GLOBAL RANKINGS 2002: Europe - Surviving downturn

Growth came from the specialisations that traditionally grow in a downturn: change management, internal comms, public affairs and crisis management. CSR grew as a new specialisation, and the healthcare sector also saw growth. In most cases the tech sector was a write-off.

The European networks fared no better than the large owned groups in 2001, with three of the top five networks seeing a shrinkage in fee income as the downturn hit marketing budgets.

As a result, there were virtually no major acquisitions in Europe among the owned groups, except in Italy, where Mavellia/Manning Selvage & Lee acquired Chiappe Bellodi and Hill & Knowlton bought environmental firm Gaia. Incepta's Citigate Group added First Financial to its Netherlands capabilities in the first quarter and Sanchis in Spain and Gunpowder in Italy later in the year. Omnicom's Fleishman-Hillard made two acquisitions in the UK (GPC in the UK and Europe and Herald Communications).

Western Europe

A staggering 21 of the top 50 PR agencies in the UK did not grow at all or posted negative growth. The dotcom bubble burst; M&As and IPOs almost ground to a halt; and although consumer spending remained surprisingly buoyant, the atrocities of 11 September further undermined confidence.

At the top of the list in the UK - Europe's largest PR market - Weber Shandwick increased income almost $14.5m to $59m following its merger with BSMG in October.

Average growth was limited to eight per cent in the top 50. It was a slow year in most sectors, with the exception of healthcare and public affairs and new practice areas such as CSR

Germany's top 200 PR agencies generated fee income of $393m in 2001 - up six per cent on the previous year. But market growth was a long way behind the hefty 26 per cent achieved the previous year. The nervousness and lack of activity on the financial markets made life tough for financial PR firms and IR specialist Haubrok plunged out of the top ten after its fee income fell by 44 per cent. There are some signs of a slow recovery in tech. But corporate comms and marcoms are fairly flat although healthcare remains in good shape. The fact that it was an election year meant a lot of uncertainty kept clients 'away from investing into comms work', according to GCI Schuppener CEO Ralf Hering.

By contrast with the UK and Germany, France's PR market turned in an overall growth rate of around ten per cent. The growth of assignments such as image or crisis management briefs has boosted average client budgets by 25 per cent during the past three years, according to Syntec, the professional organisation for French PR consultancies. The number of agencies charging more than three million euros (US$2.5m) in fees has doubled in two years to ten PR agencies last year.

The proposed enlargement of the EU, perhaps as soon as 2004, means that European agencies with PA capabilities in Belgium can envisage significant growth potential in the coming years: the three-way integration of BSMG-owned Adamson with Shandwick Belgium and Shandwick European Affairs has created a well-placed consultancy in Brussels, for example. But Hill & Knowlton chairman and CEO continental Western Europe Elaine Cruikshanks says there is more to the Belgian market than that: 'More and more Brussels is seen as a hub for not only PA and issues management programmes but also for B2B and B2C.' Still, local agency Interel Marien retains top spot in the rankings. The tech downturn was partly offset in 2001 by an increase in crisis accounts, such as those created by problems at national airline Sabena and The Belgian Post.

Last year the Netherlands recorded its lowest level of growth since 1993 - a 1.1 per cent rise in GDP compared to an average 3.3 per cent rise between 1997 and 2000 - and this year may be even worse. IT and telecoms companies have had a very hard time while the unprecendented assassination of right-wing politician Pim Fortuyn earlier this year has added to a sense of unease. The Dutch PR industry may not grow at all during 2002 but it has fared better than the ad sector, in which many of the major agencies have been forced into making significant lay-offs.

Despite massive redundancies at domestic corporates such as Ericsson, the PR industry in Sweden continued to grow in 2001 by around 15 per cent.

The largest players in Sweden remain the home-grown agencies Kreab and JKL, with GCI the biggest network presence. Total fee income for agencies last year is estimated at about $98m, compared to $84m in 2000. Larger, more established agencies had the highest growth rate last year, as opposed to 2000 when much of the growth was fuelled by smaller IT-oriented agencies, according to professional body Precis.

The second half of 2001 was particularly rocky and, as elsewhere in Europe, demand for crisis and issues management grew, while tech PR spending was drastically reduced, having been the biggest growth sector in 2000. Agencies'average expected revenue increase for 2001 was found to be a meagre 1.3 per cent - whereas a year earlier the average projected increase had been 15 per cent. Ulrich Bollman, president of Swiss PR association BPRA, says: '2002 will probably be distinguished by continued low market growth'.

While the IMF is predicting 1.4 per cent growth for the Italian economy for 2002, growth for Italy's PR industry during 2001 came in at around three-to-four per cent. Crisis prevention and issues management services, public affairs, brand marketing and PR relating to ethical business practice have all risen in popularity, but Edelman Europe president Rosanna D'Antona says: 'Clients prefer to keep internal communication, B2B activities and local community relationships in-house.' Deregulation of the pharmaceutical market has created some opportunities, notably in direct-to-consumer communication.

Full figures on Spanish PR agencies are not yet available for 2001, but the expectation is that growth has been pegged back to around ten per cent. The deterioration of the political and business environment in Latin America has had a dramatic effect on Spanish multinationals and the prognosis for 2002 is that growth will slow further, perhaps to around six per cent.

Any increase in fees stimulated by the arrival of the euro would be welcome: late in 2001, a 'price war' broke out with some agencies competing for relatively minor pieces of business reported to have discounts of up to 50 per cent.

There was strong fee income growth among many of the top 20 agencies in Austria last year, with market-leader Publico ECC, now a sister agency of Germany's market-leader ECC Kohtes Klewes, increasing by almost 15 per cent to $8.3m. ikp Vienna became Trimedia Austria, extending Switzerland-based Trimedia's capabilities further across German-speaking Europe. Most major agencies have affiliations, but remain locally-owned and owner-run. Corporate and crisis comms became more important while lobbying is booming, after a late start in Austria. IT, telecom and biotech are also performing well.

The prospect of EU enlargement offers Austrian PR agencies a raft of public and private sector programmes targeting domestic audiences, despite a degree of national disquiet about the process.

Central and Eastern Europe

EU hopefuls such as Hungary, the Czech Republic and Poland continue to emerge as markets offering their own PR opportunities, according to Alistair McLeish, central and eastern Europe CEO for MMD, which has ten offices in the region. 'Seventy per cent of all external PR spend (in Central Europe) is in those three countries,' he says. But Romania, with a population of 23 million has great potential too, he adds. Ruxandra Mateescu, director of the Bucharest office of Weber Shandwick affiliate Action PR, says: 'Obviously, budgets are no longer as large as they were in 2000. But firms are still very interested in PR, people haven't stopped doing business.'

The region has been to some extent insulated from the 'dotbomb'. 'The tech sector has avoided severe cutbacks,' McLeish says.

Burston-Marsteller closed its Polish office last year. It retains a network office in Prague and gives project work to Budapest-based Gulden Communications, formerly Gulden B-M and now part of the Young & Rubicam ad brand.

Countries such as Macedonia, with a population of just two million, are home to smaller shops such as Skopje-based Pristop Communications, which handles PR for national mobile operator Mobimak, as well as project work.

But activity in other small nations seems to be on the up. 'PR is increasing in Croatia,' says one Croatian PRO. 'People are realising that it's not advertising or marketing, but it is a learning curve for the market.' Even in a country of 4.5 million people, global brands such as Nike and Siemens Mobile are keen to establish themselves and need PR agencies.

It is a pattern that Mike Willard, CEO and president of The Willard Group, has seen before. From Kiev, in Ukraine, which borders Poland, he says multinationals in the region 'tend to come with marketers, not PR people, but you see a change as there is a demand for strategic counsel, media training and crisis management'.

Accurate fee income, or even turnover, figures remain hard to come by across the board in eastern Europe. Yet while it is pointless to consider the region as a homogenous entity, there are opportunities for agencies in an area that has more than its share of small shops unable to service more than two or three clients.

EUROPE'S TOP FIVE OWNED GROUPS
Rank Agency Europe Income (USdollars) %
01 01 00 change
1 Weber Shandwick 105,200,640 76,487,040 38
2 Euro RSCG 88,102,080 83,365,920 6
3 Hill & Knowlton 86,444,640 74,265,120 16
4 Chime Communications 81,139,680 82,195,200 -1
5 Incepta 78,577,479 66,536,265 18
Notes: All figures relate to the year ended December 2001. Fee income =
PR fees only
EUROPE'S TOP MARKETS*
Rank France Income (USdollars) %
01 01 00 change
1 Euro RSCG 40,790,880 46,882,080 -12
2 I&E 13,305,600 12,233,247 9
3 Burson-Marsteller 7,630,102 7,510,895 2
4 Porter Novelli 5,514,512 5,514,512 -
5 Brodeur SRRP 4,239,557 3,715,200 14
Notes: All figures relate to the year ended December 2001. Fee income =
PR fees only. Fee income as submitted for PRWeek UK 2001 European
consultancies table * These include Europe's largest PR markets,
according to ICCO
Rank Germany Income (USdollars) %
01 01 00 change
1 ECC Agenturen 29,986,945 28,286,193 6
2 Weber Shandwick Deutschland 17,437,184 18,029,972 -3
3 Trimedia Communications 10,652,078 9,533,163 12
4 GCI Hering Schuppener 10,616,273 8,951,327 19
5 Media Consulta Deutschland 9,219,866 6,919,376 33
Notes: All figures relate to the year ended December 2001. Fee income =
PR fees only
Data supplied by PRWeek's sister publication PRReport
Rank Italy Income (USdollars) %
01 01 00 change
1 Barabino & Partners 10,064,871 9,329,967 8
2 Weber Shandwick Italia 8,907,466 7,636,376 17
3 Hill & Knowlton 6,247,130 5,693,939 10
4 Burson-Marsteller 4,961,642 4,641,263 7
5 MS&L Mavellia Bellodi ,730,776 3,199,203 48
Notes: All figures relate to the year ended December 2001. Fee income =
PR fees only. Data supplied by Assorel
Rank UK Income (USdollars) %
01 01 00 change
1 Weber Shandwick*1 59,446,514 71,782,403 -17
2 Citigate Dewe Rogerson2 44,990,091 47,902,831 -6
3 Hill & Knowlton UK* 41,554,080 41,664,960 0
4 Bell Pottinger Communications*3 41,188,320 43,889,760 -6
5 Countrywide Porter Novelli*4 29,729,864 30,104,101 -1
Notes: All figures relate to year ended December 2001. Fee income = PR
fees plus mark-up. *Denotes PRCA member. 1 Includes BSMG, which merged
with Weber Shandwick Worldwide in October 2001 2 Includes Citigate
Communications, Citigate Smarts (pro rata), Citigate Northern Ireland,
Citigate Marchcom 3 Includes Bell Pottinger Consultants, Bell Pottinger
Financial, Bell Pottinger Public Affairs, Bell Pottinger Public
Relations, First Financial, Teamspirit, Landmark Consultants,
Environment Marketing, Heresy, AMD Property Marketing, AMD in Real Life
4 Includes Fodor Wyllie