200 for 2000: Top 30 PR Agencies - PR hits the highest points of success - Public relations agencies are undergoing fast transformations fuelled by new media, a spate of takeovers, and a serious approach to corporate reputations at board level

Three major themes dominate developments across the agency sectors.

Three major themes dominate developments across the agency

sectors.



In no particular order, they are the impact of the internet, digital

technology and e-commerce, the competition to be accepted as a boardroom

consultant rather than a mere supplier, and the takeovers and merger

wave.



All three apply to public relations, only more so. Electronic

communications have changed PR in many ways, from advising clients on

strategy, publicising web sites, distributing press releases by e-mail

and ’virtual’ press conferences via the internet.



One aspect of this is the need to monitor what’s being said about

clients in web discussion forums. Malicious gossip and criticism can

take hold like a forest fire if they are not countered (see Microsoft

panel).



Just how important digital communications have become can be judged from

the fact that the Public Relations Consultants Association’s new

’futures group’ is commissioning original research on the topic.



On the consultancy front, meanwhile, several of the biggest agencies,

including Shandwick, Burson-Marsteller and Hill and Knowlton, are

getting excited about new ways of looking at corporate reputation.



Business school academics, such as Professor Charles Fombrun, of New

York University, a consultant to Shandwick, argue that reputation can be

directly linked to share price.



Corporate reputation has been expanded to embrace relations with

investors, the media, customers, suppliers, staff and the community.



Improving reputation



If CEOs accept this, it could become the big growth area for PR

agencies, which claim the role of enhancing and protecting corporate

reputation as their own. As the head of one leading agency puts it:

’Chief executives and chairmen are acutely aware that the regard in

which their companies are held can be the key that unlocks so much that

is important to them, from share price to getting shelf space in

supermarkets.’



One significant change readers may notice between this table and the one

published by Marketing on 27 May is the inclusion in the top slot of

Bell Pottinger Public Relations.



The explanation is that Lord Bell, chairman of the publicly quoted

holding group, Chime Communications, is unwilling to provide a breakdown

of turnover between different specialisms, which is a requirement for

the Marketing Top 150. His argument is that he cannot provide the

magazine with information he doesn’t also supply to the City and

shareholders. As he admits, he’s also reluctant to give too much away to

competitors.



Bell Pottinger has been a major player since its formation, but it moves

to number one for the first time, thanks to a sparkling growth

performance in 1998 - an extra 27% in income - when its major

competitors were focused elsewhere. Citigate and Dewe Rogerson were

merging, while Shandwick, newly acquired by Interpublic, was

restructuring.



Lord Bell claims not to enjoy heading the league table. ’The only reason

I don’t like to be number one is because of history,’ he says. ’I used

to run Saatchis and when we hit number one everyone stopped working.

Once you have hit a goal, people relax.’



However, there’s no sign that he’s run out of ambition. ’We don’t have

more than a single digit share of PR, and there is no earthly reason why

we could not have 20%. Most markets consist of three or four big players

and a host of small ones.’



Following last year’s acquisition of ad agency Howell Henry, the group

has restructured into five businesses, including two PR specialists -

Bell Pottinger and Good Relations.



PR has not been immune from the attentions of the big marketing

communications groups such as Omnicom, WPP and Interpublic. In fact,

there are now only two independents in the top 20 - Text 100 and

financial specialist College Hill.



The pressures to merge and acquire are arguably greater in public

relations than in other below-the-line disciplines, for three

reasons.



The first is that truly international networks have already been

established by the likes of Hill & Knowlton and Burson-Marsteller. To

compete with them requires pins, large numbers of them, stuck into the

mandatory map on the office wall.



Second, clients are looking for PR from a global perspective. Major

international clients now see PR as a crucial tool in their marketing

mix, whether it’s Procter & Gamble linking its Max Factor brand with

Maddona, or Pepsi’s ties to the launch of Star Wars: The Phantom

Menace.



But the third thing is specialisation. Clients insist on it. Few

agencies would expect to cover all available areas. Nevertheless, when

it’s clear that some of the most spectacular growth is occurring in

sectors such as IT, consumer electronics, and healthcare, the big

players want a share.



For example, GCI - the PR arm of Grey Communications - bought Jane

Howard PR this summer to double its consumer business.



It has also set up three new services, in medical education and

publishing, change management and internal communications, and political

lobbying.



A new media consultancy service, GCI Interactive, is to be launched in

January.



Continuing change



’We’re looking for an acquisition in healthcare and in IT,’ says UK

chief executive Adrian Wheeler. ’We earn pounds 1m from healthcare and

aim to get to pounds 2m. In technology, we are smaller than we should

be. We’re doing pounds 500,000 from a standing start three years ago,

but we should be pounds 1m or more.’



This means that there have been several important deals affecting the PR

sector in the UK since the publication of the Marketing league tables in

May. Those directly relating to our top 30 include, in chronological

order:



Food-and-drink consultancy Walker Williams was acquired in May by

Charles Barker BSMG, to form the core of a new division in the

agency;



Key Communications has bought the business-to-business high-tech

specialist Sheldon Communications, merging it with its own IT

business;



Biss Lancaster, a subsidiary of Havas Advertising, acquired the regional

network Leedex PR in July, and merged it with its existing regional

operation, GTPR;



In the same month, Havas bought marketing services group Lopex. The

results of this is that Lopex PR agency Grayling retains its

identity.



It has avoided being swallowed up by Citigate and it won’t be merged

with Biss Lancaster. At least for now;



In August, WPP bought Shire Hall, the biggest independent healthcare PR

specialist.



Finally, the UK’s biggest IT specialist, Text 100, restructured. It has

done it before, most successfully by hiving off Bite Communications to

handle accounts where there was a potential conflict of interest. Now

two-thirds of the business has been put into August.One

Communications.



One might note the mid-year acquisition of Leadbetter PR by Consolidated

Communications just outside the top 30. Consolidated’s directors and

staff have every reason to be motivated. They’ve just bought the 25%

shareholding in their firm held by investment company 3i.



Top 30 Public relations agencies

                            Fee income               %        Fee income

Rnk Agency                        1998    1997  change  Staff   per head

                            (pounds m)                        (pounds m)

1   Bell Pottinger

    Communications               30.08   23.63   27.27    333     90,345

2   Citigate Dewe Rogerson       26.53   24.5     8.32    311     85,315

3   Shandwick International      25.84   23.86    8.31    374     69,099

4   Hill & Knowlton (UK)         23.29   18.75   24.22    320     72,797

5   Burson-Marsteller            17.92   14.45   23.98    173    103,566

6   Countrywide Porter

    Novelli                      17.91   17.04    5.13    266     67,342

7   Weber PR Worldwide           10.78   10.42    3.54    140     77,043

8   Charles Barker/

    BSMG Worldwide                9.63    8.32   15.74    115     83,713

9   Ketchum                       9.61    5.67   69.36    136     70,647

10  Edelman Public

    Relations Worldwide           8.93    7.13   25.35     96     93,063

11  Grayling Group                8.09    6.94   16.57    107     75,617

12  Text 100                      7.73    6.18   25.02    128     60,383

13  Medical Action

    Communications                7.52    6.53   15.16     98     76,735

14  GCI/APCO                      7.42    5.11   45.27    128     57,984

15  Biss Lancaster                7.24    6.35   13.99    131     55,298

16  Government Policy

    Consultants                   6.4     5.84    9.55     85     75,318

17  Freud Communications          5.97    5.50    8.52     98     60,949

18  College Hill                  5.66    4.65   21.69     75     75,413

19  Cohn & Wolfe                  5.4     4.19   28.92     71     76,042

20  Fishburn Hedges               4.99    4.56    9.45     62     80,500

21  Key Communications            4.92    4.26   15.39     61     80,639

22  Harrison Cowley               4.85    3.80   27.57    104     46,625

23  Harvard Public Relations      4.37    4.31    1.37     58     75,397

24  Brodeur A Plus                4.31    4.01    5.30     72     59,917

25  Firefly Communications        4.23    3.31   27.85     73     57,973

26  The Shire Hall Group          4.22    4.17    1.32     73     57,836

27  Richmond Towers               4.20    3.98    5.53     36    116,667

28  Beattie Media                 4.12    2.45   68.16     71     58,028

29  Holmes & Marchant Group       3.78    3.52    7.47     44     85,977

30  Nexus Choat                   3.72    3.29   13.33     69     53,971



METHODOLOGY



The list of the top 30 PR companies is drawn from Marketing’s top 150 PR

league tables (Marketing, May 27).



Ranking is by fee income, the industry’s preferred measure.



As this is not normally shown in agencies’ accounts, the figures must be

verified by auditors.



A unique feature of the full tables is that agencies are asked to break

down their income between the audiences they address, and between the

industries in which they operate.



This is used to develop further tables showing the leading specialists

in each sector, to help clients identify agencies with relevant

experience.



The major difference between this table and the one published in May is

the inclusion of Bell Pottinger for the first time.





MICROSOFT



It’s no secret that Bill Gates, the world’s richest man and founder of

Microsoft, is a hate figure to many computer buffs, who accuse his

company of abusing its power. There’s even a web site where techies can

ease their frustrations by hurling custard pies at a cartoon Gates.



There’s another side to Microsoft, however. It has been a long-term

supporter of the National Society for the Prevention of Cruelty to

Children. This year, it has donated pounds 1m to the charity’s highly

ambitious Full Stop campaign, as well as sponsoring the controversial

advertising and featuring an electronic collection box on its web

site.



When news of these initiatives broke, the company’s PR agency, Text 100

(now August.One Communications) was initially apprehensive. As

August.One president Katie Kemp pointed out at the time, the internet

can be an incredibly destructive tool, which needs constant

monitoring.



As it happened, this is a story with a positive outcome. Says Kemp: ’You

can become alarmist when it is not necessary. We were concerned that

Microsoft would get a lot of adverse publicity on the internet about the

NSPCC and that everyone would be very, very cynical. In fact, the

reverse was the case and the comment has been positive. It has been

absolutely brilliant.’



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