Oracle Ends 8-Year Relationship with Applied; Takes PR In-House
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Oracle Ends 8-Year Relationship with Applied; Takes PR In-House

The break-up of Applied and Oracle may be the most surprising of all recent account moves, because the two companies grew up together and Applied seemed uniquely suited to Oracle’s aggressive, competitive approach to PR.

Paul Holmes

  SAN FRANCISCO, August 27—The year 2001 is shaping up to be the most volatile in the history of the technology public relations business. Not only did the dot-com business vanish virtually overnight, but an unprecedented number of major technology clients—Sun Microsystems, Dell Computer, and most recently IBM—have either switched agencies or brought their PR in house. And now software giant Oracle is joining that list, terminating its eight-year relationship with agency Applied Communications.
While the other changes created shockwaves—Fleishman-Hillard had won numerous awards for its programs on behalf of Dell and Brodeur Worldwide and Technology Solutions had gained national recognition for their IBM work—the break-up of Applied and Oracle may be the most surprising of all, because the two companies grew up together and Applied seemed uniquely suited to Oracle’s aggressive, competitive approach to public relations.
“Oracle is a very difficult company to keep pace with, and Applied’s approach was a good fit,” says Rich Moore, one of the founding partners at technology PR specialist Copithorne & Bellows (now Porter Novelli Convergence) and currently a partner at venture capital and consulting firm Battery Ventures. “This is a defining moment for Applied. They have been Oracle’s agency for a long time, but maybe this will give them the opportunity to pursue opportunities they would not have been able to pursue otherwise.”
In some ways, the timing could not have been better for Applied, which has diversified its account base considerably in recent years—a conscious effort that dates back to the end of 1997, when Applied chief executive Alan Kelly resigned the Oracle business, which at the time represented more than half of his firm’s revenues. (Oracle returned to Applied less than a year later, after a brief stint with a “custom” agency called Avalanche, created exclusively for the software company by WPP shops Hill & Knowlton and Ogilvy Public Relations and technology specialist Cunningham Communication.)
Last year, Applied picked up a significant chunk of Hewlett-Packard business, earlier this year it added Genuity and Veritas Software, and last week it announced that it had picked up the VeriSign account. Kelly would not comment on the size of the Oracle business, but it is believed to represent less than 20 percent of Applied’s $11 million in revenues last year.
Kelly clearly has mixed feelings about the end of the relationship. “This is a day I have expected for some time, because Oracle is not the kind of account you expect to take to your grave, “ he says. “It’s the kind of account for which you have to take risks; they like to be challenged. I think we honed our approach on Oracle. Our business plan when we launched the company was to redefine PR by focusing on creating competitive advantage for our clients, and Oracle allowed us to do that. If Applied was a software application, I’d have to say that Oracle was our power user.
“But in another respect, I feel a little bit liberated. The pressure of servicing that account is uniquely high. I am looking forward to doing some new and different things.”
Several industry observers expect Oracle to rebound quickly. Chris Komisarjevsky, chief executive of Burson-Marsteller—which pitched the Oracle business three years ago and which was itself hit by the defection of a prominent technology client, Sun, earlier this year—is one of Applied’s admirers.
“One element of Applied’s approach that always stood out for me was its emphasis on research,” he says. “There not enough of that in our business. I know Applied, and I doubt this decision had anything to do with the quality of the work.”
Moore, meanwhile, suggests that while many high-tech agencies have grown up with a single defining marquee client, most of those clients have eventually moved on to other firms. He cites Compaq at Miller Shandwick, Microsoft at Waggener Edstrom, Motorola at Cunningham, and Hewlett-Packard at C&B as examples. All except Microsoft have since moved on, and Microsoft now uses a portfolio of different agencies.
But what makes this year’s shake-up interesting is that it has not followed the expected pattern of big technology companies ditching specialized domestic firms for full-service global agencies. Dell recently abandoned Fleishman-Hillard—the world’s second largest PR firm—and is considering a couple of boutique agencies as well as two larger firms. Sun Microsystems turned from B-M and Ketchum to four agencies, and is now consolidating with Alexander Ogilvy and Citigate Cunningham. IBM, meanwhile, considered presentations from several major agencies before awarding two out of three assignments to midsize shops Magnet Communications and Text 100.
Oracle, for its part, says the decision to drop Applied was driven by two desires: the first, to develop a more integrated approach to its communications programming; the second, the desire to move at “Internet speed.”
Oracle senior vice president of corporate marketing Paul Burrin, whose responsibilities include advertising, public relations, the company’s website, and internal communications, says the company has been restructuring its in-house communications staff to facilitate a more integrated approach. “We had a strong department, but it was in a classic silo structure. As we move more on to the web, and to a more integrated model, we have been looking to flatten our organization and also to move to a more networked model.”
Burrin also hopes that bringing certain functions in house may help the company move faster. “There’s a feeling this might help us execute a little faster,” he says. “In the advertising arena, for example, if we can do some of the creative in house and change our minds we can turn things around very quickly.”
Burrin insists the company was not motivated primarily by the desire to cut costs, although he concedes “there are some cost savings associated with this strategy.”
The changes will impact not only Applied, but also several other communications firms, including public relations shop PR21—which Burrin says will continue to help Oracle with several specific projects—and the company’s advertising agencies. “The same strategy applies to everyone,” he says. “We will do as much as we can in house.”
For Applied, that may mean some layoffs—a common occurrence in the technology PR business this year but one Kelly’s firm has been able to avoid to this point. Still, Kelly is confident his agency will rebound quickly. “We are looking at this as an opportunity,” he says. “We will be able to re-deploy some people and we will be able to pursue some clients we would not have been able to talk to while we were working for Oracle.”
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