As the CEO of a PR agency, I can’t even tell you how many potential clients ask “Do I really need PR?” Usually I just answer with a simple and slightly aggravated “Why Yes!” Today, however, I will answer with an example of what a smart, finely crafted and well-timed PR campaign (with strategy) can do.

The past few months we have seen historically vilified Microsoft attempt to take the current underdog, Yahoo, over with a slow hand. During the war Microsoft was seen as a Goliath, a heartless corporation out to bully Yahoo, a company determined to stand on its own.

Here’s the thing, PR frames reality. When the deal fell apart, Microsoft was smart and engaged the press early. Their PR team reached out and massaged reporters, putting the blame squarely on Yahoo.

The press painted a picture that made Microsoft seem reasonable and open to negotiations. Microsoft’s flexibility was met by an unwillingness on the part of Yahoo to negotiate or cooperate. The reason the deal fell apart had nothing to do with the suddenly valiant Microsoft; it fell apart because Yahoo was unreasonable.

While talking to the press Microsoft might have mentioned –naturally, off the record –that when you’re dealing with the takeover of a publicly traded company there are certain rules that each company must follow.

PR is more than spin. In case I forgot to mention this (wink plus wink), when done right, PR frames reality. The reality here is that the Yahoo board put the best interest of their shareholders aside.

And there are some real legal implications here. Right or wrong, the perception exists that the Yahoo board failed in their responsibility to their shareholders. When shareholders lose faith, stock price goes down. When stock price goes down, Yahoo will not be able to stand against Google. When that happens…well…there won’t be anyone left to go Yahoo! (one place where Yahoo!’s exclamation point works!)

People still may not like Microsoft (here’s a clip of Bill Gates taking a bullet to the dome in the South Park movie), but MS has framed reality to their benefit with some smart PR. Unlike Yahoo, Microsoft was out there–immediately. Yahoo’s CEO did not make statements or address the press until days after Microsoft’s well-timed and brilliant PR-strophe hit. By the time Yahoo hit the streets, people weren’t buying their story – the minds of the public were already made up.

Yes, Yahoo stressed their willingness to negotiate. They also said they were fulfilling their obligations to their shareholders. But alas, it was too late. The reality was already framed and the story already set.

Yahoo’s delay invited enormous share holder Carl Icahn in there panting and aiming to launch a proxy fight to remove the current Yahoo board. His argument? Same as Microsoft’s. There’s a good shot Yahoo will win over Icahn, but the battle to keep him away will cost Yahoo time and money, and time and money, and maybe even a little more time and money.

So you have to ask yourself, even if Yahoo did spurn Microsoft, had they controlled the story would Icahn have this window of opportunity? I don’t THINK so. All he is doing is taking advantage of the perception that Yahoo’s board is irresponsible – the perception Microsoft’s very own PR team put out there.

Lesson is, you need PR and you better be deft. The effect PR has goes way beyond people liking you, your product or your company. Always be the first person/company/whatever talking to the press. If it’s not you it’s your competition. Beat them to the punch; put your brand, your spin and your ideas out there.

And be smart about too, will ya?