Global Rankings - Australia - Increased corporate PR, a healthy economy and the Sydney Olympics have all contributed to an impressive PR boom Down Under

The Australian head of Burson-Marsteller, Kelly Parkinson, signed off on a big forecast this year - the agency's fee income should rise 40%for 2000-01.

The Australian head of Burson-Marsteller, Kelly Parkinson, signed off on a big forecast this year - the agency's fee income should rise 40%for 2000-01.

The Australian head of Burson-Marsteller, Kelly Parkinson, signed off on a big forecast this year - the agency's fee income should rise 40%for 2000-01.

Parkinson is not alone. PPR, until last week the biggest independent Australian firm, was up 48% in fee income for the 12 months ending June 2000. Indeed, most major PR groups have reported double-digit growth figures for several years while, at the same time, a plethora of specialist consultancies are flourishing.

The PR business Down Under is booming, due in part to the Sydney

Olympics, a rise in corporate PR and the sustained health of the Australian economy.

'The great thing about a booming economy is any dill can make money,' says the wry Noel Turnbull, chairman of Australia's biggest PR network, TurnbullPorter Novelli. 'Traditionally PR is counter-cyclical, but this growth period has been quite cyclical. It's had a significant impact on the industry's health.'

Although notoriously difficult to value - no figures are compiled by the Public Relations Institute of Australia - industry estimates value the sector between dollars 180 million (Adollars 300 million) and dollars 360 million. The Australian advertising sector, by comparison, is worth about dollars 5 billion.

(PRWeek has provided a table of the PR income for the top international firms, from its own research, plus estimates for PPR).

In PR terms Australia is a fragmented market. While the biggest international practices are all active - Burson's Australian operation, for instance, is the group's largest in the Asia-Pacific region - a strong line-up of mid-size single-city shops competes aggressively with multinational brands for local and offshore clients. In the next two years, several top global PR networks such as Hill & Knowlton, Edelman and Burson will be pushing for substantial new business through internationally aligned clients.

On the flipside, a number of independent local players are also looking to expand beyond their typical single-city focus in Melbourne or Sydney.

It is reminiscent of the national expansion activity that international firms undertook in the late '70s and early '80s before retreating to their Melbourne or Sydney strongholds. (Australia has seven states and territories, each with a capital city.)

In recent weeks, two major takeovers have been completed inside the top 10 Australian rankings. Edelman finalized its takeover of The Rowland Company in London, Singapore and Sydney, lifting the firm's Australian presence substantially. And The Communications Group - parent to advertising agency Bates Worldwide - last week acquired the largest remaining independent and number two player in the market, PPR.

Mirroring American and British trends, information technology has been by far the biggest growth area for Australian practices, spawning both specialized start-ups and rapidly expanding divisions inside the larger firms. Consumer relations, investor relations, issues management, government relations and sectors such as financial services and telecommunications have all, unsurprisingly, been key growth areas.

Mike Smith, Shandwick/IPR chairman and former editor of a Melbourne newspaper, says his firm has had particular success in litigation support. 'That trend has been helped along by white collar prosecutions,' he says.

Smith also notes a polarization between global companies and local corporations in the use of PR firms. 'Multinationals are showing a preference for common service styles and common brands around the world, while large Australian companies tend to cherry pick. They've got a much bigger emphasis on the individuals who do the work rather than the brand of the consultancy.

I know one very big corporation which has had seven PR consultants going in one year.'

Until 1997, Shandwick/IPR was Australia's biggest PR firm for three decades.

Although it is growing at a rate of more than 10% a year, several of its international rivals have shown faster growth.

Media makeup

The Australian PR market does have its nuances. A precious few media moguls control almost all the news outlets. There are just two newspaper proprietors - Rupert Murdoch's News Corp. and the old Fairfax family empire - which control all of the metropolitan press and most regional and rural mastheads. In a joint venture with Microsoft, Australia's other billionaire media tycoon, Kerry Packer, controls the top TV group, Network Nine; the biggest magazine publishing group, ACP; and the top ranking Internet portal, ninemsn. Packer and Murdoch are also partners in the leading national pay-TV operator, Foxtel.

Noel Turnbull, who sold a non-controlling stake in his company, Turnbull Fox Phillips, to Porter Novelli in 1997, says the nature of media ownership in Australia has greatly impacted local PR practice. He says it forced Australian firms to make early moves away from pure media relations and publicity services.

'Australian industry is very small but very sophisticated and leading-edge,' says Turnbull. 'In some markets, such as the UK and US, it's easy for a lot of practitioners to service entirely on the basis of media relations.

We also were at the forefront of the environmental tidal wave and consumer activism. If you look at anti-smoking, good health outcomes and environmentalism, Australian practitioners were dealing with those community relations problems long before people in some other markets were. We're very small but very mature. Consequently, our big focus is that interface between brand and corporate reputation.'

Royce Communications is one of the larger independents in the marketplace.

Five years ago it was 51% owned by Manning Selvage & Lee before chief executive Peter Mahon bought it back. Mahon didn't like the inflexibility of a global practice, dropped the word PR from the Royce marque and now wants to turn the company into a management consulting-cum-investment banking communications hybrid. Royce flagship clients include Nike, Siemens and the Commonwealth Bank.

'I can see Royce becoming a quasi-boutique investment bank,' he says.

'We're seeing a broadening of the scope of what people like us do and the delineation is becoming much fuzzier. I think that's a trend across all services. The advice an investment banker gives is something we could do. Defense of a public company, for example, requires strategic thinking: what the true value of a company is, how you communicate that value to existing shareholders, identifying a white knight that might come forward.'

The traditional PR stomping ground of media relations, Mahon says, is important to Royce, but he argues there is too much focus on it among his rivals.

H&K's joint managing director, Greg Ray, begs to differ. 'I don't want to deny the importance of high-end strategy, but I think it's very important the PR industry doesn't lose the fact that basics count,' he says. 'Media relations is still critically important, and if we think we can do our job outside the media or with less focus on the media, we're kidding ourselves.'

Corporate influence

The chief executive of the new Edelman/Rowland group in Australia, Sean Barrett, says the growth and increasing importance of corporate PR will see more ad agencies looking to enter the Australian market through acquisition in coming months - PPR and The Communications Group are just the first, he says. Barrett accepts the irony in Edelman's purchase of Rowland from Saatchi & Saatchi but says that was more an acknowledgment by the advertising group that it could not get the firms' synergies right. He says other ad companies will try PR because of declining margins in the ad business.

But the suggestion that marketing communications groups such as WPP and Omnicom have an advantage over PR specialists by leveraging their research and advertising capabilities is yet to be proved, according to Barrett.

'That makes sense when you're putting a case to market analysts as to why you need a conglomerate. But I see little evidence of them being able to cross-sell. There is still a huge knowledge gulf between advertising and PR. I suspect Saatchi might be out of phase with the rest of the market, but there's an element of honesty in that realization. The opportunity for us is that we will offer totally focused PR.'

And what of the Olympics? While many are enjoying the attention that the global competition brings to Australia, Parkinson expects significant activity after the Olympics because non-Olympic sponsors have been warehousing budgets for a late-year splurge.

AUSTRALIA PR AGENCY RANKINGS 2000

Ranking Agency Name Australian Income (dlrs) %

99 98 99 98 chge

1 1 Turnbull Porter Novelli 9,160,000 7,456,000 23

2 N/A PPR 9,000,000 N/A N/A

3 N/A Hill & Knowlton 8,000,000 N/A N/A

4 2 Burson-Marsteller 6,129,000 5,746,000 7

5 N/A Shandwick 6,122,000 N/A N/A

6 3 Edelman 2,591,748 2,573,192 1

7 4 GCI Group/APCO 1,348,733 438,848 207

8 6 Text 100 1,027,949 183,059 462

9 5 Cohn & Wolfe 546,000 268,000 104

10 7 Manning Selvage & Lee 41,800 41,800 0

TOTALS 17,807,230 9,250,899 92

Sources: PRWeek Top Agency Rankings; PRWeek UK European Rankings.

Auditing: Please refer to main chart on pages 30-31 for audit

information.

Notes: 2 PPR revenues are estimated 3 Hill & Knowlton revenues are

estimated 6 Edelman revenues do not include income from the Rowland

Company acquisition.







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