GLOBAL RANKINGS 2001: LATIN AMERICA - PR's star is rising. While neighbouring nations start to feel the recession in Argentina, agencies willing to expand into the continent are posting impressive gains, finds Diego Dillenberger

Latin America has always been a land of enormous business

opportunities for those who can stomach the risks - and the performance

of the PR industry during the past 12 months has been no exception.



'Last year we grew 70 per cent, and in the first half of 2001 we

advanced another 25 per cent,' says Jeffrey Sharlach, president of The

Jeffrey Group, a Miami-based consultancy specialising in multinational

firms operating in Latin America.



He predicts that the market will continue to expand as major

corporations invest in building their image in the region.



Business was good for many last year, and into the first half of 2001,

with the area's two largest economies - Mexico and Brazil - the

undisputed stars. Yet some dark clouds are gathering on the

horizon.



Economists warn that Argentina's economic troubles - the country has

been battling a recession for nearly three years - may finally be

having a spillover effect on other markets, namely Brazil and Chile.

And that's not the only problem.



'The collapse of many dot.coms and fears of recession in the US have

taken a toll on the (Mexican) market,' says Santiago Hinojosa,

Burson-Marsteller president (Latin America). He also perceives future

financial difficulties for Brazil, despite strong growth in 2000.



While some experts argue that a sagging economy can lead to work for PR

practitioners seeking to put problems in a positive light, they agree

that an overdose can prove fatal for the industry as a whole.



Mexico has been experiencing a boom since President Vicente Fox took

office, and represents the most active market for the PR industry.



Stealing the show was the acquisition of Zimat - the country's top

agency with more than $6m in annual fees - by Golin/Harris,

owned by Interpublic Group. (Interpublic had already made a major bet

in Latin America in early 2000, when it bought Nueva Comunicacion for

nearly $20m. It is now part of the Weber Shandwick group.)



Another buyout highlighting the appeal of the Mexican market was Hill &

Knowlton's acquisition of Premio, an agency with a strong presence in

the technological and telecoms sectors.



A third major move was GCI's acquisition of Gcom-Kaufmann, a former

affiliate of Manning Selvage & Lee.



Mexico's strong magnetism was also underscored by the breakneck growth

of consultancies such as Martec Porter Novelli, which experienced

nearly a 100 per cent increase in fees.



Part of the boom was undoubtedly due to the change of guard. The Fox

administration - the first not belonging to the socialist PRI party,

which ruled the nation continuously for 70 years - brought in fresh air

for investments and ushered in greater press freedom. In fact, Fox's

inauguration caused a direct shock at B-M - one of the top

consultancies in the country.



The agency saw its local CEO, Alisa Chelminsky, hired by Fox and turned

into one of his principal communications officers. B-M searched months

for a replacement and finally picked Mexican Roy Caple, a former head

of the company's branches in Chile and Venezuela.



Local experts think the new government represents a great opportunity

for the sector. 'Lobbying will grow dramatically,' says Alejandro

Rodriguez, Gricorp Ketchum director. Crisis management will also become

increasingly important,' he adds, explaining that Mexico's public

opinion is following the attitudes and messages of multinational

companies closer now than ever before.



But the biggest personal change for anyone operating in the region was

for Fox's own spokesperson, Martha Sahagun, who married the president

in July. Francisco Ortiz was then appointed as presidential spin

doctor.



Many PR practitioners believe the popularity of Fox's marriage to his

communications aide has put the industry in the limelight - a scenario

they perceive as ideal for further business development.



Brazil has recovered from its 1999 devaluation, experiencing a strong

inflow of foreign investment and an explosion in domestic

consumption.



Although no recent overall figures are available, the year 2000 was a

positive one for the country's three major consultancies - all of which

grew by more than 20 per cent.



One of the stars in early 2001 was Edelman, which decided to move its

regional headquarters to Sao Paulo, where Brazilian consultant Vivian

Pinto oversees the region. To reinforce its presence in the country,

Edelman also acquired an agency in Rio de Janeiro, Brazil's second

largest city.



Nevertheless, Hinojosa says he is concerned about the prospects for the

rest of 2001. 'The Brazilian energy crisis has manyof our domestic and

regional clients worried,' he admits.



Another thorn in Brazil's side is the aforementioned financial

difficulties in neighbouring Argentina. Those troubles reached new

heights in July, creating great instability in Brazil's financial

markets and uncertainty for the public relations sector.



Worries are certainly running high in indebted Argentina, the area's

third largest and most sophisticated economy. Yet Claudia Gioia, B-M

Argentina head, is confident that the sector will grow in spite of the

crisis. Last year, the consulting agency pulled in nearly $5m in

revenues and grew by almost 15 per cent, making it second only to Weber

Shandwick Worldwide/Nueva Comunicacion, which made $8.3m.



'We have been pushing ahead despite the fact that companies in

Argentina have been undergoing major restructurings - or perhaps it was

precisely because of that,' Gioia explains.



'In the beginning, the key was crisis management. But in the last year

we have taken over the whole PR task of some corporations after they

downsized full PR departments.'



Although many investors may have been discouraged by Argentina's

problems, the arrival of GCI in May provided further evidence that the

country hasn't lost its appeal to PR firms. The US agency, which

belongs to the Grey Group, partnered with local firm Consultores del

Plata and intends to acquire it in the near future.



Ketchum has also expressed interest in purchasing its local affiliate,

and may do so before year's end, according to Ruben Aguilar, Ketchum

director (Latin America). 'It will all depend on how the Argentine

economy evolves in the months to come,' he says, speaking from his

office in Atlanta.



Another major US player willing to enter the market is Ogilvy PR,

market sources say.



Surprisingly, it now appears to be the time that Latin America's

smaller countries are beginning to see growth in their inchoate PR

industries.



Even though Chile was not spared from the economic slowdown, all major

PR consultancies in that country have experienced growth.



And, as incredible as it seems, Colombia - jolted by years of guerrilla

warfare - today boasts a booming PR sector, with no less than 30

consultancies in capital Bogota alone.



Although no sales figures were available for Colombia (for security

reasons), local practitioners are working to set up an industry

association in an effort to engulf their activities and bring more

transparency to the sector as a whole.



TOP 10 AGENCIES OPERATING IN LATIN AMERICA

Rank Agency Name Income (USdollars)

00 00 99 % chg

1 Burson-Marsteller 12,287,000 8,924,000 38

2 Hill & Knowlton 10,259,000 1,340,000 666

3 Weber Shandwick Worldwide 8,317,184 - -

4 Edelman Public

Relations Worldwide 8,308,415 5,924,137 40

5 Cia de Noticias 6,491,521 4,206,000 54

6 Golin/Harris International 6,115,000 3,800,000 61

7 FSB Comunicacoes 5,765,704 4,344,000 33

8 G&A 5,617,500 4,375,000 28

9 MP&M Comunicacion 4,728,311 3,567,000 33

10 ZC&M 4,367,706 3,109,979 40

A NATION-BY-NATION BREAKDOWN OF LATIN AMERICA

Rank Argentina Income (USdollars)

00 00 99 % chg

1 Weber Shandwick Worldwide 8,317,184 - -

2 Burson-Marsteller 4,942,895 4,300,000 15

3 MP&M Comunicacion 4,728,311 3,567,000 33

4 ZC&M 4,367,706 3,109,979 40

5 Muchnik, Alurralde,

Jasper y Asoc 2,714,214 2,020,838 34

Rank Brazil Income (USdollars)

00 00 99 % chg

1 Cia de Noticias 6,491,521 4,206,000 54

2 FSB Comunicacoes 5,765,704 4,344,000 33

3 G&A 5,617,500 4,375,000 28

4 Burson-Marsteller 2,588,000 2,007,000 29

5 Edelman Public

Relations Worldwide 2,556,428 1,237,774 106

A NATION-BY-NATION BREAKDOWN OF LATIN AMERICA

Rank Chile Income (USdollars)

00 00 99 % chg

1 Tironi Asociados 2,300,000 2,000,000 15

2 Extend Comunicaciones 1,952,000 1,600,000 22

3 Hill & Knowlton 1,600,000 1,000,000 60

4 Feedback 1,400,000 1,500,000 -7

5 Burson-Marsteller 1,350,000 1,000,000 35

Rank Mexico Income (USdollars)

00 00 99 % chg

1 Golin/Harris International 6,115,000 3,800,000 61

2 Edelman Public

Relations Worldwide 3,455,984 2,710,321 28

3 Fleishman-Hillard 2,070,000 1,371,000 51

4 Porter Novelli 2,012,000 1,398,000 44

5 D&A Public Relations 1,350,000 1,000,000 35

Source: Imagen; Council of PR Firms; El Asesor de Mexico; Gazeta

Mercantil



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