Ketchum Pleon senior partner and president David Gallagher is the ThinkTank EMEA commentator until the summer, responding to provocative news issues on a weekly basis.
Back in 2001, I had a conversation with a journalist covering PR who complimented my agency in the UK and our strategic foresight for managing to miss significant collateral damage associated with the busted dot-com bubble in the tech sector.
He was partly right – we were not hurt as badly as many other consultancies who had invested large sums in acquisitions, senior hires and questionable business arrangements in the hype attached to the tech sector. But it wasn’t strategy, it was timing. We simply had delayed doing any significant deals and didn’t get as invested as others in what turned out to be an unsustainable proposition.
Ten years on, I wonder if we’re not at a similar moment, when a brief pause might prove fortuitous.
Take last week's public offering for LinkedIn, with share prices up 30 percent over expectations for a $4.3 billion valuation that is 17 times its 2010 revenue. Seventeen times. Google, by comparison, is valued at six times its revenue. Some experts suggest LinkedIn paves the way for even higher prices for Facebook, expected to go public in 2012.
I’m no financial expert, believe me, but this is starting to feel familiar, and not entirely comfortable. Agencies with a claim to social media expertise are commanding eye-watering prices on short track records. Digital specialists are demanding, and getting, top salaries and special bonus arrangements for simply signing on or staying put. And I’d bet there are plenty of consultancies taking on deferred-billing clients who’s ships are expected to come in any day now.
For a few first-movers in the investment community, this may, as in the late 1990s prove brilliant. For many others of us in the services sector, I’m not so sure. Yes, clients are asking for expertise that many agencies lack, or at least in sufficient capacity. Yes, those with the goods can command a premium. And yes, there will be times when a flexible or innovative arrangement with a client can serve both parties well.
But as one who got lucky in 2001 by simply showing up late, I’m inclined to keep my exuberance rational.