×

Once registered, you can:

  • - Read additional free articles each month
  • - Comment on articles and featured creative work
  • - Get our curated newsletters delivered to your inbox

By registering you agree to our privacy policy, terms & conditions and to receive occasional emails from Ad Age. You may unsubscribe at any time.

Are you a print subscriber? Activate your account.

Who's on top in public relations Here's a listing of the top 10 public relations agencies based on 1993 fee income (chart) GLOBAL PR EFFORTS ON THE WANE BIG AGENCIES SEE MOVEMENT TOWARD PROJECT WORK

By Published on .

Top public relations agencies, accustomed to building clients' reputations, are grappling with image problems of their own.

After a huge buildup in worldwide office networks in the 1980s, big operations like WPP Group's Hill & Knowlton and Young & Rubicam's Burson-Marsteller are finding major corporate customers no longer need or want global campaigns from a single agency.

Instead, they're increasingly funneling short-term projects to single offices, often based on local expertise. And that has left PR operations hard pressed to meet high overhead costs.

"We don't have as many cases where we're bringing corporations in-house counsel on a day-to-day basis," said Howard Paster, chairman-CEO at New York-based Hill & Knowlton.

"It ain't the '80s," said James Dowling, former Burson-Marsteller chairman. "There are more assignments, but they are primarily that-assignments, projects, campaigns. Everything's hard fought and hard won."

"I think clients have voted with their pocketbooks to say there are not many times when ... there is such a thing as a global PR firm that can consistently deliver around the world equally well," said Jim Arnold, chairman of Arnold & Truitt, a management consultancy specializing in the field.

The gradual move away from one-stop shopping, which began with the economy's downturn in 1990, is only now being reflected on the bottom line. And the big guys have been hit hardest.

Burson-Marsteller's net fees fell 5.5% last year to $192.5 million. London-based Shandwick's fee income fell 8.6% to $151.8 million. And Hill & Knowlton's revenue declined 8% to $146.8 million. Healthcare practices and European operations have suffered most.

These three agencies, which account for the vast majority of PR business worldwide, eliminated more than 700 jobs last year in moves to shutter unprofitable offices they opened in the 1980s' heady days of economic expansion.

"When you're doing well, you might not pay attention to the changing marketplace," Mr. Paster said. Clients "need different things than they needed from agencies like ours a few years ago."

Mr. Paster and others said the trend has forced large agencies to constantly seek new business to replenish revenue, and the cost of offsetting that churn has hurt profits.

On the bright side, several midsize independents, notably St. Louis-based Fleishman-Hillard and Chicago-based Edelman Public Relations Worldwide, reported gains, largely from their specialty focus on growth areas like healthcare and environmental issues. Omnicom PR Network and Ketchum Public Relations, both based in New York, also posted gains.

"Smaller firms are having a field day today," said Mitch Kozikowski, a Flemington, N.J.-based PR consultant who characterized such businesses, like their smaller ad agency brethren, as nimbler and capable of offering greater top management involvement to clients.

Predictably, those on the losing side of the balance sheet practiced their own internal form of spin control.

Burson-Marsteller contended operating revenue was down just 0.7% and that unfavorable exchange rates for European currencies led to the rest of the revenue drop.

"It's a big deal to us," said Larry Snodden, president-CEO. "We don't want anyone to think we're declining" across the board.

Still, bigger shops seem to be reorganizing staff on an almost monthly basis. Like the ad agencies that own many of them, the PR operations are eliminating layers of top management to put more resources on the front lines of client service.

Hill & Knowlton has installed new managers in each of its five largest U.S. offices within the past 18 months, and WPP in January rehired Mr. Paster, who headed its Washington office before leaving the agency to become President Clinton's congressional liaison.

Burson-Marsteller in March named James Lindheim, former European chairman, to succeed Mr. Dowling as chairman. And it's not replacing Tom Bell, vice chairman-chief operating officer, who has left for the client side.

In this article:
Most Popular