Is it too obvious to point out that for New York City in 2001 there was only one story? The terrorist attacks of September 11 were a human tragedy of unthinkable proportions. And when the shock began to ease, all the talk was of a return to normalcy.
Unfortunately for New York, that normalcy was a dour economy, which the attacks had only worsened, or at least prolonged. September 11 all but froze business for weeks and months, with campaigns and other PR projects put on hold.
While this undoubtedly hurt agencies' 2001 revenues, the economy has had a much more dire impact on the public relations market in New York.
This is especially true for agencies specializing in tech, such as Middleberg Euro RSCG (down 42% to $10.2 million in New York revenue) and Ogilvy (whose revenue decreased by 27%).
Even before the terrorist attacks, layoffs seemed to be the name of the game for PR agencies in the biggest PR (and media) market.
Burson-Marsteller started things off in November 2000, trimming 5% of staff nationally. In mid-2001, when it lost client Sun Microsystems, Burson laid off another 20 people working on the account in New York. Ogilvy slashed nearly 70 positions nationwide in February 2001, and cut up to 40 more in April - 24 of them in New York. And in March, Edelman trimmed its worldwide workforce by 3% (60 positions), including its Manhattan office.
And so it went, on ... and on.
Other than the staff cuts, up until September 11 the biggest New York PR story was Lizzie Grubman allegedly injuring 16 people in July when she backed up her Mercedes SUV outside a Hamptons nightclub. Peggy Siegal, who had merged her firm with Grubman's in March 2000, announced last December that she was leaving the now-troubled celebrity-event specialist.
Halfway through 2002, PR agencies are beginning to feel a cautious sense of optimism about the future economy, but are reserved enough to give "cautious a new meaning.
And for PR agencies here, a strand of silver lines the dark cloud of the economy: companies scrambling for corporate-reputation and IR counsel in the wake of Wall Street scandals and Wall Street underperformance.
For example, Burson began offering CEO-reputation counsel in 1997, and "while there was interest for some time, now it has skyrocketed because of the integrity issues, says CEO Chris Komisarjevsky.
In addition, a number of New York agencies say that consumer-products work has shown surprising resilience since 2001's fourth quarter. "We began to see a number of engagements from the traditional product marketers who sat out the last couple of years because they didn't want to go up against the clutter of the dot-com world, says Matt Harrington, president of Edelman New York.
How they measure up
According to Council of PR Firms figures, revenues for New York City agencies totaled $753.3 million in 2001, down just 2.6% from 2000. That's not too bad considering overall US revenues declined by 7%.
Ruder Finn claimed the number-one spot in the city (despite a revenue shortfall of 4%), swapping positions with Burson-Marsteller, which had a 15% revenue drop in New York, paralleling its US and worldwide performance.
Peter Finn, co-CEO of Ruder Finn, blamed the firm's slight drop to $58.8 million largely on the tech sector, which was probably mitigated by its large healthcare practice, in addition to its work in the consumer and corporate/finance areas.
Many of Burson's troubles stemmed from its loss of Sun Microsystems, though Komisarjevsky points out that this year Burson was retained by SAP for global work, which he says is larger than the Sun account.
Independent giant Edelman stayed at number three, despite a 9.1% revenue drop to $55.2 million, much of it from technology. And Ketchum zoomed into the number-four position with a whopping 47% leap in revenue. That was almost matched by number five, Incepta (Citigate), which had a 40% increase, despite a 14% falloff in US revenues, due largely to problems in the technology sector (it acquired tech specialist Cunningham in 2000).
For Edelman, losing EDS was a big blow, according to New York president Matt Harrington. He says strong practice areas have been consumer marketing, healthcare, and corporate affairs/finance.
Dale Bornstein, director of Ketchum's New York office, attributes the firm's 47% growth to three main factors: good acquisitions, such as change-management specialist Stromberg Consulting; growth from recently launched services taking flight in 2001, such as Ketchum Entertainment Marketing; and strong new business from Kodak, DuPont, and IBM.
Filling out the top 10 were Weber Shandwick Worldwide; Fleishman-Hillard, with a modest 3% growth; Porter Novelli, with a 7% drop; GCI Group/APCO Worldwide with a 3% drop; and MS&L, with 6% growth.
Although Fleishman experienced the widespread weakness in tech and consumer marketing, Peter Verrengia, GM of the New York office, says that was offset by success in healthcare and litigation support, among other areas. Fleishman's New York revenues were up 3% to $35.9 million.
Publicis Dialog posted a massive 61% increase in revenues to $7.2 million.
President & CEO Andy Hopson says the agency got unexpected work in Q4 to help make up for the slowdown, such as preparing for the World Economic Forum, which took place early this year. In May 2001, Publicis entered the IR market when it acquired Gotham-based Fabianne Gershon Associates and The Hudson Stone Group, with $1 million in combined revenues (Publicis had one IR person for a short time before that).
The biggest drops in New York City came from social-responsibility specialist Cone (-81%), which left the market by shuttering its nine-person office in June, Rowland Communications (-43%), Middleberg, Magnet Communications (-39%), and Golin/Harris (-36%).
Some agencies were hit much harder than others. Magnet's revenues were down 39%, despite winning a chunk of IBM's business to the detriment of Golin/Harris, whose own 36% drop "was almost entirely technology, says Richard Wolff, managing director of the New York office.
Manhattan boutiques did well if they were in the right practice areas.
For example, the 14-person New York office of LA-based entertainment agency Bender/Helper Impact had a 24% increase. "We looked at the whole dot-com situation very hesitantly, says New York GM Jeff Klein.
Consumer branding specialist DeVries Public Relations, which in 2001 was bought by IPG, had a good year, also with a 24% increase. CEO Madeline DeVries says the biggest client win last year was pharmaceutical giant Allergan.
The upstate market is typically steadier than it is downstate. Total revenue for upstate firms on the PRWeek 2001 list was $25.3 million, only marginally down from $25.7 million in 2000.
And yet big upstate clients caused some turmoil. Rochester-based Kodak eventually awarded its account to Ketchum, and the aforementioned Armonk-based IBM slimmed down the number agencies working on its $60-million global PR operations to three: Text 100, Magnet, and One Blue (which uses people from parent Omnicom's agencies).
Rowland Communications' Rochester office was number one upstate with $11.9 million in revenue, followed by the four offices of Eric Mower & Associates, which combined for $3 million in billings - basically flat from 2000. Greg Loh, senior partner for PR services at Eric Mower, says the Syracuse office's increase of 19% is explained by the 2001 acquisition of b-to-b specialist Sage Marcom; the Rochester office's plummet of 41% was caused by a client (which he declined to name) significantly reducing its PR spending.
Buffalo-based Collins & Company enjoyed a 37% increase in revenue to $2.5 million. Principal Bill Collins says the company does public affairs work for the Peace Bridge Authority on its proposal to build a new bridge across the Niagara River that will connect Buffalo and Fort Erie, Ontario. The agency is also working with the Seneca Nation of Indians, which is building casinos in Buffalo and Niagara Falls. Other clients include Microsoft and Home Depot.
For PR agencies across the state, though - especially in Manhattan - there is some sense of return. "I see it slowly but cautiously coming back, says Publicis' Hopson. "People have in the backs of their minds that another shoe might drop. Our clients are looking ahead very conservatively. Yet we're involved in more new-business activity this year than last year."
And the fight for that new business only gets more heated. "The competition for new business is becoming more fierce, says Ketchum's Bornstein.
"We see every agency pulling out all the stops to win new business."
So the PR market in the Big Apple is, more than ever, not for the faint of heart. But as Frankie once said, if you can make it here, you can make it anywhere.
NEW YORK CITY PR AGENCIES
Rank Firm Name Revenue (dollars) Increase Staff
2001 2000 (%)
1 Ruder Finn Group 58,780,000 60,993,000 -4 343
2 Burson-Marsteller 55,238,000 64,929,000 -15 311
3 Edelman 54,593,123 60,108,566 -9 367
4 Ketchum 50,592,000 34,476,000 47 249
5 Incepta (Citigate) 49,471,359 35,312,677 40 254
6 Weber Shandwick Worldwide 39,476,500 N/A N/A 233
7 Fleishman-Hillard 35,859,000 34,780,000 3 162
8 Porter Novelli 27,665,000 29,842,000 -7 199
9 GCI Group/APCO Worldwide 25,154,375 25,841,339 -3 150
10 MS&L 24,938,720 23,571,122 6 179
11 Hill & Knowlton 23,304,000 28,452,000 -18 141
12 Ogilvy Public Relations WW 22,008,743 30,151,900 -27 142
13 Golin/Harris International 20,551,277 32,174,297 -36 70
14 Cohn & Wolfe 18,997,000 23,130,000 -18 113
15 Morgen-Walke Associates 16,083,725 22,189,902 -28 68
16 Chandler Chicco Agency 14,933,990 12,576,088 19 61
17 DeVries Public Relations 12,475,762 10,024,393 24 58
18 Noonan/Russo Communications 11,410,000 10,540,000 8 64
19 KCSA Public Relations 10,867,544 12,300,000 -12 61
20 Middleberg Euro RSCG 10,220,315 17,736,676 -42 76
21 Magnet Communications 9,179,000 15,090,000 -39 73
22 Stanton Crenshaw Comms. 8,022,700 6,999,562 15 59
23 Rowland Comms. Worldwide 7,687,000 13,359,000 -42 40
24 PepperCom 7,336,435 9,275,456 -21 35
25 Publicis Dialog 7,218,066 4,496,942 61 36
UPSTATE NEW YORK PR AGENCIES
Rank Firm Name/Location Revenue (dollars) Growth Staff
2001 2000 (%)
1 Rowland Comms. WW 11,857,000 11,762,000 .8 80
2 Eric Mower & Associates 3,006,193 3,011,752 -.2 30
3 Collins & Company 2,488,883 1,814,830 37 16
4 Text 100 Public Relations 2,335,413 2,177,524 7 15
5 Sawchuk Brown Assoc. 2,305,171 2,172,200 6 35
6 JMC Mktg. Comms. & PR 1,379,424 1,135,921 21 13
7 Saphar & Associates 1,036,477 1,182,570 -12 16
8 Robin Leedy & Associates 837,410 596,122 40 8
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.