Midwest: Double billing

Business is booming for PR agencies in the Twin Cities.

Business is booming for PR agencies in the Twin Cities.

PR pros in the Twin Cities of Minneapolis and St. Paul, MN, have many reasons to smile.

Those who run firms are happy because business is up substantially - from 11% at Tunheim Partners to more than 30% at Karwoski & Courage and Carmichael Lynch Spong (CLS) - over 2004, which had itself shown improvement over 2003.

Moreover, margins on new business are holding steady or even rising, as firms no longer have to pitch business at cut-throat rates to stay in the game.

Business is coming from consumer goods, healthcare, and technology. Public affairs business is growing, as is nonprofit work, with several local cultural organizations preparing to open new facilities in the coming years.

Those who work in the region's diverse corporate base, which ranges from consumer goods and food to healthcare and manufacturing, are using PR more extensively, integrating it closely with company business and sales objectives.

"The days of just PR for PR's sake are long gone," says Pete Stoddart, PR director for Ceridian, an HR outsourcing firm. "PR is a business tool today."

As a result, says Anna Lovely, PR manager for Select Comfort, a major bedding maker in the area, "We have so many companies that are doing really interesting things."

Agencies and corporate departments have hired, and many are looking to hire more. "Everyone I talk to is hiring," says Kim Olson, PR director with General Mills, one of the region's major corporate employers. Olson has grown her department by two people, to 13, this year.

Job listings for the local PRSA chapter have increased, and chapter membership, another sign of the profession's health, is on the rise, rebounding to 400 after the chapter saw 100 people drop out in 2002 because of the recession.

Growing agency business

Twin Cities firms don't limit themselves to local markets when seeking new business. Many have more than half their income coming from outside the region.

But the local opportunities are there. Weber Shandwick, which has the market's largest PR operation, does extensive work for the US Treasury's direct deposit efforts, for example, from Minneapolis. It also has won new business with Opus, a major developer, and Stanlink, a local tech company, and it had its contract with the Treasury extended, notes Sara Gavin, president, Weber Shandwick Minneapolis.

CLS, which The Minneapolis-St. Paul Business Journal rates the second largest PR operation in Minneapolis, saw revenues jump 33% last year and is ahead of that pace in the first six months of this year, says Doug Spong, managing partner. It won a major housing client, the Del Webb brand of Pulte Homes, and a big assignment with Clorox. Agency head count is up 15%, and Spong is looking for six more to bring his total PR staff to 60.

Karwoski & Courage saw its business jump 30% last year and expects to exceed that rate this year as accounts won at the end of 2004 start filtering down to the bottom line, says MD Glenn Karwoski.

Padilla Speer Beardsley, which gets 45% of its revenues from outside the Twin Cities, is seeing a 15% increase this year. Lynn Casey, agency CEO, says the type of business she's getting shows how the economy is improving. The firm had been doing a great deal of critical issues and crisis work in the past three years. Today it's seeing more new product work and assignments that relate to growing a client's revenues.

Ad agency Colle & McVoy in April rebranded its PR operation as Exponent Public Relations to give it its own identity. Exponent's revenues are up 17% this year, thanks mainly to wins in the food and beverage sector, says MD Riff Yeager. The firm has made three hires, increasing its staff to 21, and will be hiring more. "There's more competition for good people now," Yeager says.

Tunheim Partners has been working with the Minnesota Twins to get a new stadium built in Minneapolis. The state legislature adjourned without deciding on allowing a new tax to fund the stadium, but a special session may take up the issue again in September, notes president Kathy Tunheim.

The firm also has seen business grow from client Target and its SuperTarget stores. While known for its marketing savvy, Target remains wary of discussing its marketing strategies, Tunheim notes.

Smaller firms also are doing well. Haberman & Associates, which specializes in cause-related work, has seen revenues climb 20% in the first half of 2005.

Corporate heavyweights

General Mills remains the 900-pound gorilla of the Twin Cities food sector, and its brand PR continues to expand.

It garnered 9 billion media impressions for its fiscal year ending in June, compared with 4.5 million the year before, Olson notes. It worked with Rogers & Cowan out of LA for a celebrity influencer program for its Chocolate Lucky Charms and is doing more product placement.

General Mills' spending with agencies is up, Olson says. It works with 10 to 12 agencies at any given time. On the corporate side, the company launched a controversial effort earlier this year to defend the role of cereals in breakfasts, even as critics contend that American children are eating too much pre-sweetened cereal and other treats.

Conglomerate 3M is doing more with PR across the company, says Helen Wagner, manager of PR. Specific uses vary by business line and product.

Best Buy has been focusing on redefining itself as more customer-focused. "Everyone in the company is touching that" customer-centric philosophy, says Kelly Groehler, manager of corporate PR. The company wants people to think of it not as a big-box retailer but as a retailer that asks, "What do you need from us as a company?" she says.

Select Comfort has been increasing PR spending for the past five years, says Lovely. This year, it's increasing community relations efforts, such as a program that puts its mattresses in Ronald McDonald Houses around the country. It's also started a media relations campaign telling consumers what to consider when buying a mattress and is working to put its Sleep Number mattress in Radisson hotels. It has a new sleeper-sofa coming out and is using a contest searching for America's sleepiest couple to promote that. It's also been using LA agency Hero to handle product placement on TV design shows.

US Bancorp handles PR for the 24 states it serves, with a five-person internal staff in its Minneapolis corporate headquarters and no agency help. It's been working nationally this year to alert customers about the dangers of identity theft, says Steve Dale, SVP and director of media relations. It also has been doing media training with bank employees in various markets, providing a local face to connect the bank with the community. "We are going to give the media a local representative as many times as we possibly can," Dale says.

Ceridian concentrates on b-to-b efforts and analyst relations, says Stoddart. "Our major focus is to generate PR to help drive sales," he says. Sales staff use company press releases in prospect presentations, for example.

The media environment

"It's always been a two newspaper market," says WS' Gavin of the Twin Cities' print scene.

The Minneapolis Star Tribune is the dominant newspaper, but the St. Paul Pioneer Press is owned by Knight Ridder, so stories placed there can be picked up by its other papers, notes Fred Haberman, president of Haberman & Associates. Clients also want to be in the Minneapolis-St. Paul Business Journal, he notes.

The local TV scene is usually a horse race for ratings between CBS-affiliated WCCO and NBC's KARE11.

The Twin Cities are also a big radio market, with Minnesota Public Radio and Public Radio International, which produces programming for other public stations, notes Gavin, who is on the board for Minnesota Public Radio.

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