretty quiet about it."

It wasn't always this way. A year ago, Spark went to all sorts of creative lengths to get its clients ink. Last May, for example, the agency scored the kind of coup that could give the average flack a hot flash. It pitched a writer for Elle magazine with a simple idea: Go on "dates" with four Silicon Valley bachelors - all young, all dot-com execs, all rolling in stock options and general hip-ness. And all - you guessed it - represented by Sparkpr.

The resulting story, headlined "Single Gal Heaven," got all four clients high-profile coverage in a national magazine. The guys chatted about how hot their businesses were while the reporter dutifully noted how hot they were. No nasty questions about profitability or complicated technology issues, just basic hype. Even Hollywood bought it - the story was optioned by the producers of the Austin Powers movies.

That was then, this is now. These days, Spark agents spend their time working with clients to hone their public images and brand messages, biding their time until the press is ready to take dot-coms seriously again. In the case of Bang Networks, Spark hasn't even bothered to pitch the company to reporters.

Spark was founded in 1999 by refugees from Netscape's in-house P.R. department. Spark's original business plan was to sign one-year contracts with promising new companies (receiving an equity stake in return) to shepherd them through their launches and IPOs, and then move on. In the old days - before last November - one of the first things a savvy startup did was find a good P.R. agency. For many VCs, "Who's doing your P.R.?" was the first question put to prospective clients; once a company went public, P.R.-driven word of mouth could send its stock price sky-high. At the same time, a company's list of VC backers became a major component of its P.R. message.

Spark built its rep with clients like VA Linux, whose December 1999 IPO is considered one of the most successful public offerings in history. But with fewer startups to choose from and fewer IPOs to hype, partner Donna Sokolsky says Spark now plans to keep its clients around a little longer. VA Linux, for example, is still a Spark customer - 15 months after its IPO.

Because all of its clients - including Epinions, Juniper Bank, Tellme and Vividence - are startups, the current media backlash has its own particular sting at Spark. Many reporters feel embarrassed now rereading clips about how great, say, Boo.com's business model was. All too often, the press neglected to ask probing questions about customers, profitability and the bottom line that might have exposed the weaknesses beneath all the new-economy glitz. Now they're making up for those mistakes. Bang's Boatman says Spark has prepared her for tougher questions from a more skeptical media.

P.R. has always been the red-haired stepchild of the marketing business, but during the boom it became the cheapest and fastest way to get noticed by consumers and Wall Street. "Last year we got 40 phone calls a week, all from new dot-coms who wanted us," says Mollner. "Everybody wanted P.R. - our whole industry moved up the food chain very quickly." P.R. experts like Spark made startups with little more than seed money and an untested business model look legit. They threw parties, talked to reporters and blasted releases to anyone and everyone who might care.

Mollner says many public relations folks are privately relieved that the go-go days are over. During the boom times, the pressure to crank out daily "news" was intense. Reams of press releases went out to announce a client's exciting move to a new office building, say, or the appointment of a new deputy CTO.

That buzz became increasingly self-defeating. There were so many parties, so many deals, so many companies destined to be "the next Amazon of the [fill in the blank] sector," that getting an individual message heard was next to impossible. Public relations firms hired like mad, bringing in inexperienced college grads by the dozen to keep up the stream of press releases. Reporters were bombarded with phone calls, e-mail and kooky mouse pads from young P.R. folks who could barely describe the companies they were pitching.

Spark isn't the only agency in retrenchment mode. "We're all in a really defensive environment right now," says Simone Otus, P.R. veteran and co-founder of Blanc & Otus. "We just have to wait it out. The media world will turn upright again at some point."

Like Otus, the Spark execs remain philosophical. They believe that the business is cyclical like any other, that the Internet isn't going away just because reporters are bashing it, that someday they'll go back to doing what they do - getting people to pay attention.

But until then, Sokolsky says, "We're just keeping our heads down."

--------------------------------------------------------------------------------Blair Clarkson is a freelance writer in San Francisco.

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