Getting the Right Spin: PR on the Net

The Internet has begun to change the dubious art of public relations. If it cuts down on unsolicited phone calls, reporters will be forever grateful.

By James Ledbetter and Bernhard Warner

For four years, Eric Ward has run a unique public-relations firm. In all that time, he has never called a reporter or faxed a single press release. Never. Not even when Jeff Bezos asked him for help promoting the launch of Amazon.com (AMZN) in 1995. Ward runs URLwire, an Internet-based PR firm in Knoxville, Tenn. His dealings with the 10,000 or so journalists on his contact list are conducted entirely via e-mail and the Web.

Ward and other online media-relations firms contend that the Net has triggered a minirevolution among the nation's $10 billion-dollar public-relations industry – a revolution for which many PR stalwarts were ill-prepared. Some still haven't caught on.

"The Internet has totally blindsided the PR industry," says Ward, who moonlights as a consultant for heavyweight PR firms, including Burson-Marstellar. "All of a sudden, their clients got Web sites. And they said, Now what do we do?'"

According to recent federal statistics, management and public relations is the third-fastest growing industry in the country. That growth, coupled with the Internet  - as well as the emergence of hundreds of Net-centric businesses – has spawned dozens of online PR firms that specialize in disseminating information to journalists over the Net. Many of these companies act as service bureaus for larger firms with little or no online expertise.

The Net's growth appears to be fueling consolidation in the industry. Earlier this month, for example, the public-relations giant Omnicom snapped up the San Francisco firm InterActive Public Relations, which specializes in launching high-tech startups. In mid-January, the Chicago-based Financial Relations Board, which had been the fourth-largest independent PR firm in the world, merged with New York-based BSMG Worldwide.

In announcing the latter deal, the two companies cited "the growing role of the Internet in the investment information and decision-making process." Some industry experts saw the coupling as an admission that FRB, an old-school PR and investor-relations firm, needed a technological edge in order to survive.

"A lot of these companies are in Jurassic Park when it comes to the Internet," says John Williams, senior VP of PR Newswire, a New York-based electronic distributor of news-related press releases.

PR Newswire, which claims to serve two-thirds of Fortune 500 companies, says its Web site serves up 5 million pageviews a month. In December, its chief rival, Business Wire in San Francisco, reported 2.3 million pageviews, up from about 1.8 million in 1997. The two services together move nearly 2,000 press releases each day.

Both the giants and the newcomers in the business use the same model. They build a database of journalists and charge companies for delivering press releases to reporters and editors. On top of a $100 annual membership, PR Newswire charges as much as $650 to broadly distribute a 400-word press release or similar announcement. News organizations get the service for free.

Online public-relations firms offer a variety of Net-based services, including e-mail delivery, sending reporters batches of news releases one or more times a day.

Another offering is the "virtual press room," in which registered journalists enter a password to gain access to a Web page with thousands of releases. Reporters select in advance which categories they want to view and, upon entering the site, see that day's releases arranged by category and hour of delivery.

PR Newswire claims to have registered 15,000 journalists; 3,000 reporters and editors have signed up for Business Wire's "Press Pass" service.

"The Internet has the potential to eliminate some parts of the PR process – the middle man if you will," says Ward. And it can be a lucrative business. Ward says URLwire earns him and his wife, the only employees of the small company, a "six-figure income." He says he's twice turned down offers to sell the business – or at least his list of 10,000 media contacts.

Some analysts have feared the Internet would produce widespread, and largely unprecedented, opportunities for fraud disguised as public relations. This could range from "investment tips" posted anonymously in chat rooms to bogus information released by legitimate-sounding groups.

PR Newswire insists that it is the Net's credible voice – the company says it has "firm policies" about what's acceptable material to disseminate, especially in the area of stock announcements.

Internet News Bureau, another online news distributor, monitors its list to ensure registrants aren't salespeople posing as journalists. "If I find somebody is using it as a marketing list, then I'll tell them to stop or remove their name," says Renee Menius, editor of the Bend, Ore.-based service.

It's not clear what effect, if any, Web-distributed PR has had on the way journalists produce the news. Journalists who want information know where to find it. And reporters, often flooded with requests for coverage, can ignore a virtual press release just as easily as they can ignore a paper one.

Still, the electronic PR firms insist that their service is valuable. Perhaps more important, they have found out that the audience for PR is no longer simply journalists. The Web has made available for free what a PR Newswire official calls "unfiltered, unedited and unselected" corporate data to anyone with a Web browser.