PR Week went to America to talk to some of the agency scene’s biggest
players about their game plans for the next decade. Steve Bevan reports
Everyone has their pet theory about how the PR business is going to
develop over the next five or ten years. When it comes to the
consultancy business, there are a probably just a handful of global
players whose ideas will determine what that future will be.
Omnicom’s acquisition of Ketchum, Burson-Marsteller’s decision to
reorganise along practice lines, and a whole series of new ventures
designed to exploit the growth of the Internet are just a few of the
major developments of the last six months.
So what does the next year hold for the agency business? We went to the
world’s largest PR market, America, to ask 12 top agency executives some
Are we going to see more consolidation among the big PR agencies?
(HP) We’re not going anywhere. WPP is not a seller and Hill and Knowlton
is not going to break up. With all due respect I think this is a
question for Richard [Edelman] and John Graham and people like that to
decide whether they’re going to stay independent or not. PR acquisitions
[for us] would either be specific niche opportunities or associated with
an advertising agency - there’s not a large desire to go out and buy
another major agency.
(RE) The real question is how profitable are ad agencies and how
profitable do they expect their PR subsidiaries to be despite the fact
they are two different businesses. Edelman had a bad situation in London
for two years - I’m not sure if we were under ad agency ownership we
would have been able to stick with it.
(LC) Manning Selvage and Lee is working hard on acquisitions around the
world because we believe equity signals control to the client. In the
end the critical decision the client has to make is about seamless
performance and equity is at least a signal of that. We’re all aiming
for the same goal. For the larger firms, global is the name of the game
(BA) There’s probably not one road to success here. From Fleishman-
Hillard’s perspective there is going to be a lot more consolidation, but
also we anticipate the emergence of a lot of new agencies and that’s a
How have the financial pressures changed?
(JH) Clients are demanding more value for money. In the early 1980s we
could do 75 cents worth of work per dollar and they were happy, the same
with law firms and accountants. Nowadays they expect dollars 1.50 for
that same dollar in that sense there is a lot more financial pressure
coming directly from the client.
(BB) The practical reality is that you don’t start the year with the
same volume of business that you used to, much more of it is project
(GA) Previously I think you could rely on a set of business
relationships that you knew would continue and endure - that’s all
(MK) I think there’s a balance between ability to invest and the right
profit margin for now. It’s given APCO a sense of security that we have
a parent company [GCI Group]. Having the ability to invest with some
level of security and having a business partner that has deep enough
pockets to believe in a vision is very important.
Are agencies investing in the future?
(DD) I think we’re getting significantly better at running businesses. I
think the advertising agencies have certainly taught us that.
(HP) The issue of running an agency well is different in different
markets because you’re selling different services and different levels
of sophistication. So you have very different cost structures in terms
of people, which is still our biggest cost by far. It’s the same thing
with real estate. What we’re finding in some markets is that we need
less real estate and more people of intellect and knowledge and
(KB) In the European market the inflexibility of the structure of labour
laws means that your business management practices have to be very good.
The answer to this is the virtual office scenario. But at the same time
we all recognise the need to be really good business managers with real
time information which means unbillable costs and hourly fees. The days
of looking at accounts at the end of the month are gone.
Is practice rather than geographical management the way ahead or is it
simply adding another layer of bureaucracy?
(JH) The practice is nothing more than a delivery mechanism for B-M’s
services - so it’s not replacing one bureaucracy with another. We still
have geographic structures, we still have people who are leaders in
those markets. More than anything, the practice structure has freed our
organisation up to bring whatever resources the client needs to bear
without the worry of geographical P&Ls and fiefdoms.
The client leader is now the most important person in our organisation.
It’s not so much a reflection of what the market is today as much as
what we’d like it to be. We know from experience if you can leverage
regional relationships and global relationships your ability to add
value to what you do for the client goes up and your ability to add
margin from that kind of business is immense.
(MK) If you can create a system where people are on the phone sharing
the best ideas I think that transcends whether one imposed structure
works better than another.
(MW) I think the tyranny of structure could kill the strongest agency
against a divergent client structure. The fact is that to the extent
that you’re successful, it usually means that you’ve been able to grow
and accommodate your style and your structure with the culture and
service of your client’s needs.
(BD) I think that the important thing from a structural point of view is
the people itself. If your people aren’t highly motivated and really
enthusiastic about the business, they’re not going to serve the client
well. That’s why I think the balance we are all looking for has to be
one of geography, balanced with an international practice because people
go to a location, they go to an office, they go some place where they
rub shoulders with other practice leaders.
How have clients needs changed?
(RE) In at least two areas - at the grass roots level, there used to be
massive operations in big companies in local markets, but they’ve taken
PR people out. Secondly in employee communications, they used to have
big internal departments to do employee communications now the agency
handles that part.
(KB) The outsourcing that’s happening with the downsized corporations is
very notable, particularly on a global basis.
(GA) When people ask me what business I’m in, I say I’m in the business
of helping companies solve problems where the company thinks
communications may be part of the solution. Sometimes it isn’t. The
ability we need to inculcate in our people is to analyse a business
problem, recognise where the solution doesn’t include communications.
Six months from now there may be a PR and communications aspect but
that’s going to come later. But what the client wants is somebody to
solve his or her problems. They don’t care whether you’re an advertising
person, a lawyer, a management consultant or a PR person.
(MW) I think that clients are overloading, I think they’re having a very
difficult time figuring out ‘should I have corporate image ads done by
my advertising agency or should I have it in the arena of the PR
counsellor?’ I think we have not done a very good job in distinguishing
in the minds of clients the various products and services we offer.
Are PR companies losing out to other disciplines in exploiting the
(KB) Editorial imperatives give PR agencies a very strong edge. If you
treat a web site as a one-off where you want to go out and just get
somebody to set it up for you, there are a whole host of people who
could set that up but in terms of maintenance and providing regular
articles I think PR agencies are going to be very much present.
(MK) I think what ad agencies are doing and what we’re doing are two
almost totally different things because I think the design of a web site
is only one way that technology is going to affect our business. Other
things we’re looking at are applying artificial intelligence to crisis
management and interactive press conferences that allow you to use
keypad technology to have journalists respond. Web site is the buzz
phrase now because it’s what people see and it’s tangible but it goes
way beyond that.
(DD) Everybody on the Internet has control and everybody can deliver a
message. Our job - and I don’t think the ad agencies can figure it out
- our job has to be to figure out how you provide the control of this
and improve the information flow.
What’s the biggest challenge facing you?
(JH) I think its finding the sort of talented people that have all the
skills we’ve talked about. It really is a unique skill set when you
start to think about all the things we expect an individual to be able
to do. If you can’t find them, and this is usually the case, then you’re
having to train them and develop them. The amount of money we’re
spending on training these days is incredible.
(HP) Another issue is that the cost of competing for business has really
risen in proportion to the value of it because there are fewer ongoing,
permanent large relationships and more significant pieces of business
are competed for on the basis of the quality of the presentations and
the people you bring in from outside. You’re carrying all these costs,
so you can’t chase every dollar, you’ve got to make judgments about what
business you should pursue.
Is the reputation of PR improving?
(RE) I think in the last couple of years we’ve had a real setback, the
whole idea of spin doctors represents the worst part of politics getting
into the PR business. We ought to have some degree of standards and
feeling, not for who we represent, but how we represent them. When we’re
on TV and getting hammered, its not good for our industry, we don’t have
the same level of acceptance as the law or other professions, we’re
still at a delicate phase in getting accepted.
(DD) We have to focus on business people because we’ll never make the
world understand what we do so we should stop eating ourselves up over
it. It is not something that is ever going to be well understood or well
From left to right standing:
(MW) Mark Weiss, CEO, Rowland US
(HP) Howard Paster, chairman and CEO, Hill and Knowlton
(BA) Bill Anderson, executive vice-president and senior partner
(JM) John Margaritis, president and CEO, Ogilvy Adams and Rinehart
(RE) Richard Edelman, president and co-CEO, Edelman PR Worldwide
(DD) David Drobis, chairman and CEO, Ketchum PR
(BD) Bob Druckenmiller, president, Porter/Novelli
(KB) Kathy Bloomgarden, president, Ruder-Finn
(MK) Margery Kraus, president and CEO, APCO Associates
(GA) Gavin Anderson, chairman and CEO, Gavin Anderson and Company
From left to right sitting:
(LC) Lou Capozzi, executive vice-president/worldwide creative director
Manning Selvage and Lee
(BB) Betsy Buckley, executive vice-president, director business
development, Shandwick USA
(JH) Jeff Hunt, vice-chairman, client services worldwide, Burson-