The longevity of most Web-based marketing and design businesses
says a lot. It’s a tough way to make a living.
Stand back from the hyperbole of the Internet, and take a sober look at
the fees being earned and, after the select few leaders, the typical
income drops away rapidly.
This is an immature market, where the investment demands still heavily
outweigh the rewards on offer to most business. It is as well to
remember also, that the Internet ’public’ in the UK at least, is still
only seven per cent of the adult population (many at work), and around
two per cent of households.
The good news, however, is that for those players with a foot in the
door, Web development is proving a highly profitable development
According to Hill and Knowlton’s Tony Burgess-Webb chair of the agency’s
Web development division, relatively modest fee income figures mask some
extremely healthy profit margins.
PR Week’s survey of how much UK PR agencies are earning from Web
development shows that at present, the serious fee income is flowing
mainly to a few international agencies who have been pouring money and
resources into Web development businesses for several years. However,
there are a number of dedicated Web spin-offs entering the market.
Despite the obvious synergy of new media with existing PR skills, there
are many genuine reasons for separating a Web development outfit from PR
’It’s a question of mindset really,’ says Jan Stannard, joint managing
director of Marbles, which has a small, separate Web development
’Electronic media does not just concern the marketing side of business,
but also business processes, sales channels, and business functions such
as communications. Some firms getting involved in the Web are only
giving the Web a marketing label - if you look comprehensively at what
the Internet can do for companies, it’s well beyond the scope of public
relations and marketing.’
Charles Cohen, managing director of Band and Brown’s independent
spin-off company Thought Interactive claims massive growth for the
purely Web-focused business.
After six months’ of independence, he claims turnover is heading for
pounds 500,000. Band and Brown started up the venture around two years
Big name clients include BT (also a corporate account for Band and Brown
Communications) and the Liberal Democrats general election site.
Despite the success of The Weber Group’s US Web development spin-off
Thunder House, UK Web fee income was rather modest last year - at around
pounds 60,000. But all this is set to change with plans to open a
Thunder House office in the UK next month, offering Web development,
maintenance and on-line media buying.
Meteoric growth is a feature of some of the new breed of design-oriented
Web development agencies, for instance Sunbather, a media and
entertainment-led agency which has grown to a turnover of almost pounds
1.5 million in two years. William Julian, partner and creative director,
reckons its turnover will more than double in the next two years.
Having the range of hi-tech skills in the in-house team of five is a
major factor in achieving high quality results. One popular offering is
’Incorporate’ the company’s own system of handing back control to
clients, allowing them to drag-and-drop documents from their own word
processors into their Web sites.
Shandwick emerges as the most active player on the UK PR scene. Last
year Web development accounted for pounds 967,120 in fees - four per
cent of its overall UK fee income. Shandwick has long been involved with
the Internet, but its current star, Shandwick Interactive has only been
in existence since last September. It was born out of established
trading companies such as Shandwick Design, and has its developmental
roots in Shandwick’s US-based Spiderworx Web design brand.
Indeed, it began working for major client Shell (www.shell.co.uk) in
March 1996, six months before Shandwick Interactive was conceived.
The Web development agency can also draw on the resources of the rest of
Shandwick International, to bring in expertise on identifying key
audiences and developing suitable messages for them.
’We take a strategic focus, we’re not a back-end delivery outfit,’ says
Shandwick Interactive managing director Simone Barratt.
Shandwick Interactive employs 13 staff in London, and 60 worldwide.
Working together as a global ’virtual’ team gives them a cross-cultural
team which can exchange views on designs, concepts, tone and
Nearest rival Hill and Knowlton Net Communications reported UK fees of
pounds 612,000 for 1996. H&K Net Com managing director Chris Solheim
points to the importance of the skills mix, with a high technical
content, among its16 full-time staff in London. ’We’re one of the
largest specialist communications departments in any European PR
agency,’ says Solheim.
Critically important is having IT specialists who can talk the same
language as the client’s IT staff, since this is an important factor in
winning the client’s confidence. However, IT specialists are not always
specialists in communications media, and having experienced
communications staff in this area distinguishes H&K from many purely
design or technology-oriented agencies.
Solheim has also invested in a staff member who is devoted to improving
on-line publicity for sites, including search engines and links from
other Web hot spots.
One of Hill and Knowlton Net Communications’ biggest Internet sites is
the Shell-Ferrari Formula 1 site (www.shell-ferrari.com). Many more
developments are taking place in clients’ Intra or Extra-nets (private
sites either entirely within one company, or shared between a restricted
group of companies).
Solheim’s personal prediction is that 1997 will be the year when these
private sites become the most substantial area of business.
’Extranets are likely to become an extremely important part of corporate
communications and business-to-business for an increasing number of
companies,’ he says.
’It is still mostly Internet business but sooner or later companies will
see the Intranet as a cost-effective way of putting out all the stuff
they need to,’ agrees Dick Lumsden, managing director of Charles Barker
Lumsden left Paragon, which pioneered Shandwick’s Web business, to set
up Charles Barker Publishing single-handed. Annual turnover since the
start of 1996 is heading for pounds 1 million, pounds 189,625 of which
was generated by Web development.
A number of agencies hint at the risk that companies will pay big
up-front costs for Web site design from the emerging design specialists,
but then recoil in horror at paying for regular updates. The fees
charged by leading transatlantic Web design agencies, vary widely and
are often misunderstood, since hi-tech gimmickry can weigh heavily in
the cost of individual projects.
William Julian, partner and creative director of Web design specialist
Sunbather says the range of prices they have charged for Web sites
varies widely, from pounds 12,000 up to between pounds 200,000 and
Hi-tech features which seriously notch up the cost include links to
databases, and use of so-called Intelligent Agents.
Lower level programming-based features such as Shockwave games and CGI
scripts are also expensive.
Despite the widespread belief that a compelling Web site has to be
loaded with hi-tech features, the issue of content continues to be the
serious long-term issue.
’What we’re doing is designed to answer the question: ’Why would anyone
go to your Web site twice?’,’ explains Nick Hayes, managing director of
’We don’t develop anybody’s Web site from scratch, we specialise in
there is definitely a clear role for public relations companies in the
marketing relationship with their clients.’
Recent successes for Noiseworks include Hewlett-Packard, Lotus, Creative
Labs, and Packard-Bell.
With this sudden and easily-won success, Hayes believes he has struck
the right chord at the right moment for this area of business to prove
an explosive growth area for Noiseworks.
However, comforting as it may seem for public relations agencies to rely
on the content issue for Web sites, this is an open secret shared by
others outside the world of public relations.
’Anybody who’s not doing content is not going to be in business long,’
points out Sunbather’s Julian.
CASE STUDY: SHELLING OUT FOR A DESIGN CLASSIC
Shell International did have a Web site prior to taking on Shandwick
Interactive, but this went straight into the bin, leaving a clean sheet
for the new team.
A key strategy underlining the development was a desire to reflect
political moves within Shell to become more transparent and open. This
includes Shell’s desire to be seen as leading the environmental debate,
and Shandwick proposed that the Web site could be the first demonstrable
tool that reflected this new approach.
Elements that show a willingness to be open include a number of
quasi-news groups, debating issues where Shell has been in the news.
Visitors can say anything, apparently, although the number who actually
contribute is small. The site also provides links to the sites of
pressure gourps,such as Greenpeace. Recently it was shortlisted for one
of the Web design awards actually worth having - the British Interactive
Media Association’s Corporate Web site award.
For example, there are just three messages in the Human Rights/Shell in
Nigeria thread, although all three are strongly-worded and lengthy
condemnations of Shell’s record in the country. General business
principles, which featured strongly in the news coverage of Shell’s AGM
last month, attracted just one sceptical questioner immediately
The total numbers accessing the site exceed 6,000 visitors daily. The
site generates business responses via e-mail as well. From an initial
350 pages, the Internet site has developed to over 800 pages, and is
expected to continue growing both in size and in the number of
Shandwick Interactive is also developing an internal Intranet site for
There is also an active on-line and off-line marketing campaign to
promote the Shell Web site. The initial launch was promoted through a
press campaign in 40 countries, and has continued actively since then.
In addition to defining an Internet strategy, Shandwick has evaluated
competitors’ use of the Internet and carried out a survey of NGO and
environmental organisations’ use of the Internet. The company also
tested the site design in 15 countries, running in-house training for
Shell operating companies to identify best practice in Web creation, and
subsequently creating ’best practice’ guidelines.
The daily updates and maintenance of the site are driven by tight
For example, the annual chairman’s speech at the AGM in May was
reproduced on the site exactly half an hour after it was delivered to
’It’s a bit like a marriage. After the big build-up, you have to make
sure it works the next day, and the next day ...’ concludes Shandwick
Interactive’s managing director Simone Barratt.
CASE STUDY: A FINGER ON THE PULSE FOR GPS
One of the PR industry’s biggest Internet enthusiasts is Scott Clark,
managing director of Complete Pharma Relations, which specialises in
multinational and international programmes for pharmaceutical
Quick to spot the potential of the Internet for delivering high quality,
and sometimes complex messages, to key audiences, Complete Pharma
invested in its own Web server, and has been delivering editorially-led
information targeted particularly at GPs for around two years.
Complete Pharma’s income from Web site design and management is about
six per cent of its fee billings, and heading for between 10 per cent
and 12 per cent. Last year Web development generated fees of pounds
Despite the Internet being what seems an obvious medium for the delivery
of international campaign messages, pharmaceutical companies have found
the universal accessibility of the Internet to be a mixed blessing.
Drugs have to be approved for use in treating specific diseases by
different bodies in different parts of the world. This has led to
problems in providing information about treatments where they are
’indicated’ differently in different countries or regions.
Legislation that prevents such mishaps occurring in traditional printed
media does not apply to the Internet. The issue was covered in some
depth in the February issue of Medical Marketing and Media, and the US
Federal Drugs Administration wrote a warning letter to companies about
its view of the problem, which could lead to new legislation.
Clark’s view is that the alarm has been rung too soon. ’Let’s wait and
see if there really is a problem before they start regulating: we should
get into a discussion about it.’
CPR’s approach is that the openness of the Internet is good for putting
out general information about diseases, such as the Ephanet site,
sponsored by the European Association for Asthma. However,
product-specific information is restricted to medical audiences with a
password protection system.
’You have to ask: ’is this the best medium to reach an audience?’,’ says
Some experience points to GPs being an unusual Internet audience, in
that it tends to be older practitioners who have access to the Internet,
at home. Younger GPs are more career-minded or distracted by families,
and are less likely to have Internet access. General practices as a rule
do not have Internet access at work.
Experience seems to show that the Internet is working well as a means of
reaching GPs. They appreciate the exclusiveness of the password
protected zones, and have visited CPR sites in tens of thousands. For
instance, CPR had a recent target to point a medical audience towards
specific new research findings, and exceeded its target ten-fold.