MARKET FOCUS LOS ANGELES: From sitcom to dot-com - Los Angeles PR agencies are well known for their work in entertainment and not much else. But as David Ward discovers, that’s all beginning to change

For years the attitude on the East Coast was that Los Angeles was fine for movies and sun, but if you wanted real business done, you’d better stick with New York. Despite a steadily growing populace and billions invested in a subway system and other infrastructure, the city couldn’t shake its image as a series of disparate communities connected by an overcrowded highway system. And when Los Angeles did finally step on the global media stage, it was more often than not for negative images, such as the 1992 riots or the OJ Simpson trial.

For years the attitude on the East Coast was that Los Angeles was fine for movies and sun, but if you wanted real business done, you’d better stick with New York. Despite a steadily growing populace and billions invested in a subway system and other infrastructure, the city couldn’t shake its image as a series of disparate communities connected by an overcrowded highway system. And when Los Angeles did finally step on the global media stage, it was more often than not for negative images, such as the 1992 riots or the OJ Simpson trial.

For years the attitude on the East Coast was that Los Angeles was

fine for movies and sun, but if you wanted real business done, you’d

better stick with New York. Despite a steadily growing populace and

billions invested in a subway system and other infrastructure, the city

couldn’t shake its image as a series of disparate communities connected

by an overcrowded highway system. And when Los Angeles did finally step

on the global media stage, it was more often than not for negative

images, such as the 1992 riots or the OJ Simpson trial.



But finally that’s beginning to change. Thanks in some part to an

emerging dot-com industry, as well as its growing role as the gateway to

the Far East and the Southern hemisphere, Los Angeles is evolving from

an entertainment-driven city into a truly national hub that may

eventually rival New York.



The PR industry is one of the biggest beneficiaries of the region’s

evolution.



The top 41 agencies in LA that gave revenue figures to PRWeek billed

over dollars 174 million last year, up 33% over 1998. Only six of the

top 41 firms experienced flat or negative earnings. ’This is without a

doubt the most exciting time ever within the PR industry, particularly

in California,’ notes Sean Fitzgerald, director of Ketchum Los

Angeles.



That’s not to say that the image of the city as the entertainment

capital needs to be discarded. But as Fitzgerald says, ’It’s

entertainment in a much broader interpretation of the word, especially

in the area where entertainment and technology converge.’





A tough market to crack



This maturation is encouraging more firms to finally set up offices in

the area and for national agencies to beef up their presence. But Dawn

Wilcox, general manager of Deen & Black’s LA office, says it can be a

tough market to crack. Sacramento-based Deen & Black had a staggering

1,275% growth in 1999 to dollars 52,748 in billings, in part because of

client wins such as the LA Police Department’s campaign on 411

alternatives.



But, Wilcox says, ’It’s taken us two years to get on the list of

agencies that people now consider.’



Others note that the overall PR climate in the area still has a ways to

go. Part of the problem is the continued shortage of skilled

professionals, a local variation on a national theme. But compounding

that is LA’s sheer size. ’The LA PR community has done a very poor job

in building an infrastructure that nurtures professional development and

talent,’ says Don Spetner, formerly SunAmerica’s vice president of

corporate communications and now a consultant. ’Just by its geographic

nature, we have difficulty getting together. Whatever location you pick,

you’re going to alienate 50% of the people.’



LA is going from sitcom to dot-com. As in virtually every other major

city, the Internet is spurring much of the growth in LA PR these

days.



’LA was a little bit late to the party in the venture capital and

dot-com world, but it’s hit with a vengeance,’ says Spetner. ’There’s a

lot of money flowing into the area for start-ups and few established PR

firms to take advantage of it.’ The result has been that PR agencies

large and small can tout at least some Internet or tech-related

business.



And in some ways the Internet’s delayed impact on the LA PR scene had

its advantages. ’We’ve benefited from the second wave of Internet

companies, the b-to-b wave,’ explains David Paine, president of Paine

and Associates, which saw 27% growth in 1999, to nearly dollars 1.4

million. ’These companies tend to be a lot more stable, and many of them

have learned lessons from the first start-ups.’





Diversifying clients



PR agencies are learning similar lessons. ’We turn down five times as

many of the dot-coms as we take,’ says Rhonda Brauer, managing director

of Burson-Marsteller’s LA office, who adds that she’s not so certain

other firms are as discriminating. Burson had only 6% growth in 1999, to

dollars 8.6 million, but Brauer insists that was due to a disciplined

focus rather than a lack of new opportunities. Brauer touts Burson’s

recent win of Tiffany & Co. as proof that the agency is not looking just

to the Internet for growth. ’If 100% of your new business book is

dot-coms, you’re in trouble,’ she adds.



This entertainment/technology convergence is moving PR firms with

multiple specialties into new roles. ’We have blended teams that can

serve as a bridge between corporate and tech clients and the

entertainment community at large,’ says Ketchum’s Fitzgerald, citing

client Mattel as an example.



Not to be lost amid the hype is how LA is being redefined as a national

and international PR center. ’We’re attracting an awful lot of companies

that are not based here,’ a departure from the past, notes Paine. ’We

work with GTE in Dallas, we’ve picked up a piece of Verizon’s business,

also based in Dallas, and we’ve got Iomega.’



The LA office of Kratz & Jensen, now part of Magnet Communications, saw

business rise 86% in 1999, thanks in large part to national restaurant

accounts such as Jamba Juice and Einstein Bros. Bagels. The company

services part of these accounts by outsourcing work to PR firms in the

targeted local markets, says Magnet senior vice president Jeff

Smith.



LA PR firms have long benefited from the city’s role as one of the

gateways to the Far East, but now they are beginning to reap other

international business. For example, Golin/Harris has picked up Nintendo

Europe and part of the Nintendo Australia account to add to its Nintendo

of America work. It also won the global account for the launch of Lego’s

new MyBots computerized toy line. These wins helped fuel an impressive

39% growth in 1999 and made the agency boost its LA staff from 50 in

1998 to 80 today, says Fred Cook, general manager of the LA office.





Invading the ethnic markets



LA has long been known for its diversity, but until recently most of the

major firms left the ethnic markets to specialty shops such as Imada

Wong, Lagrant Communications and Durazo Communications. But that too is

beginning to change. ’More and more of the big companies are realizing

that niche markets, and specifically the ethnic markets, are viable long

term,’ says Lagrant CEO Kim Hunter, adding, ’I think the new census data

is going to shock people.’



Yet, two of the firms with a distinct ethnic slant, Imada Wong (Asian

American) and Durazo (Hispanic), were among the handful of firms that

fell off last year after a strong 1998.



While attributing the yearly decline primarily to a one-off account that

inflated the 1998 number, executive vice president Dan Durazo says

growth in the ethnic PR market has been steady rather than spectacular.

He says business has been picking up recently, citing dollars 300,000 in

June billings, including a contract to raise the profile of the CART

auto racing series among the Latino audience.



Further validation for this market came when TrueNorth acquired 49% of

Imada Wong. ’The trend is to buy only a minority stake,’ explains CEO

Bill Imada. ’Not only does that allow the agency to be a little bit more

independent and entrepreneurial, it also allows you to continue to

qualify for minority- and women-owned business enterprise status.’



Given the changes the region has undergone, it’s appropriate that LA be

given a chance to shine in the national spotlight early in this new

decade. That chance will come next month at the Democratic National

Convention.



Many PR firms are doing pro bono work for the gathering, such as helping

to organize parties and other events.



’It’s a huge opportunity to polish LA’s image,’ Spetner says.



Not all agree that the 10 days in the spotlight will make a long-term

difference, but others contend the convention may be just what the city

needs to get more people to take a second look at the town and its PR

community.



LOS ANGELES KINGS: LOS ANGELES PR AGENCIES


 Rank    Agency Name            Audit      LA income (dollars)    Growth

99  98                                         1999         1998     (%)

1   10   Ketchum*                   Y    15,948,000    5,100,000     213

2   2    Shandwick                  Z    15,403,000   11,899,000      29

3   1    Hill and Knowlton          Z    13,600,000   12,300,000      11

4   3    Manning, Selvage           Z    13,415,000   11,667,000      15

         & Lee

5   4    Fleishman-Hillard**        Y    11,562,000    9,543,000      21

6   23   Ogilvy***                  Z    10,915,800    1,485,400     635

7   6    Golin/Harris               Z    10,875,507    7,800,000      39

8   8    BSMG                       Y     9,350,393    6,457,200      45

9   5    Burson-Marsteller          Z     8,577,000    8,117,000       6

10  7    Rogers & Associates        Y     8,193,894    7,100,000      15

11  9    Bragman Nyman              Y     7,166,000    5,439,000      32

         Cafarelli

12  11   Porter Novelli             X     5,006,000    4,700,000       7

13  12   Murphy O’Brien             Y     4,370,000    3,800,000      15

14  17   The Bohle Company          Y     4,217,222    3,133,403      35

15  16   Edelman                    Y     3,745,381    3,136,528      19

16  13   Fischer & Partners         X     3,586,209    3,662,850      -2

17  14   Bender/Helper Impact       Y     3,449,842    3,481,591      -1

18  15   Cerrell Associates         X     3,331,466    3,328,148       0

19  18   mPRm Public Relations      Z     3,100,000    2,700,000      15

20  19   The Phelps Group           Z     2,463,000    2,181,000      13

21  25   Cohn & Wolfe               Y     1,853,000    1,399,000      32

22  21   Power PR                   X     1,801,179    1,583,362      14

23  26   GCI Group                  Z     1,644,819    1,107,983      48

24  N/A  The MWW Group              X     1,633,102          N/A     N/A

25  22   Smith Pub. Relations       X     1,578,961    1,562,990       1

26  N/A  The Blaze Company          Z     1,550,000          N/A     N/A

27  27   Paine & Associates         Y     1,371,002    1,082,210      27

28  N/A  Incepta (Citigate          Z     1,263,838          N/A     N/A

         Dewe Rogerson)

29  24   Durazo Communications      Z     1,223,731    1,453,155     -16

30  28   Valencia, Perez            Y     1,221,931      866,112      41

         & Echeveste

31  20   Imada Wong                 Y     1,110,000    1,826,000     -39

         Communications

32  31   Kratz & Jensen             Y       982,401      528,075      86

33  32   Ruder Finn                 Z       718,000      481,000      49

34  30   Spelling Comm.             Z       659,524      594,000      11

35  29   Agnes Huff Comm. Grp       Z       650,000      650,000       0

36  33   Russ Reid                  Z       400,000      376,000       6

37  34   Brigham Scully             Z       351,279      349,404       1

38  N/A  The Kamber Group           Z       225,000          N/A     N/A

39  35   The Gable Group            Z       224,656      193,249      16

40  N/A  Carter Ryley Thomas        X       122,520          N/A     N/A

41  36   Deen & Black               X        52,748        3,837   1,275

         Totals                         174,118,945  131,087,497      33


 Rank    Agency Name             US income    LA%       US income    LA%

99  98                       (dollars)1999     99   (dollars)1998     98

1   10   Ketchum*              123,630,000     13     101,485,000      5

2   2    Shandwick             153,429,000     10      91,485,000     13

3   1    Hill and Knowlton     138,140,000     10     113,000,000     11

4   3    Manning, Selvage       62,628,000     21      50,173,300     23

         & Lee

5   4    Fleishman-Hillard**   181,152,000      6     136,272,000      7

6   23   Ogilvy***              92,220,200     12      54,457,700      3

7   6    Golin/Harris           55,100,751     20      48,500,000     16

8   8    BSMG                  122,062,000      8     109,573,000      6

9   5    Burson-Marsteller     164,850,000      5     142,815,000      6

10  7    Rogers & Associates     8,193,894    100       7,100,000    100

11  9    Bragman Nyman           7,166,000    100       5,439,000    100

         Cafarelli

12  11   Porter Novelli        106,606,000      5      79,522,000      6

13  12   Murphy O’Brien          4,370,000    100       3,800,000    100

14  17   The Bohle Company       4,217,222    100       3,133,403    100

15  16   Edelman               128,174,735      3     101,868,218      3

16  13   Fischer & Partners      3,586,209    100       3,662,850    100

17  14   Bender/Helper Impact    4,928,346     70       4,797,011     73

18  15   Cerrell Associates      3,331,466    100       3,328,148    100

19  18   mPRm Public Relations   4,100,000     76       3,400,000     79

20  19   The Phelps Group        2,463,000    100       2,181,000    100

21  25   Cohn & Wolfe           30,230,000      6      25,982,000      5

22  21   Power PR                1,801,179    100       1,583,362    100

23  26   GCI Group              65,511,850      3      44,539,245      2

24  N/A  The MWW Group          27,002,400      6      17,220,267    N/A

25  22   Smith Pub. Relations    1,578,961    100       1,562,990    100

26  N/A  The Blaze Company       1,550,000    100             N/A    N/A

27  27   Paine & Associates      4,564,936     30       3,588,698     30

28  N/A  Incepta (Citigate      23,509,066      5      23,514,000    N/A

         Dewe Rogerson)

29  24   Durazo Communications   1,223,731    100       1,453,155    100

30  28   Valencia, Perez         1,221,931    100         866,112    100

         & Echeveste

31  20   Imada Wong              1,324,000     84       2,295,000     80

         Communications

32  31   Kratz & Jensen          7,747,369     13       6,192,972      9

33  32   Ruder Finn             53,408,000      1      45,601,000      1

34  30   Spelling Comm.            659,524    100         594,000    100

35  29   Agnes Huff Comm. Grp      650,000    100         650,000    100

36  33   Russ Reid               1,752,000     23       1,421,000     26

37  34   Brigham Scully            351,279    100         349,404    100

38  N/A  The Kamber Group        9,225,600      2      12,215,000    N/A

39  35   The Gable Group         2,583,366      9       2,324,328      8

40  N/A  Carter Ryley Thomas     6,124,194      2       4,462,275    N/A

41  36   Deen & Black            3,126,917      2       2,349,347      0

         Totals              1,548,083,866     11   1,207,345,243     11


 Rank    Agency Name                        Location

99  98

1   10   Ketchum*                           Los Angeles

2   2    Shandwick                          Los Angeles

3   1    Hill and Knowlton                  Los Angeles

4   3    Manning, Selvage & Lee             Los Angeles

5   4    Fleishman-Hillard**                Los Angeles

6   23   Ogilvy***                          Los Angeles

7   6    Golin/Harris                       Los Angeles

8   8    BSMG                               Los Angeles

9   5    Burson-Marsteller                  Los Angeles

10  7    Rogers & Associates                Los Angeles

11  9    Bragman Nyman Cafarelli            Beverly Hills

12  11   Porter Novelli                     Los Angeles

13  12   Murphy O’Brien                     Santa Monica

14  17   The Bohle Company                  Los Angeles

15  16   Edelman                            Los Angeles

16  13   Fischer & Partners                 Marina del Rey

17  14   Bender/Helper Impact               Los Angeles

18  15   Cerrell Associates                 Los Angeles

19  18   mPRm Public Relations              Los Angeles

20  19   The Phelps Group                   Santa Monica

21  25   Cohn & Wolfe                       Los Angeles

22  21   Power PR                           Torrance

23  26   GCI Group                          Los Angeles

24  N/A  The MWW Group                      Los Angeles

25  22   Smith Pub. Relations               Los Angeles

26  N/A  The Blaze Company                  Venice

27  27   Paine & Associates                 Beverly Hills

28  N/A  Incepta (Citigate Dewe Rogerson)   Los Angeles

29  24   Durazo Communications              Los Angeles

30  28   Valencia, Perez & Echeveste        Pasadena

31  20   Imada Wong Communications          Los Angeles

32  31   Kratz & Jensen                     Los Angeles

33  32   Ruder Finn                         Los Angeles

34  30   Spelling Comm.                     Los Angeles

35  29   Agnes Huff Comm. Grp               Los Angeles

36  33   Russ Reid                          Pasadena

37  34   Brigham Scully                     Woodland Hills

38  N/A  The Kamber Group                   Los Angeles

39  35   The Gable Group                    Santa Monica

40  N/A  Carter Ryley Thomas                West Hollywood

41  36   Deen & Black                       Santa Monica

         Totals


Source: PRWeek 2000 Agency Rankings

Auditing:

X denotes a full audit or review;

Y compilation audit;

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

A random audit process will be used for agencies providing unaudited

figures.

* includes Ketchum/Sheppard Associates (Glendale, CA)

** includes San Diego office

*** includes Alexander Ogilvy and Baker Winoker Ryder, acquired in 1999

sold in April 1999



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