REGIONAL FOCUS NORTHWEST: Patchy Pacific fortunes - While some netspecialist PR agencies have gone to the wall, there are still lots ofopportunities for shops with a more diverse client base, reports JuliaHood

New Venture Communications ranked number 16 in PRWeek's Northwest

regional market focus in 2000, with 33% growth. But New Ventures will

not be appearing next year. The Portland tech firm, which was launched

in 1998 and had 928% growth in 1999 working with start-up clients such

as Pixelworks, WebTrends, and WebCriteria, closed down last month, a

victim of the dot-com slide. Wave Rocks, another promising Northwest

agency that worked with internet clients, also closed earlier this

summer.



The Northwest's e-commerce promise has faded. No surprise, perhaps,

given what has happened across the industry, but a year ago it seemed

like it was this region's turn to shine after roiling in the shadows of

Silicon Valley for so long. With VC money pouring in and start-ups

popping up, the so-called Silicon Forest was ready for its close-up.



Now, following the bubble that had many chasing start-up dollars, PR

agencies in the area have taken a collective deep breath and are once

again looking to their fundamentals, figuring out ways that new or

expanded practice areas can be developed to attract business while they

work even harder to hold on to current clients.



Waggener Edstrom tops this year's agency rankings yet again, and with a

focus on technology and science, it has bucked the regional trend by not

having to make layoffs. "One of the blessings is that we have a

diversified portfolio, and clients that have been with us for a long

time," says Chuck Humble, EVP of the Portland office. "Clients now

really want an agency that will take the initiative to lead them and

stay ahead of their thinking, but in a practical, sensible,

block-and-tackle way."



Diversification is now a running theme with many agencies. Ray

Berardinelli, cofounder and president of now-defunct New Venture, says

he wishes his agency had looked for other business sooner. "Our clients

depended on VC money, and when the VC money dried up, so did the ability

to fund PR projects," he reflects. "As the sector went, so we went."



2000 boom time



The 2000 table demonstrates that brisk growth was realized throughout

the top ten agencies. Waggener Edstrom continues to lead the pack with

an income of $52 million, $42 million ahead of KVO, its

nearest rival. KVO, part of Fleishman-Hillard, moved from third to

second place with a 25% increase in income. MWW/Savitt, which is part of

the MWW Group, jumped up by 23%. Other agencies that fared well last

year were Seattle's Imagio and GCI Group/APCO Associates.



But there is no doubt that next year's rankings will reflect a leveling

off of growth, as clients in the region have cut spending on PR and

marketing overall, and the start-up culture has withered away. Across

the board, agencies have had to lay off staff as the times have become

leaner.



"Many clients have pulled their work in-house to save money," says Vicky

Hastings, SVP of Cole & Weber/Red Cell in Portland. The agency works

with a wide range of clients, including Intel, Nike, Tilamook Cheese,

and Texas Instruments. "As a result, the in-house PR managers are

overloaded with day-to-day tasks, and don't have the time or mind space

for strategic work."



But despite the downturn, some firms are still investing more in the

region. Oregon-based KVO opened its Seattle office in April. Atomic PR

launched its Portland office in January, and in February Waggener

Edstrom acquired Kirkland, a Washington-based shop. Agencies looking to

find talent will not have to look far, as recent layoffs have made

hiring much easier.



Job market



San Francisco-based Carlson & Company, an executive search firm

specializing in PR and marketing professionals in tech and biotech,

opened a Seattle office this year."For the past several years," explains

principal Valerie Pressley, "job seekers have been the ones driving

where they want to work and who they wanted to work for. They've been

making the calls on lifestyle decisions."



No longer. Employers are now calling the shots. "Today, candidates are

far more open to considering positions that will pull them out of the

area, and they're reassessing some industries they are choosing to work

in." Pressley adds that she has noticed an increase in demand for PR

people in "old economy" businesses like law firms and insurance

companies.



New business



While employees are pondering a possible change of direction, PR

agencies themselves are looking at new ways of attracting clients.



The advantage that the Pacific Northwest has over Silicon Valley is that

it was never associated with technology exclusively. The area is still

ripe with plenty of corporate gems like Microsoft and Intel on the

technology side, and consumer favorites like Starbucks, Amazon.com, and

Nike. Although Boeing's corporate headquarters has moved to Chicago, the

Puget Sound area still holds some 80,000 of its employees, as well as a

strong PR team. How they will be affected by the 30,000 layoffs

announced last week is as yet unclear.



Agencies are looking to expand their offerings into new areas, and for

new approaches to old problems. "Something that sets the Pacific

Northwest apart from the rest of the country is a strong interest in

sustainability and the environment," says Hastings of Cole & Weber/Red

Cell. The agency has set up a specialized practice in that space.



Publicis Dialog had a slight dip in income last year in the region,

which includes offices in Seattle and Boise, ID. This month, the firm

tapped chief creative officer Steve Bryant to lead its Seattle office,

which has healthcare, food, and technology clients. The move is intended

to boost the firm's creative PR offerings. "Creativity is at a higher

premium than ever in this business," Bryant says. "It is the glue that

holds together the different tools clients want to use to make a deeper

impression."



Will Ludlum, a partner and GM with Porter Novelli, which has offices in

Portland and Seattle, sees opportunities in the energy field. "The

energy space is ripe for further growth because the issues are so

broad-reaching in Washington and Oregon," he maintains. "They are issues

that transcend the state, but reflect the geographical region."



The agency, which has a strong technology background in the market, has

also been working with the Colorado Anti-Smoking Initiative.



Portland's Lane Communications, last year's PRWeek Boutique Agency of

the Year, embodies the kind of diversification other agencies are

adopting with its three practice areas: consumer, b-to-b, and

technology. With revenues of $1.4 million in 2000, president

Wendy Lane says the agency is on track to earn $2.3 million this

year, and she is adding to her staff.



Recent account wins of Persodie (an interactive voice response company)

and the Oregon Wine Advisory Board reflect the broad range of her

accounts.



But Lane is not immune to the market. "I've had clients, who, even

though they have fabulous coverage, their market is declining and

they've had to cut their budgets."



Imagio, which has been a dedicated tech shop since its inception, is

this week announcing the launch of a healthcare practice to leverage

experience gained in the health-tech area. "A lot of our work was with

the emerging tech companies, and those companies aren't getting funded

anymore," explains Ralph Fascitelli, president of Imagio. He says the

firm is pursuing opportunities in medical devices, hospitals, and

service providers and, to a lesser extent, biotech.



KVO is also looking to grow in biotech and healthcare, and has been

retained to work on a conference held by the Washington Biotechnology

and Biomedical Association on investment opportunities in that industry.

In tandem, KVO's parent company Fleishman-Hillard is installing a

healthcare practice in San Francisco to beef up the whole region's

health-tech offerings.



"Diversification is really crucial," says Sharon Van Sickle, KVO's

president and founder. "We've all been working together to look at the

West Coast holistically with respect to where we might field various

talent." Waggener Edstrom is also looking to expand into the health-tech

market.



Show and tell



Strong measurement tools have become essential for agencies from Silicon

Valley and throughout the Northwest as competition has grown more and

more fierce. "It's our job to become essential, and to illustrate to our

clients the bottom-line value of building a highly valuable reputation,"

says Kathy Savitt, president of MWW/Savitt. "There are many ways to

measure, from benchmark reputation research to quantitative research to

tying success with customer churn, or the successful resolution of

litigation support," she claims.



New companies are still popping up on client rosters in the region, even

if they are based outside the area. British Columbia-based JaalaM

Technologies, a network intelligence company with a Seattle office,

looked on both sides of the border for a PR firm as its new product

launch approached. The company recently retained Waggener Edstrom to

help with strategic planning on PR, research, and analyst and media

tours.



The financial stability of the PR firm was a factor in JaalaM's

decision. "Financial stability, especially in a turbulent economy, and

the ability to stand tall (were important)," Browne says. "They had been

through tough times before, and they have good backing."



As the economy continues to fumble, and with the enduring uncertainty

that last month's terrorist attacks in New York and Washington, DC only

exacerbated, PR agencies in the Northwest are trying to be more

flexible, and prepare for the unexpected.



Delayne Giardini, who was formerly in the PR field, is principal of a

company called One More Mind, which helps companies focus on their

goals. "What I am seeing in organizations right now is that the

leadership is tired, and management is complacent," she says.



And she knows it won't be easy to overcome. "This community really needs

some healing."



NORTHWEST PR AGENCIES

Revenue

Rank Firm Name (dollars) Staff Growth Location

2000 1999 2000 (%)

1 1 Waggener Edstrom 52,055,570 428 18 Portland, OR***

2 3 KVO 10,516,000 77 34 Portland, OR

3 2 The MWW Group 8,268,795 55 29 Seattle, WA

4 4 GCI Group/APCO

Associates 8,019,491 55 50 Seattle, WA

5 11 Imagio 7,319,308 101 119 Seattle, WA

6 NEW DDB Public

Relations 6,500,000 N/A N/A Seattle, WA

7 5 Shandwick* 6,356,000 60 28 Seattle, WA

8 12 Edelman 6,173,983 58 115 Seattle, WA

9 NEW Pacific Rim

Resources 4,300,000 49 22 Seattle, WA

10 8 Gogerty Stark

Marriott 4,019,521 19 5 Seattle, WA

11 NEW Text 100 3,647,662 36 62 Seattle, WA

12 15 Porter Novelli 3,337,000 33 99 Seattle, WA

13 9 Publicis Dialog 3,089,637 26 -18 Seattle, WA

14 16 Weber* 3,025,369 21 123 Portland, OR

15 NEW MacKenzie

Kesselring 2,800,000 30 55 Portland, OR

16 17 New Venture Comms 1,998,817 23 49 Portland, OR

17 9 Publicis Dialog 1,885,022 5 N/A Boise, ID

18 18 Richmond Public

Relations 1,563,396 16 20 Seattle, WA

19 19 Lane Marketing

Comms 1,437,491 20 66 Portland, OR

20 NEW The KMC Group 1,422,115 11 34 Bellevue, WA

21 21 Sterling Comms 1,100,000 10 83 Gig Harbor, WA

22 NEW HMH 825,000 7 7 Portland, OR

23 NEW OBPR 738,139 N/A 39 Portland, OR

24 24 Carter Ryley

Thomas 162,917 2 412 Portland, OR

25 NEW Horn Group 18,508 4 N/A Seattle, WA

TOTAL 132,176,211 33**

* Weber and Shandwick merged in September 2000;

** Average growth for all agencies in 2000 was 27%;

*** Includes income from Bellevue, WA office



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