REGIONAL FOCUS PENNSYLVANIA: Pennsylvania finds shelter -Pennsylvania agencies lagged behind when the rest of the US wascelebrating dot-com riches. But now they're happy to have the healthcareand energy sectors. John Gaffney reports

Joe Schubert, head of the Philadelphia b-to-b agency that has born

his name for 30 years, says he recently met with two new hires in his

office. Both had recently come from jobs at larger New York City

firms.



"They wanted to know the difference between how public relations is

practiced in Pennsylvania from the way they practiced in New York," he

says. "I told them that in New York it seems like you're comfortable

being all things to all people. In Pennsylvania, we're very comfortable

finding a specialty and sticking to it, no matter what outside forces

influence us."



The statistics say that Pennsylvania's revenue growth (20%) lagged

behind the rest of the country's (32%) in 2000. But PR agency executives

in Philadelphia, Harrisburg, and Pittsburgh say they'll take their rate

of growth. Because when the numbers check in next year, they claim the

state will see an increase in revenue while the rest of the country

swallows the bitter pill of the dot-com crash and soft media economy.

While California, New York, and Massachusetts (among others) have had to

deal with a tremendous readjustment in the business world, Pennsylvania

mainly deals in stable industries. Dot-coms never found a fast track

here. Energy, healthcare, pharmaceuticals, and big consumer packaged

goods have. And those areas have given Pennsylvania PR firms some

shelter from the economic storm.



Evidence can be seen in some of the big gains of the past year. Though

he runs a small agency, Schubert says his focus on b-to-b clients netted

13 new accounts in 2000, and this year he is reporting one of his best

years ever. That has been fueled by new business from Motorola

Broadband, bill processing company MEI, and National Standards Testing

Laboratories, which tests and approves the technology that drives

everything from toasters to computers. At Pittsburgh's Jack Horner

Communications, Microsoft has been its lone tech client, but the agency

has profited from new business from hotels built in the refurbished

downtown area, as well as from stalwart brands Fisher Electronics and

Alcoa. Horner posted a 24% increase in revenue in 2000.



"We did not change our stripes to participate in the boom economy," says

CEO Jack Horner. "We kept to our specialty, which is providing excellent

general PR. The boom economy led to growth in some of our local

businesses downtown, and we're having a great year with them."



PA in the big leagues



The biggest player in Pennsylvania is the Pittsburgh-based Ketchum. With

$9.5 million in revenue, the office counts Alcoa and Heinz among

its biggest clients. The Heinz pet snacks division is the biggest area

of new business for the agency this year, says SVP/associate director

Kelly Skoloda. Other new accounts include Pittsburgh-based Quigley, best

known for a cold-symptom-easing gum called ColdEeze. Following it at No.

2 is Tierney at $7.8 million for 2000. According to director Jay

Devine, old-economy clients like Exelon, Aventis, American Water Works,

Blank Rome Comiskey & McCauley, McDonald's, and Deloitte Consulting are

growing.



Healthcare - despite continued struggles with regulations in Washington

and rising costs - continues to grow as an industry, with many large

pharmaceutical firms based in the state. Several Pennsylvania-based

agencies have had significant wins in this sector recently. Among them

is Earle Palmer Brown (EPB), the state's No. 7 agency. Lisa Robinson

Packer, general manager of EPB PR Philadelphia, says the agency's most

visible initiative last year was on behalf of the Children's Hospital of

Philadelphia. It produced a video news release about the separation of

conjoined twins at the hospital, which aired nationally and around the

world. EPB claims it is one of the most viewed VNRs ever distributed by

MediaLink (with more than 17.5 million viewers), and has won several

awards.



Philadelphia-based healthcare specialist Dorland Sweeney Jones (DSJ),

the third-largest Pennsylvania agency, grew by 28% last year. This year

is proving to show another increase, says DSJ's PR director Nancy Bacher

Long.



She points out that DSJ has had to accept more project work and fewer

retainers. "You take the project, you get in there, and you try to grow

the business," she says. Long adds that agencies like her own are

suffering from non-healthcare-specialist agencies (especially in New

York) turning to the sector for a business replacement for dot-coms.

Second, the cachet that New York carries is proving to be a stronger

force when clients choose an agency. Still, this year has given the firm

some significant wins, including major healthcare technology firms

Beckman Coulter, Firekey, Matrix, Novascept, Orametrix, and Roche

Diagnostics.



"Because we've concentrated on a specialty niche, we've been well served

by that focus," Long says. "I'm cautiously optimistic about the economy

and how it will affect the healthcare field, but I know that we're

positioned extremely well. But the big elephant in the yard is the

economy."



Collaboration in lieu of acquisition



That elephant has for all intents and purposes cooled the agency

acquisition activity in the state. Long expects to see more strategic

alliances rather than cash deals between firms in the future. For

example, she is currently talking to other firms in the state that

specialize in targeted marketing to jointly pitch new businesses.

Outside of that, the lone acquisition of note was in February of this

year, when EPB's parent company, Panoramic Communications, acquired

Odyssey, a provider of Internet solutions.



Because of the relative stability of the leading industries in the

state, leading PR executives are optimistic about future prospects.

Healthcare, despite continued struggles with regulations in Washington

and rising costs, continues to grow as an industry.



Energy deregulation will continue to cause worry and even distrust among

consumers. Therefore, it will continue to need the skills of the PR

industry.



Burson-Marsteller Pittsburgh, for example, won a key government account

from Pennsylvania's Low Income Energy and Housing initiative, which

sought to inform low-income residents about the effect regulation would

have on them.



"This energy issue is huge across the board," says John Evans, SVP of

Philadelphia-based Al Paul Lefton. "Even companies only marginally

concerned with the energy field are tapping into consumer concerns in

that area to promote the value of their products."



Lefton has found its niche in the energy space by representing

Pennsylvania Power and Light, as well as the Washington, DC-based

Geothermal Heat Pump Consortium, which promotes alternative energy

sources. But Evans says even building-material clients such as Leviton

have turned toward promoting the energy efficiency of their brands.



While the dot-com downturn has not hit Pennsylvania firms as hard as

those in other states, Pennsylvania has harvested the spoils of the

economic boom it spawned. Long says all three of the major PR and

business centers - Philadelphia, Pittsburgh, and Harrisburg - have

different reasons to realize growth based on their core businesses.

Healthcare pervades both Philadelphia and Pittsburgh. Energy is more

prevalent in Harrisburg. "It's a very cool time to be in Pittsburgh,"

says native Jack Horner. Other Pennsylvania PR practitioners agree.



"We haven't had to cut back any staff, and we're hoping we don't have

to," says Laura Gongus, managing director of Burson-Marsteller

Pittsburgh.



"From my perspective, the clients that are in the industries that are

the highest profile in this state are blurring the lines between

advertising and PR, and advertising is cut before PR. So we're seeing

increased responsibility."



"Big clients are still big clients," says Ketchum's Skoloda. "We haven't

seen any declines from big accounts. We have seen a lot more initial

inquiries over the past six months from potential clients, ranging from

very big to small projects. They could be planning for next year, or

they could be looking to work with us soon. Either way, we'll take

it."



PENNSYLVANIA PR AGENCIES

Revenue

Rank Firm Name (dollars) Increase Staff Location

2000 2000 (%)

1 Ketchum 9,569,000 12.84 67 Pittsburgh

2 Tierney Strategic

Communications 7,859,382 29.37 47 Philadelphia

3 Dorland Sweeney Jones

Health Comm. 4,050,000 28.82 13 Philadelphia

4 Elias Savion 3,389,700 4.62 10 Pittsburgh

5 Burson-Marsteller 3,308,000 -2.68 17 Pittsburgh

6 Al Paul Lefton Company 2,934,453 10.66 15 Philadelphia

7 Earle Palmer Brown/PR 2,446,259 20.00 12 Philadelphia

8 Magnet Communications 2,127,000 N/A 14 Pittsburgh

9 Signova 1,681,980 381.34 2 Philadelphia

10 Jack Horner

Communications 1,636,834 23.91 20 Pittsburgh

11 Anne Klein & Associates 864,973 -9.18 7 Marlton, NJ*

12 Michael James & Company 626,767 -40.31 8 Pittsburgh

13 Altus Group 425,000 21.43 3 Philadelphia

* Included in PA rankings due to proximity to Philadelphia.

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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