MARKET FOCUS: TEXAS - Lone Star PR shines. There was a time when you thought Texas, you thought oil. But - by necessity - the Lone Star state and its PR pros have spent the last decade diversifying. Sherri Deatherage Green reports

If the prime-time soap Dallas had debuted in 1988 instead of 1978, we might have seen JR Ewing holding his Stetson in an unemployment line.

If the prime-time soap Dallas had debuted in 1988 instead of 1978, we might have seen JR Ewing holding his Stetson in an unemployment line.

If the prime-time soap Dallas had debuted in 1988 instead of 1978,

we might have seen JR Ewing holding his Stetson in an unemployment

line.



Yes, oil poured much of the state’s economic foundation in the first

half of the century. But when banking and real estate followed crude

prices down the tubes in the late 1980s, Texans learned one lesson the

hard way: diversify or die. Companies too closely invested in affected

industries - including a few PR firms - collapsed. Some national PR

agencies packed up and left like fair-weather friends.



Luckily, the seeds of diversification had already been sown. ’I think

(the oil bust) helped significantly in the long run,’ offers Ken Luce,

general manager of BSMG’s Dallas office.



Dallas/Fort Worth International Airport opened its gates in 1974 and

American Airlines moved its headquarters to the area four years

later.



Southwest Airlines fought legal battles to stay at Dallas’ Love Field

and began low-cost commuter flights to Houston in 1971. Continental

Airlines merged with Texas International in 1982 and has since called

Houston home.



Both Dallas airlines employ agency-sized in-house PR staffs. American’s

parent, AMR, works frequently with BSMG and Burson-Marsteller, and

Southwest retained Porter Novelli earlier this year for special projects

and strategic planning.



When a federal judge ordered AT&T’s break-up in 1984, telecommunications

flourished in Dallas’ northern suburbs. Texas’ relatively cheap real

estate and labor, favorable tax policies and strong universities also

enticed organizations like JCPenney, Boy Scouts of America and Kimberly

Clark to relocate. And technology stalwarts such as Texas Instruments

and Tandy paved the way for newer hi-tech companies like EDS, Compaq and

Dell.



Oil spill



Today, oil continues to fuel a significant segment of the economy.

Exxon, which moved its headquarters to Irving in 1990, reports the

highest revenue of any Texas corporation. But that oil is no longer king

was shown in the temporary price plunge that prompted the pending

Exxon/Mobil merger.



The dip didn’t halt Texas’ overall economic boom and 1998 PR fee income,

up 21%, reflects that. ’There are not a lot of people in Dallas doing

any kind of manual labor,’ notes M/C/C president Mike Crawford. In

Houston, energy and communications giant Enron, which runs neck and neck

with Compaq as the city’s largest public company, has spun off most of

its oil and gas exploration business, says senior PR director Karen

Denne. The in-house PR staff of 50 there handles broad duties with some

occasional project help from local agencies.



Now the top 10 national PR firms all have outposts in Texas and most

predict strong growth in 1999. ’In terms of the PR profession, (Texas)

has matured,’ especially in the last three years, says Stan Levenson,

CEO of Dallas-based Levenson PR.



Boasting three of the nation’s 10- largest cities and one of its

fastest-growing technocenters, Texas easily could be divided into

multiple PR markets. Dallas/Fort Worth is the state’s most diverse

economic area and the country’s seventh-largest TV market. Many view

Houston as a business-to-business city with strong ties to oil,

biotechnology and aerospace.



SBC calls San Antonio home and NAFTA has increased international trade,

but the city’s economy traditionally has hinged on military bases and

tourism, ’neither of which supports PR very well,’ notes Texas Public

Relations Association president Marilyn Pippin.



And then there’s the Austin factor. As well as the 120 staff public

affairs shop Public Strategies Inc. (PSI), the state capital opened its

own international airport this year and has positioned itself as a

hi-tech hot bed. Ten to 12 agencies opened Austin offices in the last

year, estimates local PR veteran Dale Chrisman. Blanc & Otus and

Pierpont are among the agencies expected to move into the city soon.



Figuring out why Fleishman-Hillard tops PRWeek’s Texas listing doesn’t

take much math. The firm represents two of the state’s 10 largest

companies - Austin’s Dell and San Antonio’s SBC (parent company of

Southwestern Bell) - and does some project work for two others, Exxon

and EDS in Dallas.



Fleishman typically follows its clients into new markets. Regional

president Janise Murphy opened the Dallas office in 1993 to serve EDS.

The two companies no longer have an on-going relationship, although

Murphy says Fleishman wrapped up a project for EDS recently. In the past

six years, Fleishman has also opened offices in Houston, Austin and San

Antonio.



The other large firms have also been active. Edelman is among the few

national firms that saw Texas through the rough times. However, Edelman

recently lost its Houston and Dallas managers to a brutally competitive

job market; the agency announced last month that Samuel Falcona would

leave his own agency, Alert Five Communications in Chicago, to lead its

Texas operations. Edelman clients include Ericsson, Raytheon and the Boy

Scouts. The purchase of Austin-based hi-tech firm GTT last year should

boost 1999 revenue, however.



Publicis Dialog can trace its complicated root system in Dallas back at

least 20 years to the Bloom agency. Publicis represents clients like

Nestle and Samsung. However, a conflict that arose when Publicis merged

with EvansGroup in July 1998 forced the company to drop an unnamed big

client, causing income to fall.



BSMG integrated what was Temerlin McClain’s Dallas PR shop in March

1998. Later in the year, it pulled out of Houston and Austin, cut loose

some local accounts and dropped a few practice areas. But access to

BSMG’s national resources put the office on a strong future footing,

says Luce.



Shandwick moved to Houston to serve Compaq, a 17-year client it made no

bones about dropping last month in favor of Hewlett-Packard’s PC

account.



However, the firm says its Houston jobs are secure. Business development

VP Calvin Fudge cites clients in the oil and gas, telecom and aviation

defense industries. Meanwhile, Compaq’s corporate PR director, Jim

Finlaw, says the company could double its 25-person in-house staff

within the next year and is assessing its needs for external PR

counsel.



Other national agencies to watch in Texas include Burson-Marsteller,

which quietly opened a Dallas office this summer; The Weber Group, which

gained an Austin presence at about the same time; and Golin/Harris,

which launched branches in Dallas and Houston last year after winning

the lucrative Texas Instruments account.



Mavericks



Befitting Texas’ maverick reputation, the three agencies posting the

largest percentage gains in 1998 were independents. Revenue for

Houston’s Pierpont Communications jumped 64% to nearly dollars 2

million. President Phil Morabito says he has been approached by bigger

firms talking acquisition, but hasn’t taken the bait.



Houston-based Vollmer PR opened offices in Austin and Dallas this year,

and saw its revenues almost double in 1998 with clients such as Quaker

State and Pennzoil. Also nearing the 50% mark in growth was Dallas’

Levenson PR. In addition to working for Zale and three movie studios,

Levenson helped W.R. Grace respond to damaging publicity generated by

the movie A Civil Action.



A number of firms claiming revenues of dollars 1.5 million or more in

Texas didn’t submit audited financial information for the PRWeek survey:

they include Halcyon, Read-Poland, Bates Churchill, Springbok and

PSI.



Some Dallas PR pros claim their hometown really enjoys more hi-tech

business than Austin, which many view as an emerging PR market. Most

concede, however, the capital city boasts better scenery and a higher

per capita concentration of start-ups and Internet companies. ’It’s like

musical chairs and somebody’s not going to have a chair,’ Crawford says

of Austin’s hi-tech gold rush.



His Dallas-based integrated marcom agency dropped some small, start-up

PR clients last year in favor of companies with bigger advertising and

marketing budgets, flat lining PR income.



Cunningham Communications runs its Texas operation solely from

Austin.



The office has grown to 40 employees in three years and ranks second in

the state. ’We feel the market is just beginning to show its true

capabilities,’ says Morris Denton, Cunningham’s managing director.



Cunningham, like a growing number of agencies in the state, exclusively

serves hi-tech clients.



But could these late comers to Texas, along with a few who remember the

1980s all too well, eventually regret putting too many eggs in one

basket?



Pierpont ’s Morabito, who moved to Houston just as the state’s economy

bottomed out, doesn’t think so. ’Technology isn’t an industry that lives

and dies by the price of a commodity,’ he points out. ’Technology itself

is a diverse specialty.’





TEXAS STARS BIG AND BRIGHT: THE TOP 10 TEXAS PR AGENCIES

Rank      Company                                 Income          Change

98   97                                        1998         1997       %

1    1    Fleishman-Hillard**             8,263,000    5,755,000      44

2    N/A  Cunningham Communications       4,991,000          N/A     N/A

3    3    BSMG Worldwide                  4,523,900    4,366,000       4

4    2    Publicis Dialog                 4,017,400    4,508,300     -11

5    5    Vollmer Public Relations        3,400,000    2,300,000      48

6    4    Edelman PR                      2,887,023    2,482,078      16

7    N/A  Miller/Shandwick

          Technologies                    2,713,000          N/A     N/A

8    7    Pierpont Communications         1,946,132    1,189,941      64

9    6    M/C/C                           1,500,000    1,500,000       0

10   8    Levenson PR                       988,431      662,793      49

          Totals                         27,525,886   22,764,112      21



Rank      Company                        US income       Texas %

98   97                                        1998         1998

1    1    Fleishman-Hillard**           136,272,000            6

2    N/A  Cunningham Communications      20,437,000           24

3    3    BSMG Worldwide                109,537,000            4

4    2    Publicis Dialog                11,403,700           35

5    5    Vollmer Public Relations        3,400,000          100

6    4    Edelman PR                    101,868,218            3

7    N/A  Miller/Shandwick

          Technologies                   91,485,000            3

8    7    Pierpont Communications         1,946,132          100

9    6    M/C/C                           1,500,000          100

10   8    Levenson PR                       988,431          100

          Totals                        366,915,481            8



Rank      Company                         US income   Texas %   Location

98   97                                        1997      1997

1    1    Fleishman-Hillard**           115,193,000         5     Dallas

2    N/A  Cunningham Communications      17,390,000       N/A     Austin

3    3    BSMG Worldwide                 58,136,000         8     Dallas

4    2    Publicis Dialog                10,817,598        42     Dallas

5    5    Vollmer Public Relations        2,300,000       100    Houston

6    4    Edelman PR                     86,833,594         3     Dallas

7    N/A  Miller/Shandwick

          Technologies                   80,292,000       N/A    Houston

8    7    Pierpont Communications         1,189,941       100    Houston

9    6    M/C/C                           1,500,000       100     Dallas

10   8    Levenson PR                       662,793       100     Dallas

          Totals                        276,632,926         8

Source: PRWeek Top 200.

** Includes both Houston and Dallas offices.



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