Anecdotally, the tech PR sector is experiencing its worst period in history. Budgets are being cut, decisions on agency selection are being stalled, and growth in the sector is but a memory. So, should tech PR firms be surprised and how should they react to the market conditions?
The original Tech PR bubble
It’s worth revisiting history. The original tech bubble burst in 2000/2001 after an enviable bull run that started in 1995. The Global Financial Crisis of 2007/8 stalled things somewhat as the world came to terms with a new economic landscape. In both cases, tech bounced back quickly, driven by innovation and the realisation that technology held the key to competitive difference. The phrase digital transformation was born.
In more recent times, tech seemed relatively immune to the worst of the Covid slowdown. Indeed, through 2020-22, every aspect of the digital world was amplified with the result that we saw a valuation frenzy. Money was cheap and early-stage entrepreneurs fished in a pool of hungry investors. And then interest rates began to rise….
This has had a profound effect on tech investment. Firstly, early-stage investments have slowed so the pool of VC-backed tech firms that typically hire small to mid-sized independent agencies has shrunk. Secondly, those that have raised big money rounds are focused more than ever on making the numbers and are tightening their marketing budget belts. At the high end, large private and public companies are subject to ever stricter fiscal controls, with a trend toward taking PR back in-house.
Faced with these realities, tech PR firms cannot just sit back and hope to ride out the storm. There’s no safe harbour from the conditions of today. Firms must face up to the fact that the halcyon days of being hyper-selective on which pitches to accept; on having minimum retainer levels; and on enjoying favourable contract terms are over – at least for the foreseeable future.
Technology sits at the heart of the economy
The good news is that there is money out there. Tech still sits at the heart of the economy. Tech firms from start-ups to titans still need to build brand, reach customers, protect their reputations, address shareholder issues, show their social credentials, and meet regulatory requirements. The need for good PR has not gone away.
Today more than ever, Tech PR firms must develop strong sales and marketing skills. Every pitch is now hard-won. To win the war of growth, battles must be fought on the front line of business development, sales, and client service. You can’t leave it to chance.
And arguably too many firms take an ad hoc approach to new business. Poorly curated prospect lists, unmanaged outreach, sporadic contact, late follow-up, and poor targeting all contribute to missed opportunities.
No battle is ever won by the poorly prepared.
To win in the current climate, agencies need to build sharp new business and marketing skills. Acknowledging this typically falls to the senior cohort means that time must be ring-fenced to make this happen. A common failing is that spare capacity is wasted on over-servicing clients rather than a concerted effort to find new contracts.
It's more important than ever to avoid the trap of over-servicing the client for fear of losing budget or being let go. It is better to engage in open conversation about budget limitations by flagging over-servicing and by offering up creative solutions which might involve an agreed reduction in hourly rates (different to over-servicing). Now is not the time to roll over.
But looking at history should give us a clue to the future. Innovation has not gone away. Business still needs tech. Interest rates will fall. It’s not a question of if but when. Those agencies that fight back and focus on the fundamentals of growth today, will be the winners of tomorrow.
Article written by Andy West managing consultant at Westofcenter.
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