REGIONAL FOCUS BOSTON & NEW ENGLAND: New England, new approach

Its resilience in 2001 has instilled optimism throughout the area's PR sector.

Its resilience in 2001 has instilled optimism throughout the area's PR sector.

New England PR rode the wild roller-coaster ride of the economy in 2001, expanding with quick growth in small surges and unexpected turns, and falling even faster, with layoffs and budget cutbacks from the post-tech downturn. Now, most area practitioners think they've reached the lowest point, and are starting a slow, uncertain manual ascent. Agencies have found that they have to create their own momentum. And they are, with new client wins and expansion. "Despite the fact that it's been a particularly tough year for PR, we've won some great new business," says Andrea Carney, CEO of Brodeur Worldwide, whose new clients include PerkinElmer, a life-science and healthcare instrument company, AdvisorCentral, a spin-off of Fidelity Investments, and Selected Independent Funeral Homes. Nevertheless, 2001 was a difficult year for Brodeur, with revenues from its Boston office down 29% to $18.1 million, as well as smaller decreases in its Connecticut and New Hampshire outposts. Schwartz Communications, the largest independent agency in the area with revenues of $24.1 million, won a record 15 accounts in 45 days, but EVP Lloyd Benson is still cautious. "I think it would be premature to say the economy is rebounding based solely on our wins," he says. "Our successes are attributed to our hard work and position in the market." Another factor is the agency's medical tech practice, which, Benson believes, is a less volatile sector than either biotech or hi-tech. A positive forecast Though few are ready to make predictions in such uncertain times, many are optimistic nonetheless. "I think this is deeper than some of the other recessions," says Jamie Parker, president of technology, Eastern region at Weber Shandwick Worldwide. "But I think times like these give rise to new technologies and strategies." WSW just topped the rankings with 2001 revenue of $25.1 million. As the New England weather got warmer in 2002, the economy started to look a little sunnier. In May, the New England Economic Project's semi-annual update announced that New England states are out of recession, but that growth in the region will only be 3% per quarter in 2003 because of the large number of tech-dependent businesses. "It's a year marked by resilience and commitment," says Ed Pignone, VP of communications at the Greater Boston Chamber of Commerce. "Fortunately, we have a very diverse economy in a fine metropolitan region. We're a world-class sports town with four seasons, close to the ocean, and close to the mountains." Boston is clearly the stronghold for Northeast PR. Long known for hi-tech practices, 2001 saw the diversification of many firms' client bases as a necessary survival measure in the softening economy. Healthcare became a strong player, and many tech firms started biotech sectors. Helene Solomon, a partner at independent Bishoff Solomon Communications, says her firm's niche of "recession-proof" crisis communications pulled it through the year, and helped it to nearly break even in 2001, with revenues of $3.1 million. "We've always been diverse," she says. "Last year we were nuts, this year we're geniuses." One noticeable revenue gainer was Boston-based tech and biotech firm FitzGerald Communications, up 8.3% to $10.4 million. FitzGerald was recently bought by parent company Omnicom, and now operates under Brodeur. Maura FitzGerald, president and CEO, credits diversification for the agency's growth. "There were a couple of things we did right," she says. "It has always been our practice to never have one client be more than 5% of our revenue. The other factor that helped us was our regional reach. We were significantly diverse enough so that when one office was doing poorly, the other three could help out. Boston is one of the offices that's been a more consistent performer. New York was hard hit, and San Francisco had been having issues before that. Now San Francisco is rebounding beautifully." FitzGerald's fourth office is in Washington, DC. Probably the most impressive gainer in 2001 was Greenough Communications, which nearly doubled its revenues to $5.5 million, mostly through organic growth. President Phil Greenough says, "The biggest problem that the industry has faced is that we're still working on the hangover of the bubble, and some are losing sight of the basics. We look very hard at our strong portfolio clients. We're laser-focused on them right now. When the numbers are going down, you need to talk about the company's assets, trends, position, and that requires more skills and the ability to overcome skepticism." Independent agencies like Schwartz and Greenough found the economy easier to weather because they didn't have to answer to shareholders, according to Clarke & Company president Brian Delaney. "Being independent allows us to be flexible in how we deal with sudden and long-term downturns," he says. "We only have to answer to ourselves and our clients." Clarke & Company, which specializes in crisis communications, saw a rebound in August 2002, with its best month in more than a year. Cuts create competition Though many survived the ride without any serious whiplash, there were numerous layoffs. PRSA Boston chapter president Jeff Seideman recently checked The Boston Business Journal's annual listings of top PR firms for the number of employees. "I added it up, and it was about 1,100. Looking back at February, it was 1,660 then. So nearly 600 people were put on the street, and that's just the larger agencies. My guess is that there are 2,200 or more PR people who are adding market pressure that's driving prices down." Seideman adds that a fair number of laid-off PR pros actually started their own firms, thus creating more competition. Now, PR in New England looks a lot like it's landscape of smaller villages scattered among the bigger cities, such as Boston, Providence, New Haven, CT, and Portsmouth, NH. And plucky New Englanders are not scared in the face of a stagnant economy. Tony Sapienza and Paula Slotkin started their own shop in May. Malden, MA-based Topaz Partners is hoping to find its niche. Sapienza says, "We are a new breed of agency that fits between contractors and agencies. There are many obstacles to starting a business in this economy, but we have nowhere to go but up." Of course, clients cut staff and budgets too, adding to the already competitive nature of PR business in the area. They've become more conservative, and pitches and sales cycles have become more drawn out. "There's no clear-cut PR leader in the area," says Tim Hurley, a partner at Porter Novelli in Boston, and because of it, New England firms have seen a surge in standards, forcing PR pros to make themselves stand out, and, most importantly, to show the importance of their work. Competition for business makes for better PR, as a rising number of firms have to do more with less, and increased emphasis is placed on measurement. "Now more than ever, I think any firm has to make the argument that they can add value to a company and that it will show up in the bottom line," says Ben Kincannon, GM of Fleishman-Hillard in Boston. Fleishman brought in nearly $17.8 million in revenue last year, down from $21 million in 2000. In addition, firms also have to compete for editorial space, which has forced PR pros to get creative. "We've seen a back-to-basics approach where tech companies are taking a careful look at their marketing spend," says Greenough. "They're shifting resources away from monologue, one-off functions to PR, where an actual story, with characters and context, is being told in a way that resonates with their most critical audiences. A higher form of storytelling is beginning to emerge." Outside of Boston in the smaller states of Connecticut, New Hampshire, and Rhode Island, PR practitioners with local clients are benefiting from working in close-knit communities. Among the large agencies, only Brodeur has an office there, with Beaupre & Co. in Portsmouth. The remaining boutiques were affected by the recession, losing revenue and slowing down, but they planned well, and therefore continue to see growth in 2002. Thomas Rankin Associates, the only ranked Rhode Island firm, saw four new account wins, and New Haven, CT firm Mason & Madison took on Krispy Kreme's first two New England shops as a new project. Elisabeth Galligan, president and founder of Newberry PR based in East Providence, RI, says it helps to work in a small state. "There's always a connection in Rhode Island," she says. The corporate story On the corporate side, many have learned a valuable lesson from the volatile economy and corporate scandals of the past year. "Things have been changing so quickly," says Janice Foley, VP of corporate communications for the Boston Stock Exchange. "Now, so much of what we do is preparing to react to things that can happen. When you have fatter budgets, PR isn't looked at closely. The end result of that will make for PR people who are more in tune with their audiences, and that's really what the industry needs." For the future, the feeling is optimistic. "It's a rich economy," says Fleishman's Kincannon. "I think that the New England economy is much stronger than in was in the late '80s. The reason it's an exciting place to live is that it's a hotbed of innovation. New companies are starting all the time. That's a reason for long-term optimism."

NEW ENGLAND PR AGENCIES
                         Revenue                     Loca-
Firm Name                  (dlrs)      Change  Staff   tion
2001                         2000         (%)
BOSTON METRO
Weber Shandwick WW     25,071,855         n/a    n/a    126   Boston
Schwartz
Communications         24,116,646  26,984,202    -11    125   Waltham
Brodeur Worldwide      18,082,800  25,400,000    -29    159   Boston
Fleishman-Hillard      17,756,000  21,049,000    -16    128   Boston
Ogilvy PR Worldwide    13,323,040  15,291,100    -13     55   Boston
FitzGerald
Communications         10,379,885   9,584,159      8     75   Boston
Cone                    8,792,000   8,399,132      5     39   Boston
Porter Novelli          8,017,000   9,675,000    -17     43   Boston
Pan Communications      7,494,000   8,724,000    -14     44   Andover
Mullen PR               5,797,000   6,287,000     -8     37   Wenham
Greenough
Communications          5,500,000   2,850,000     93     36   Boston
MS&L                    4,252,797   5,526,191    -23     21   Boston
Incepta (Citigate)      4,039,120   3,986,103      1     20   Cambridge
Bishoff Solomon Comms   3,138,491   3,159,100   -0@7     21   Boston
Horn Group              2,997,000   2,986,000    0@4     20   Braintree
Morrissey & Company     1,898,628   1,488,986     28     14   Boston
Schneider & Assocs      1,675,111   2,260,738    -26     18   Boston
Marenghi PR             1,500,000   1,900,000    -21     18   Boston
Text 100 PR             1,419,983   2,612,711    -46      7   Boston
Corporate Ink PR        1,378,790   1,484,250     -7      9   Newton
Edelman PR Worldwide    1,318,064   2,510,652    -48    n/a   Boston
Ronald Trahan
Associates              1,011,204   1,047,352     -3      5   Sherborn
Michael James & Co        848,483     801,924      6      4   Boston
Ruder Finn Group          615,000     381,000     61      6   Boston
Lewis                     519,847         n/a    n/a      3   Boston
Morgen-Walke
Associates                486,810     831,536    -41      3   Boston
Voce Communications       119,521         n/a    n/a      5   Boston
CONNECTICUT
Brodeur Worldwide       6,883,400   8,000,000    -14     43   Stamford
Peter Martin
Associates              2,795,000   2,632,000      6     20   Stamford
Jacobs & Prosek PR      2,237,345   2,041,449     10     16   Stratford
The Kotchen Group         852,597     793,608      7      8   West
                                                             Hartford
Emmanuel Kerr Kilsby      812,000   1,806,333    -55      9   Stamford
Andrea
Obston Marketing          436,500     389,500     12      4   Bloomfield
Waggener Edstrom           13,000         n/a    n/a      3   Stamford
NEW HAMPSHIRE
Brodeur Worldwide       5,373,500   5,800,000     -7     37   Portsmouth
RHODE ISLAND
Thomas
Rankin Associates         784,879     570,812     38      7   East
                                                             Greenwich

Source: Council of PR Firms Auditing: No audit was required for inclusion in the rankings. The CEO/CFO/principal was required to sign a statement verifying the accuracy of the data and agreeing to possible participation in a random audit Disclaimer: While every effort has been made to ensure the accuracy of these figures, PRWeek cannot accept liability for, nor make financial guarantees based upon the information in this chart.

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