GLOBAL RANKINGS: Latin America - While neighboring nations start tofeel the recession in Argentina, shops willing to take the plunge areposting impressive gains

Latin America has always been a land of enormous business

opportunities for those who can stomach the risks - and the performance

of the PR industry over the past 12 months has been no exception.



"Last year we grew 70%, and in the first half of 2001 we advanced

another 25%," says Jeffrey Sharlach, president of The Jeffrey Group, a

Miami-based consultancy specializing in multinational firms operating in

Latin America. He predicts that the market will continue to expand as

major corporations invest in building their image in the region.



Business was good for many last year and into the first half of 2001,

with the area's two largest economies - Mexico and Brazil - the

undisputed stars. Yet some dark clouds are gathering on the horizon.

Economists warn that Argentina's economic troubles - the country has

been battling a recession for nearly three years now - may finally be

having a spillover effect on other markets, namely Brazil and Chile. And

that's not the only problem.



"The collapse of many dot-coms and fears of recession in the US have

taken a toll on the (Mexican) market," says Santiago Hinojosa,

Burson-Marsteller's president for Latin America. He also perceives

future financial difficulties for Brazil, despite strong growth in

2000.



While some experts argue that a sagging economy can be beneficial for PR

practitioners seeking to put problems in a positive light, they agree

that an overdose can prove fatal for the industry as a whole.



Mexico



Mexico has been experiencing a boom since President Vicente Fox took

office, and represents the most active market as far as the PR industry

is concerned.



Stealing the show was the acquisition of Zimat - the country's top

agency with more than $6 million in annual fees - by

Golin/Harris, owned by Interpublic Group. (Interpublic had already made

a major bet in Latin America in early 2000, when it bought Nueva

Comunicacion for nearly $20 million. It's now part of the Weber

Shandwick group of companies.)



Another buyout highlighting the appeal of the Mexican market was Hill &

Knowlton's acquisition of Premio, an agency with a strong presence in

the technological and telecommunications sectors. A third major move was

GCI's acquisition of Gcom-Kaufmann, a former affiliate of Manning,

Selvage & Lee.



Mexico's strong magnetism was also underscored by the breakneck growth

of consultancies such as Martec Porter Novelli, which experienced nearly

a 100% increase in fees.



Part of the boom was undoubtedly due to the change of guard. The Fox

administration - the first not belonging to the socialist PRI party,

which ruled the nation uninterruptedly for 70 years - brought in fresh

air for investments and ushered in greater press freedom. In fact, Fox's

inauguration caused a direct shock at Burson - one of the top

consultancies in the country. The agency saw its local CEO, Alisa

Chelminsky, hired by Fox and turned into one of his principal

communications officers. Burson searched months for a replacement and

finally picked Mexican Roy Caple, a former head of the company's

branches in Chile and Venezuela.



Local experts think the new government represents a great opportunity

for the sector. "Lobbying will grow dramatically," says Alejandro

Rodriguez, director at Gricorp Ketchum. "Crisis management will also

become increasingly important," he adds, explaining that Mexico's public

opinion is following the attitudes and messages of multinational

companies closer now than ever before.



But the biggest change by anyone in the region was by Fox's own

spokesperson, Martha Sahagun, who married the president in July.

Francisco Ortiz was then tapped as the new presidential spin doctor.

Many PR practitioners believe the popularity of Fox's marriage to his

communications aide has put the industry in the limelight - a scenario

they perceive as ideal for further business development.



Brazil



Brazil has recovered from its 1999 devaluation, experiencing a strong

inflow of foreign investment and an explosion in domestic

consumption.



Although no recent overall figures are available, the year 2000 was a

positive one for the country's three major consultancies - all of which

grew by more than 20%.



One of the stars in early 2001 was Edelman, which decided to move its

regional headquarters to Sao Paulo, where Brazilian consultant Vivian

Pinto oversees the region. To reinforce its presence in the country,

Edelman also acquired an agency in Rio de Janeiro, Brazil's second

largest city.



Nevertheless, Burson's Hinojosa says he's concerned about the prospects

for the rest of 2001. "The Brazilian energy crisis has many of our

domestic and regional clients worried," he admits.



Another thorn in Brazil's side is the aforementioned financial

difficulties in neighboring Argentina. Those troubles reached new

heights in July, creating great instability in Brazil's financial

markets and uncertainty for the public relations sector.



Argentina



Worries are certainly running high in indebted Argentina, the area's

third largest and most sophisticated economy. Yet Claudia Gioia, head of

the local office of Burson, is confident that the sector will grow in

spite of the crisis.



Last year, the consulting agency pulled in nearly $5 million in

revenues and grew by almost 15%, making it second only to Weber

Shandwick Worldwide/Nueva Comunicacion, which made $8.3

million.



"We have been pushing ahead despite the fact that companies in Argentina

have been undergoing major restructurings - or perhaps it was precisely

because of that," Gioia explains. "In the beginning, the key was crisis

management. But in the last year we have taken over the whole PR task of

some corporations after they downsized full PR departments."



Although many investors may have been discouraged by Argentina's

problems, the arrival of GCI in May provided further evidence that the

country hasn't lost its appeal to PR firms. The US agency, which belongs

to the Grey Group, partnered with local firm Consultores del Plata and

intends to acquire it in the near future.



Ketchum has also expressed interest in purchasing its local affiliate,

and may do so before year's end, according to Ruben Aguilar, Ketchum's

director for Latin America. "It will all depend on how the Argentine

economy evolves in the months to come," he says, speaking from his

office in Atlanta.



Another big US player willing to enter the market is Ogilvy PR, market

sources say.



Chile and Colombia



Surprisingly, it appears the time for smaller markets has arrived. Even

though Chile was not spared from the economic slowdown, all major PR

consultancies in that country have experienced growth.



And as incredible as it seems, Colombia - jolted by years of guerrilla

warfare - today boasts a booming PR sector, with no less than 30

consultancies in Bogota alone. Although no sales figures were available

for Colombia (for security reasons), local practitioners are working to

set up an industry association in an effort to engulf their activities

and bring more transparency to the sector as a whole.



TOP 10 AGENCIES IN LATIN AMERICA

RANK AGENCY NAME INCOME (dollars) %

2000 2000 1999 CHANGE

1 Burson-Marsteller 12,287,000 8,924,000 38

2 Hill & Knowlton 10,259,000 1,340,000 666

3 Weber Shandwick Worldwide 8,317,184 - -

4 Edelman Public Relations Worldwide 8,308,415 5,924,137 40

5 Cia de Noticias 6,491,521 4,206,000 54

6 Golin/Harris International 6,115,000 3,800,000 61

7 FSB Comunicacoes 5,765,704 4,344,000 33

8 G&A 5,617,500 4,375,000 28

9 MP&M Comunicacion 4,728,311 3,567,000 33

10 ZC&M 4,367,706 3,109,979 40

SOURCE: Imagen; Council of PR Firms; El Asesor de Mexico; Gazeta

Mercantil

KEY MARKETS IN LATIN AMERICA

RANK ARGENTINA INCOME (dollars) %

2000 2000 1999 CHANGE

1 Weber Shandwick Worldwide 8,317,184 - -

2 Burson-Marsteller 4,942,895 4,300,000 15

3 MP&M Comunicacion 4,728,311 3,567,000 33

4 ZC&M 4,367,706 3,109,979 40

5 Muchnik, Alurralde, Jasper y Asoc. 2,714,214 2,020,838 34

RANK BRAZIL INCOME (dollars) %

2000 2000 1999 CHANGE

1 Cia de Noticias 6,491,521 4,206,000 54

2 FSB Comunicacoes 5,765,704 4,344,000 33

3 G&A 5,617,500 4,375,000 28

4 Burson-Marsteller 2,588,000 2,007,000 29

5 Edelman Public Relations Worldwide 2,556,428 1,237,774 107

RANK CHILE INCOME (dollars) %

2000 2000 1999 CHANGE

1 Tironi Asociados 2,300,000 2,000,000 15

2 Extend Comunicaciones 1,952,000 1,600,000 22

3 Hill & Knowlton 1,600,000 1,000,000 60

4 Feedback 1,400,000 1,500,000 -7

5 Burson-Marsteller 1,350,000 1,000,000 35

RANK MEXICO INCOME (dollars) %

2000 2000 1999 CHANGE

1 Golin/Harris International 6,115,000 3,800,000 61

2 Edelman Public Relations Worldwide 3,455,984 2,710,321 28

3 Fleishman-Hillard 2,070,000 1,371,000 51

4 Porter Novelli 2,012,000 1,398,000 44

5 D&A Public Relations 1,350,000 1,000,000 35

SOURCE: Imagen; Council of PR Firms; El Asesor de Mexico; Gazeta

Mercantil.



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