REGIONAL FOCUS: Southeast: a revival of sorts

A surge in late 2002 has the Southeast's PR firms optimistic about the year ahead.

A surge in late 2002 has the Southeast's PR firms optimistic about the year ahead.

""Cautious optimism" seems to be the overriding theme of agencies in the Southeast region. It's not surprising, since PR people aren't paid to look at a glass as half-empty. If they were, they'd be in another business. Reviewing the past year, agency reports revealed a mosaic of revenues: many up and some down, but everyone is holding their own for the most part. The "hot" sectors seem to be those where the agency has a specific area of expertise. If anyone is looking for startling news, they won't find it here. No agency reported a booming profit, a boast that would have been out of step with the rest of the nation, for sure. The aftermath of September 11 affected the first part of 2002, but agencies experienced a surge in the third and fourth quarters, leading to renewed confidence for 2003. Yet, no one dared stick out their neck to predict a rosy year. An uncertain economy, impending military actions (pick one: Iraq or North Korea), oil shortages (pick one: Venezuela or Iraq), and state budget deficits (pick any state) were all cited as reasons not to be overly buoyant about the future. Still, everyone forecasts modest growth while secretly hoping for a tsunami of new business. But the confounding economy caused agencies to come under more client scrutiny: They want to know what to expect for their dollars. Joe Gallehugh, president of Trone PR in Greensboro, NC, notes, "Clients are asking for more accountability. It is a necessary part of this emerging economy right now. Everyone is looking to get more out of the dollars they spend. They are also looking for a more integrated marketing approach." Trone, which had $2.4 million in revenues in 2001, expects to report about the same figures for 2002. Phil McAdams, president of Greensboro, NC-based Wrangler Western, says it has been a year of reorganization. "We have a lot of talent in this company that we want to fully utilize. We look at our PR relationship the same way. We want to understand what they can do for us and how best to utilize them to grow our business." Wrangler, a manufacturer of outdoor wear, uses French/West/Vaughn (FWV) in Raleigh, NC. "We will use PR more, but it will be more focused, " McAdams adds. In the past, he says, the agency would report on media placements or special events. Now they are being asked to contribute to sales and consumer motivational programs. McAdams expects the first two quarters of this year to be a struggle, a common cry among retailers. While December was good, he says the retail market was "soft" last year. Krispy Kreme, headquartered in Winston-Salem, NC, uses PR almost exclusively to promote its brand, and has about 10 agencies in the Southeast region. Steve Bumgarner, director of marketing, says Krispy Kreme will be making modest increases in its PR budget, both to existing agencies and expansion into new markets. The company, he says, uses a "decentralized marketing approach." There is only one in-house person dedicated solely to PR, but the company leaves it to agencies to find the opportunities in their markets. Cutting costs, improving quality On the automotive side, Toyota Motor Manufacturing North America, headquartered in Kentucky, is in growth mode, according to Jim Wiseman, VP of external communications. However, that doesn't mean Toyota is increasing its PR budgets. Quite the contrary, he says. "Our philosophy is to ask all our suppliers to do two things that they think impossible: cut costs and improve the quality of the work." Wiseman doesn't believe anyone ever does their very best work, citing a Japanese word, kaizen, which means "continued improvement." He believes there is always room to do better. Toyota uses local agencies where it has plants, and uses national agencies on a project basis. Wiseman says he has three PR challenges this year: to dispel the perception that Toyota vehicles are imported, when 70% are made domestically; communicate the company's strides in the environmental area by highlighting its hybrid vehicles; and recognize Toyota's diversity programs, both in employment and purchasing. Toyota spends about $1 billion a year with minority companies. John Van Mol of Nashville, TN agency Dye ,Van Mol & Lawrence says the bar is getting higher for everyone. "Ten years ago, a mid-level person who could do the work fine and be happy may not make it today. With the internet and the [many] ways we communicate, it is a faster-paced world, and client expectations are greater." He believes 2002 was the year clients made the reductions, and that agencies worked just as hard to cut their own costs. The economy pushed large national agencies to seek out business that they previously would have left to smaller or regional agencies - and they even offered bargain prices. Monty Hagler, president of Capital Strategies in Raleigh, NC, says, "We found ourselves at the table against top-10 agencies more than ever before. Often the larger agencies undercut the smaller agencies [in price]." Hagler doesn't see this as a negative, however. "I think it's great that we stack our ideas up against anyone else. If a client can hire a national agency at a competitive price, then great. But we feel the value of what we bring is worth what we are charging," he added. Mark McNeely, president of Nashville, TN agency McNeely Piggot & Fox PR, reported a banner year in 2002, with $5.4 million in revenues, up from $4.7 million in 2001. But, he adds, it wasn't without great effort. Most of the business came from outside the state, including the US Navy and Atlanta companies Colonial Pipeline and Mannheim Auctions. McNeely also sees healthcare as an area that continues to be lucrative, even though the federal government has reduced budgets for healthcare providers. The agency lost one of its partners, Dave Cooley, who worked on a successful governor's race. He is now deputy governor to Tennessee Governor Phil Bredesen (D). Acquisitions boosted FWV's revenues in 2002. With the addition of McKibben Marketing, a travel and tourism marketing firm, FWV reported revenues of $7 million, up from $5.2 million in 2001. "This was a very good year for us," says president and CEO Richard French. French adds that the acquisition paid off nicely, as the firm is currently partaking in nine different travel and tourism pitches. French is also in serious discussions with two Hispanic agencies, and hopes to announce an acquisition - or at least a strong strategic partnership - in the spring. Things must be good in North Carolina, since both Hagler and French are predicting a bullish 10%-12% growth in their agencies' revenues in 2003. Tough times in Virginia On the red side of the ledger, Richmond, VA's Carter Ryley Thomas (CRT) and Slay Public Relations did not have banner years. CRT reported revenues down 6% on 2001, and Mark Raper, president, says all the revenue was lost in the first half of the year - which he blames on September 11. Slay was down to $2.5 million from $4.1 million in 2001. President Joe Slay says clients that had planned to do projects delayed or reduced them. Still, he is sanguine about this year. He sees more work coming from the energy industry. The firm added Framatome, a French-owned nuclear-power company headquartered in Lynchburg, VA. "I feel like things are starting to improve. It feels like decision makers want to be more aggressive in their marketing in 2003," Slay says, hopefully. CRT's Raper believes that the past six months have a positive trend. CRT closed its Charleston, SC shop, and rolled it into a new office in Charlotte, NC. JR Hipple, president of the Richmond, VA office, left, and management was reshuffled to cover his duties. The Norfolk, VA operation showed the largest gain - 15% - from federal-government work and housing. This year's celebration of the Centennial of Flight won CRT numerous projects, and Raper hopes to regain revenues from these projects, some which of will bill through early 2004. But the threat of war looms, and it's unknown what effect it would have on the PR industry. "If we go into a protracted war and it expands, it is difficult to predict what will happen [to the economy]," says Phil Lynch, VP of corporate communications for Brown-Forman Corporation, based in Louisville, KY. It will add another challenge to PR people, he notes. "It will be difficult to get the media to focus on other stories." The tough economy has helped PR at the distilling giant. Lynch says money was taken from advertising budgets and moved into PR. "We did a good job of persuading our marketing folks that a small investment in PR went further than a large investment in advertising." Brown-Forman also got a boost this month when a study tied health benefits with alcohol. "It's a benefit to us. We'd never use health benefits in advertising, but we can generate [PR] stories on health and alcohol," Lynch adds. The distiller uses agencies only for individual brands, not corporate communications assignments. But at least agencies that work for Philip Morris in the Southeast region can breathe easily. Kim Farlow, manager of communications for Philip Morris USA, who oversees the company's agencies, says that while she always seeks ways to reduce costs, "marketing communications should be the last place you make cuts. It is vital to [the success] of a long-term business."

SOUTHEAST PR AGENCIES
                   Firm Name    Revenue  Chge Staff  Location
2001                 2000 (%)     (dlrs)
NORTH CAROLINA
French/
West/Vaughan        5,173,824  3,610,344    43    59  Raleigh
Capital Strategies  3,967,000  4,221,000     6   n/a  Raleigh, Charlotte
Trone Public
Relations           2,406,633  2,355,317     2    17  Greensboro
Brodeur Worldwide   1,944,300  3,600,000   -46    16  Raleigh
Gibbs & Soell       1,323,150  2,026,000   -35     9  Raleigh
Ruder Finn Group      823,000  1,147,000   -28     5  Raleigh
PRStreet              443,400    380,000    17     9  Cary
Mullen
Public Relations      323,000        n/a   n/a     2  Winston-Salem

SOUTH CAROLINA
Carter
Ryley Thomas          327,584    103,232   217     2  Charleston

TENNESSEE
Dye, Van
Mol & Lawrence      4,988,515  6,084,515   -18    55  Nashville
McNeely Pigott
& Fox PR            4,682,697  5,108,477    -8   n/a  Nashville, Memphis
Ackermann PR        2,522,020  3,447,689   -27    25  Knoxville
Katcher Vaughn
& Bailey Comms      1,417,453  1,348,046     5    15  Nashville

VIRGINIA
Carter
Ryley Thomas        5,763,514  6,406,642   -10   n/a  Richmond, Norfolk,
                                                     Roanoke
Slay PR
(formerly
Martin PR)          4,138,000  4,930,055   -16    23  Richmond
BCF&M               3,757,867        n/a   n/a   n/a  Virginia Beach,
                                                     Richmond
Siddall Matus
& Coughter            857,742        n/a   n/a    31  Richmond
JMC Marketing
Comms & PR            168,223        n/a   n/a     1  Richmond

KENTUCKY
Guthrie/Mayes PR    2,087,714  2,017,684     3    18  Louisville
Public
Relations Network     446,604        n/a   n/a     4  Louisville

No firms filed from Alabama, Louisiana, and Mississippi. Georgia will be
covered in December

Source: Council of PR Firms Auditing: No audit was required for
inclusion in the rankings.
The CEO/CFO/principal was required to sign a statement verifying the
accuracy of the data and agreeing to possible participation in a random
audit. Disclaimer: While every effort has been made to ensure the
accuracy of these figures, PRWeek cannot accept liability for, nor make
financial guarantees based upon the information in this chart.

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