Until a few years ago, the Canadian PR industry could have been defined as a wing of the US. It was dominated by the branch offices of US multinationals such as Hill and Knowlton, Cohn and Wolfe and Edelman, while major clients were often branches of US corporations like Kraft and Microsoft.
Yet this was hardly surprising. Despite its best efforts to resist the cultural imperialism of the US, most of Canada's relatively small population of just over 30 million people live within a few hours' drive of the border.
But while PR practitioners in Canada concede that Americans have long dominated the industry, they say that's changing - to a point. 'Canadian (client) companies now need to address the US market, so it is pretty rare that a client discussion doesn't turn to the US,' says Bruce MacLellan, president of Environics Communications in Toronto. 'It's funny that your market priority is outside your own country.'
What has propelled Canadian PR firms to turn their attention stateside is the red-hot Canadian economy, ignited not only by US markets but by the Toronto Stock Exchange (TSE), which reached record highs this summer.
Fuelling the TSE is the emergence of world-class Canadian technology companies like JDS Uniphase and Nortel Networks, both of which are also listed on US exchanges. In addition, Canadian-owned corporations are acquiring US companies, such as the purchase by Montreal-based Seagram of Universal Studios.
As a result, Canadian clients are increasingly asking their PR firms for US capabilities. In an effort to keep those clients from defecting to US agencies, more and more Canadian-owned firms are buying or starting PR shops south of the border.
Watching their figures
Although accurate financial figures for the Canadian PR industry are hard to come by, and many firms are privately owned, some local companies have reported annual growth rates over the last two years of as much as 75 per cent in the technology sector.
National Public Relations, the largest PR agency in Canada with estimated income of dollars 27 million, has seven offices nationwide. Its clients include Glaxo Wellcome and 3Com Canada. Although independent, National has a loose affiliation with Burson-Marsteller.
The second-largest agency in Canada is Omnicom-owned GPC Group. Integrated advertising agency Maxxcom is also Canadian. For the most part, though, the market is still dominated by large multinationals, including Cohn and Wolfe, Fleishman-Hillard and Shandwick.
To beef up its almost non-existent hi-tech practice in Canada, F-H's Toronto office earlier this year bought High Road Communications, a hi-tech specialist with offices in Ottawa and Toronto, along with a two-person outpost in San Francisco. More than 80 per cent of High Road's revenues come from the US for work done for Canadian and US clients. F-H and High Road now refer clients to one another.
Buyers build momentum
Until last year, Hill and Knowlton lacked a strong presence in the province of Quebec, a large French-speaking market that's been difficult to crack.
H&K merged its Montreal office with local PR shop Ducharme Perron. Last June, it merged again with Montreal rival Forum Communications and Public Affairs. H&K is now the third-largest PR firm in Canada. With these acquisitions, it can comfortably expect to rise from its current position.
Manning Selvage and Lee has also made waves on the acquisition front, and is emerging as a force. It recently bought Advance Planning and Communications of Toronto. The two firms had been working together since 1995. Advance Planning's clients include Ontario Realty and Procter and Gamble.
Two years ago, National opened an office in New Jersey because, according to partner Colin Buchanan, five per cent - and growing - of its business is international. Last year National won the global PR assignment from pharmaceutical giant SmithKline Beecham for its largest brand, the anti-depressant Paxil/Seroxat, beating out the New York office of Cohn and Wolfe and Shire Hall.
Buchanan says National has been able to compete on a North American stage with the help of a not-so-secret weapon: the low value of the Canadian currency in comparison to the US dollar. This means, in effect, that its services are on sale. 'It is very exciting for a Canadian to go out and play on the international stage,' he says. 'We compete with London and New York hourly rates that would be dollars 350. It's not our primary sales message but clients are getting used to our rates being a whole lot less painful.'
National is not the only Canadian-owned company making inroads in the US. Toronto-based agency Maxxcom, which owns mostly specialised marketing firms such as healthcare PR agency Veritas Communications in Toronto, went public on the TSE in April.
Beverley Morden, Maxxcom president and chief executive officer, says the company plans to build a platform of PR firms across the US. Currently, it has stakes in PR and ad shop Fletcher Martin Associates in Atlanta, and in Colle and McVoy Marketing Communications in Minneapolis. PR makes up about 12-15 per cent of Maxxcom's revenue.
'We'd like that percentage to be higher,' she says. 'We are very keen on acquiring a public relations firm on the East Coast, between New York and Atlanta, over the next few months.' She says Maxxcom intends to list itself on a US stock exchange in 2001 to further finance its expansion plans.
Ones to watch
Environics was the first Canadian PR firm to land on US soil in 1996.
It has an office in Stamford, CT and 'we're intending to open a second,' says president Bruce MacLellan, 'but we are considering a less obvious place than San Francisco or Boston.'
Optimum Public Relations, the PR arm of Cossette Communication-Marketing in Quebec City, the largest ad agency in Canada, already has an office in Washington, DC, and plans to use money Cossette received from an IPO last summer to grow further. 'It is interesting to see that we and Environics have been able to break into the US market,' says Marcel Barthe, Optimum president. 'We've done it slowly and surely, as Canadians do, but the results so far have been very positive.'
Just before it was bought by the Omnicom Group, Toronto-based GPC International, which has also established a strong European public affairs presence, last year made its first US acquisition. The agency purchased McDermott/O'Neill and Associates, which has offices in Washington, DC, Boston and Providence, RI. 'The US is the primary expansion market for us,' says Nadine Saby, GPC senior vice-president and general manager. 'It only makes sense not to sit still, but to expand our sights in the US to serve our Canadian clients and create those across-the-border revenues.' Although no longer technically Canadian-owned, GPC still operates independently.
What has helped send Canadian PR agencies into the US is a new breed of Canadian technology firms, which were slower to receive venture capital financing than their US counterparts. Karin Scott, manager of public and media relations for Strategic/ Ampersand in Toronto, a PR firm with 15 tech clients, says: 'Canada is experiencing the growth that Silicon Valley PR had two years ago. Most of our clients, even if they are Canadian-based, want to talk to US press and analysts because that's where they want to expand.'
Indeed, High Road opened a two-person office in San Francisco this year to handle its US work. Among the US business that the agency has won is the North American PR account for Eloquent, a Silicon Valley-based communications software maker whose clients include Microsoft and AT&T.
The new climate
Enjoying this new climate are a string of start-ups. Julie Rusciolelli, who was technology vice-president at Cohn and Wolfe in Toronto, started Maverick Public Relations 16 months ago and has already racked up 20 clients, including e-mail transformation company Metamail.
Another new venture involves father-and-son team Armand and Jean-Claude Torchia. Armand was chairman of Edelman Canada in Toronto while Jean-Claude worked in the London office, where he managed the global public relations programme of British American Racing on the Formula One world circuit.
The two left Edelman last month to open their own firm, Torchia Communications.
It has offices in Montreal and Toronto and will focus on promotions, special event management and sports, arts and entertainment sponsorships.
To compete internationally, the company is finalising an affiliation with a major US-based agency; the Torchias would not disclose its name.
But PROs and other industry observers say a drought of good talent is holding back the rapid growth of Canadian-owned firms, especially on the technology side, where some companies have been forced to turn away clients.
Sandra Matteson, principal of Toronto-based PR executive search firm Matteson Management, says it takes several months, or about as twice as long as it did three years ago, to fill a hi-tech PR position.
'If you are trying to recruit someone from the West Coast, because that is where the tech people are, they don't want the weather or the snow,' she says. 'And the money isn't enough to overlook that.'
Meanwhile, the other threat to Canadian PR comes from international ad giants. Rusciolelli, Scott and MacLellan all say they have been approached to sell. 'These monoliths like WPP and Omnicom have voracious appetites, and there are few independents in Canada left today,' says MacLellan.
And even with so much cross-border business, practitioners are sometimes tripped up by the differences in cultural institutions between the US and Canada. Robert Waite, senior vice-president of corporate communications and public affairs at the Canadian Imperial Bank of Commerce (CIBC) in Toronto, has worked for both the Canadian and US divisions of IBM and Ford, and was press secretary to former Senator Bob Dole.
'You would be surprised by how many people in the US just assume that the holidays are the same for both countries,' says Waite. He says such oversights can foil the impact of a North American PR campaign launch in Canada.
Waite is planning to hire a PR agency to promote CIBC Worldmarkets, the bank's investment banking and brokerage arm, in North America. 'We are not looking for a Canadian firm with offices in New York,' he says, 'but rather a strong US player that has more knowledge of the local US market. Of course, it wouldn't hurt if they had an office in Toronto.'
INTERNATIONAL AGENCIES OPERATING IN CANADA
RANK AGENCY NAME CANADA INCOME (DOLLARS) %
99 99 98 CHANGE
1 GPC Group 15,443,856 N/A N/A
2 Hill & Knowlton 11,830,000 10,900,000 9
3 Maxxcom 9,753,622 4,584,404 113
4 Shandwick 8,759,000 6,598,000 33
5 Edelman 8,038,593 8,478,912 -5
6 Fleishman-Hillard 4,121,000 3,405,000 21
7 Porter Novelli 3,042,000 1,210,000 151
8 Environics 2,863,275 N/A N/A
9 GCI Group/APCO 2,428,292 1,895,929 28
Sources: PRWeek US Top Agency Rankings; PRWeek UK European Rankings
Notes: 2 Hill and Knowlton estimated by agency.