MARKET FOCUS TEXAS: It’s hot in Texas - Texas PR is hot right now, but which city is the hottest? Sherri Deatherage Green explores whether Austin is the new PR capital or if all the talk is just, well, PR

If perception is reality, then Austin is the capital of more than just government in Texas.

If perception is reality, then Austin is the capital of more than just government in Texas.

If perception is reality, then Austin is the capital of more than

just government in Texas.



The once-sleepy, once-funky college city now courts the Silicon Hills

image. Hi-tech start-ups and the PR firms that serve them flock to

Austin in droves, some say insidiously destroying the charm that

attracted them.



Statistics support Austin’s reputation as a hotbed of hi-tech upstarts,

but they show it lagging behind Dallas and Houston in overall PR

revenue.



On the other hand, PriceWaterhouseCoopers’ MoneyTree Web site ranked the

Texas region seventh in US venture capital investment for the first

quarter of 2000, and of the dollars 769 million pumped into Texas, about

44% went to Austin, 32% to Dallas and 22% to Houston.



Based on revenue reported by the 36 Texas PR firms that provided

figures, Dallas accounted for almost half of the dollars 72 million

earned in Texas during 1999, with Houston contributing 29% and Austin

18%. Austin’s PR revenue growth rate of 48%, however, eclipsed the

statewide average of 34% (which is six points higher than the national

average).



Dallas loyalists claim their city employs 100,000 more hi-tech workers

than Austin, generally in longer-established companies. ’I think Austin

is still finding itself in terms of true success in the hi-tech

industry,’ comments Glenn Abel, president of Dallas-based Springbok

Technologies.



Dallasites rightly boast a more diverse economy. So why does Austin get

all the good press? ’Austin has done a much better job of marketing

itself compared to Dallas,’ says Don Bartholomew, general manager of

Alexander Ogilvy’s Dallas outpost and former head of Cunningham’s Austin

operation.



Much of the credit goes to the Austin Chamber of Commerce, which was

chaired by PR entrepreneurs at least twice during the 1990s. A 1980s

economic development study led the chamber and city to focus on economic

development through technology, says PR pro Kerry Tate, who chaired the

chamber in 1996. Two-term mayor Kirk Watson also has become head

cheerleader for Austin as a tech capital, adds 1991 chamber chairwoman

Carol Thompson of the Thompson Group.





Hotter, wetter and much, much cooler



PR pros say the prevailing attitude in Austin is friendly and

collaborative.



And although the city is often hotter than Dallas and on some days

nearly as humid as Houston, firms have less trouble recruiting talent to

scenic Central Texas. ’Austin also has a cool factor that Dallas

doesn’t,’ Bartholomew notes.



Most of the big names in hi-tech PR have staked claims in Austin, but

some say the indigenous population hasn’t benefited that much. Wages

historically have been stymied by government pay scales and the

willingness of freshly minted UT grads to take low-paying jobs. A pay

chasm seems to have developed between traditional fields and the

technology realm. Tate, president of TateAustin, perceives a bias

against people with public sector or nonprofit backgrounds. ’They think

you don’t get it,’ she says. Government communicators can break into

hi-tech if they are willing to learn a new language and step a few rungs

down the career ladder, she adds.



With unemployment at less than 2%, finding qualified people in Austin

can be a challenge. Several firms, however, have found that employees

seeking quality of life and a relatively affordable cost of living

eagerly transfer from places like San Francisco and Boston. ’In Silicon

Valley, people live to work. In Austin, people work to live,’ says Cindy

Johnson, director of Blanc & Otus’ new Austin office. Most firms say

they are willing to train, but Johnson admits B&O wants employees who

can hit the ground running. ’Clearly, people who have been in Austin for

a while just don’t have that,’ Johnson opines. B&O still hasn’t hired a

general manager for the eight-month-old office, despite rumors that the

company is offering a salary considered lofty even in higher-rent

cities.



Cunningham’s reorganized operation continued to lead the Austin pack in

1999 with revenues of dollars 7.3 million. Tate dropped its advertising

and marketing functions last year and finished in second place with

dollars 3.3 million.



Companies with a few years in the local market, including Socket,

Springbok and Lois Paul, posted revenues in the dollars 1 million to

dollars 2 million range.



A few 1999 entrants, Weber and Vollmer for example, couldn’t report a

full-year’s income.



Niehaus Ryan Wong hung out a shingle in Austin this month, while Dallas’

Shelton Communications and Houston’s Pierpont Communications will open

offices by Aug. 1. Also planning invasions before year’s end are

Burson-Marsteller and London-based Lewis.



Hi-tech and government interests historically haven’t mixed, Tate

notes.



’For a long time, you could not have handcuffed and dragged a technology

CEO to the state Capitol (building),’ she says. ’They didn’t speak the

same language.’ But with hi-tech coffers fattening, the Microsoft ruling

causing hands to wring and the Bush campaign poking holes in Austin’s

long-held reputation as a liberal oasis, the two camps are paying more

attention to each other. ’The politicians are tripping over themselves

to get tech money,’ Tate observes.



Public affairs has long been a key element of Austin’s PR scene, with

influence generally wielded in back rooms. ’It’s still sort of an

insider’s game here,’ admits Bill Miller of HillCo Partners.



Some consider Public Strategies Inc. (PSI) to be the dominant player in

Austin public affairs and its founder, Jack Martin, among the city’s

most low-key practitioners. Clients include heavyweights such as SBC,

TXU (formerly Texas Utilities) and Bank of America. The firm isn’t

comfortable with the PR label, although many of its services fall

squarely within that realm. It also shunned lobbying until it brought

veteran lobbyist Rusty Kelly and his five-person team into the fold this

month. ’We are not by any means going to become a lobby shop,’ stresses

managing director Elyse Yates. PSI prefers to focus on strategic

consulting and grass-roots campaigns. A growing staff of 135 is led by

CEO Mark Rose, hired away from the Lower Colorado River Authority this

spring, with Martin as chairman.



Some firms see opportunity in the gap between PSI and Austin’s

small-but-influential public affairs operations. Fleishman-Hillard plans

to use its recent win of the regional AARP account as a springboard for

more Texas public affairs work, says regional president Janise Murphy.

’Texas has become a bellwether state for a lot of public policy issues,’

adds Burson’s managing director, Michael Lake. Burson slipped quietly

into Dallas 15 months ago and has built up a client base including AMR,

Greyhound and Alcatel. Lake says the company will set up shop in Austin

before the biennial legislative session begins in January.





The biggest country club in the US



In Dallas, many say referrals have replaced RFPs as the primary means

for gaining new business. ’Everybody’s turning away work,’ says

Edelman’s managing director Sam Falcona. Retail, telecom, transportation

and hi-tech business in Dallas affords a broader array of PR

opportunities. Dallas’ movers and shakers are very well networked,

observes Brian Cummings of the 19-month-old Cummings McGlone agency.

’One of our clients calls it the biggest country club in the United

States.’



Big Texas companies made few agency switches in 1999. Many, like

Southwest Airlines, AMR and RadioShack, rely primarily on in-house

staffs. Fleishman still banks on Dell, SBC, Nortel and several other big

names. Some PR uncertainty surrounds Irving-based GTE’s recent merger

with Bell Atlantic.



The new entity, Verizon, is organizing in-house staff from both

companies, and the status of agency relationships is yet to be resolved.

Springbok and Burson are among agencies working on GTE projects.



Texas’ biggest account upheavals in 1999 involved Shandwick’s Houston

outpost. The global firm dropped Compaq in favor of Hewlett-Packard,

which is served primarily out of California. Hill & Knowlton then picked

up Compaq. Shandwick’s Houston office went from being a one-client shop

in October to serving a diversified customer base, says VP Jean

Gonsoulin. BMC Software was its biggest win for the year.



The MoneyTree breakdown reveals Houston’s venture capital investments to

be fewer but often larger than those in Austin and focused on new media

and industrial applications. Dallas, meanwhile, attracts more than twice

the telecom money Austin gets. So far, Texas PR agencies report no ill

effects of the spring slump in dot-com stocks.



While Austin’s rep as a blazing start-up market is well earned, Murphy

says Fleishman’s growth is fueled by technology in all of its Texas

markets.



’Technology opportunities are everywhere,’ she observes.



BIG AND BRIGHT: TOP TEXAS PR AGENCIES


Ranking  Agency Name              Audit     TX income (dollars)   Growth

99  98                                          1999        1998       %

1   1    Fleishman-Hillard            *   10,494,000   8,263,000      27

2   3    Cunningham Comms.            *    7,329,288   4,911,000      49

3   N/A  Springbok Technologies       Y    5,810,571         N/A     N/A

4   5    Vollmer                      *    5,020,282   3,496,785      19

5   8    Shandwick International      X    5,008,000   2,713,000      85

6   3    BSMG Worldwide               *    4,582,343   4,523,900       1

7   7    Edelman Worldwide*           *    4,286,424   2,887,023      48

8   4    Publicis Dialog              *    3,604,436   4,017,400     -10

9   6    TateAustin                   X    3,290,000   2,950,000      12

10  12   Fogarty Klein Monroe         *    2,583,689   1,790,293      44

11  10   Pierpont Communications      *    2,537,308   1,946,132      30

12  11   Hill & Knowlton              X    2,287,000   1,795,000      27

13  27   Ogilvy PR Worldwide          X    2,117,900     274,900     670

14  9    Dawson/Duncan Comms.         X    2,033,000   1,982,000       3

15  19   Lois Paul & Partners         *    1,816,065     753,174     141

16  20   Shelton Comms. Group         X    1,663,957     693,536     140

17  14   Sunwest Communications       X    1,558,000   1,449,000       8

18  13   MCC                          X    1,500,000   1,500,000       0

19  N/A  Golin/Harris International   X    1,354,000         N/A     N/A

20  15   Dublin & Associates          X    1,333,313   1,196,228      11

21  N/A  The Tate Agency              X    1,300,000         N/A     N/A

22  16   Levenson Public Relations    X    1,002,984     988,431       1

23  17   Ketchum                      *    1,000,000     900,000      11

24  24   Socket Public Relations      X      935,578     406,704     130

25  18   Byrne-Johnson                X      929,020     814,137      14

26  23   Gibbs & Soell                Y      878,200     641,000      37

27  21   Ward Creative Comms.         *      827,918     673,577      23

28  22   Brinker Communications       *      798,173     659,701      21

29  N/A  Burson-Marsteller **         X      681,930         N/A     N/A

30  29   Cummings McGlone **          X      678,311      73,788     819

31  N/A  The Hart Agency              X      551,096         N/A     N/A

32  26   Ackermann Public Relations   Y      413,570     298,583      39

33  N/A  Corporate Technology Comms   X      365,000         N/A     N/A

34  28   Stuart Bacon                 X      359,000     152,500     135

35  N/A  Weber PR Worldwide**         *      333,708         N/A     N/A

36  25   Morgen-Walke                 X      242,920     372,061     -35

    TOTALS                                71,110,679  53,122,853      34


                                     US income           US income

Ranking  Agency Name                 (dollars)   TX%     (dollars)   TX%

99  98                                    1999    99          1998    98

1   1    Fleishman-Hillard         181,152,000     6   136,272,000     6

2   3    Cunningham Comms.          23,379,560    31    20,437,000    24

3   N/A  Springbok Technologies      5,810,571   100     2,636,972   N/A

4   5    Vollmer                     5,020,282   100     3,496,785   100

5   8    Shandwick International   153,429,000     3    91,485,000     3

6   3    BSMG Worldwide            122,062,000     4   109,573,000     4

7   7    Edelman Worldwide*        128,174,735     3   101,868,218     3

8   4    Publicis Dialog            23,505,716    15    11,403,700    35

9   6    TateAustin                  3,290,000   100     2,950,000   100

10  12   Fogarty Klein Monroe        2,583,689   100     1,790,293   100

11  10   Pierpont Communications     2,537,308   100     1,946,132   100

12  11   Hill & Knowlton           138,140,000     2   113,000,000     2

13  27   Ogilvy PR Worldwide        92,220,200     2    54,457,700     1

14  9    Dawson/Duncan Comms.        2,033,000   100     1,982,000   100

15  19   Lois Paul & Partners       16,243,872    11    13,521,975     6

16  20   Shelton Comms. Group        1,663,957   100       693,536   100

17  14   Sunwest Communications      1,558,000   100     1,449,000   100

18  13   MCC                         1,500,000   100     1,500,000   100

19  N/A  Golin/Harris Int’l         55,100,751     2    48,500,000   N/A

20  15   Dublin & Associates         1,333,313   100     1,196,228   100

21  N/A  The Tate Agency             1,300,000   100           N/A   N/A

22  16   Levenson Public Relations   1,002,984   100       988,431   100

23  17   Ketchum                   123,630,000     1   101,485,000     1

24  24   Socket Public Relations     2,835,789    33     2,423,180    17

25  18   Byrne-Johnson              929,020,00   100    814,137,00   100

26  23   Gibbs & Soell              12,793,000     7    11,689,000     5

27  21   Ward Creative Comms.          827,918   100       673,577   100

28  22   Brinker Communications        798,173   100       659,701   100

29  N/A  Burson-Marsteller **      164,850,000     0   142,815,000   N/A

30  29   Cummings McGlone **           678,311   100        73,788   100

31  N/A  The Hart Agency               551,096   100           N/A   N/A

32  26   Ackermann Public Relations  4,017,529    10     2,129,481    14

33  N/A  Corporate Technology Comms  4,645,000     8     1,367,000   N/A

34  28   Stuart Bacon                  359,000   100       152,500   100

35  N/A  Weber PR Worldwide**       76,760,938     0    57,886,543   N/A

36  25   Morgen-Walke               25,895,289     1    23,143,604     2

    TOTALS                       1,073,593,645     7   813,254,966     7


Ranking  Agency Name                   Location

99  98

1   1    Fleishman-Hillard             Dallas/Austin/Houston/San Antonio

2   3    Cunningham Comms.             Austin

3   N/A  Springbok Technologies        Austin/Richardson

4   5    Vollmer                       Houston/Dallas

5   8    Shandwick International       Houston

6   3    BSMG Worldwide                Irving

7   7    Edelman Worldwide*            Dallas/Austin/Houston

8   4    Publicis Dialog               Dallas

9   6    TateAustin                    Austin

10  12   Fogarty Klein Monroe          Houston/Dallas/Austin

11  10   Pierpont Communications       Houston

12  11   Hill & Knowlton               Houston

13  27   Ogilvy PR Worldwide           Dallas

14  9    Dawson/Duncan Comms.          Dallas

15  19   Lois Paul & Partners          Austin

16  20   Shelton Comms. Group          Dallas

17  14   Sunwest Communications        Dallas

18  13   MCC                           Dallas

19  N/A  Golin/Harris International    Dallas/Houston

20  15   Dublin & Associates           San Antonio

21  N/A  The Tate Agency               Houston

22  16   Levenson Public Relations     Dallas

23  17   Ketchum                       Dallas

24  24   Socket Public Relations       Austin

25  18   Byrne-Johnson                 Dallas

26  23   Gibbs & Soell                 Houston/Kingwood

27  21   Ward Creative Comms.          Houston

28  22   Brinker Communications        Dallas

29  N/A  Burson-Marsteller **          Dallas

30  29   Cummings McGlone **           Dallas

31  N/A  The Hart Agency               Dallas

32  26   Ackermann Public Relations    Dallas

33  N/A  Corporate Technology Comms    Austin

34  28   Stuart Bacon                  Fort Worth

35  N/A  Weber PR Worldwide**          Austin

36  25   Morgen-Walke                  Dallas


Source: PRWeek 2000 Agency Rankings

Auditing: Y denotes a full audit or review; * compilation audit;

X unaudited statements approved by either the CFO or CEO/partner.

A random audit process will be used for agencies providing unaudited

figures.

*Opened Austin & Houston offices 1999

**Office opened in mid-1999

**Agency opened May 1998



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