THE TOP 150 UK PR CONSULTANCIES 1998: INDEPENDENTS AND OWNERS - Agencies regroup for growth. Over the past year the global conglomerates have shown how hungry they are to buy up PR firms, so how do independent agencies stack up against the new PR barons?

The world’s largest independent PR firm may not be independent for

much longer. In January Shandwick was reported to be in talks with the

US-owned advertising agency group True North about a possible deal.

The agency responded to press speculation with a statement confirming it

was having ’preliminary discussions.’ The release read: ’These options

may include a substantial minority investment in the company or,

potentially, an offer being made for the whole of the issued share

capital.’

An announcement confirming a deal is expected imminently. In the

meantime, Shandwick is preparing itself with a major makeover designed

to shed the ’bureaucratic layers of fat’ and save pounds 2.5 million.

Chief executive Dermot McNulty and former Shandwick UK chief executive

Colin Trusler were the first casualties of the cost cutting mission.

’There was one extra layer of management too many,’ explains Michael

Murphy, Shandwick UK’s new chief executive and board member. ’Lord

Chadlington (group chairman) decided to bring the people who were doing

the day-to- day business closer to the board. We want to cut down on

non-fee earning, client servicing staff.’

Aside from the saving, Shandwick is also using a task force to look at

its own image. ’In the UK we are seen as a bit predictable and a bit of

an institution,’ admits Murphy. ’But Shandwick is actually very

inventive and creative. We need to get our staff to become more

aggressive and more effective at telling our own story.’

The next chapter will involve the rationalisation of its business under

two global brands, Shandwick and its full service subsidiary

Golin/Harris.

The latter will operate from a dozen offices in key markets around the

world. ’It gives us more opportunity for market share, just like

Burson-Marsteller and Cohn and Wolfe. We have to challenge ourselves in

everything we do to remain in the leading position,’ explains

Murphy.

Another independent with grand plans for the future is Edelman PR

Worldwide, the UK’s fourth biggest independent, which grew fee income by

48 per cent last year. ’We spent three to four years going from loss

into profit and now we are into growth,’ says new UK managing director

Tari Hibbitt.

Like many in the industry, Hibbitt has witnessed a rapid increase in

international business. ’Business has gone truly global,’ she says. The

agency is looking to enlarge its 34 owned agencies and 60 affiliate

agency networks, particularly in South Asia, Scandinavia and Central and

Eastern Europe. It also hopes to grow staff numbers in the London office

to 100 by the end of 1998.

Harvard PR has shown consistent growth, thanks partly to the growth of

budgets as hi-tech programmes expand across into the consumer

market.

The agency added ten staff last year and swelled income by 20 per

cent.

Group PR director Gareth Zundel is dismissive of the suggestion that PR

giants, like Burson-Marsteller or Hill and Knowlton, will squeeze out

the smaller independents, believing there will always be a place for

agencies like Harvard or healthcare specialist Shire Hall, because a

’uniform centralised’ campaign is not always what the client wants.

Zundel says: ’An owned group, with a presence in every country, is

appealing but you can end up with big bureaucratic hubs which are out of

touch with the needs of local journalists.’ Zundel believes that there

is a trend towards the big players dominating the PR scene, but he adds:

’I see the trend building up and then breaking down into locally managed

relationships in around five years time providing more opportunities for

local independent agencies.’

TOP UK PR OWNERS

PR now accounts for over 20 per cent of income for Omnicom - the world’s

largest communication group. Following the purchase of Fleishman-Hillard

last year, Omnicom set up a dedicated ’virtual holding company’ called

Communications Consulting Worldwide (CCW) to house its PR agencies - a

sign of its intention to continue investing in PR.

Under the CCW umbrella, Omni-com is building GPC International, the

world’s largest public affairs consultancy. It is also building a major

hi-tech brand, under Brodeur Porter Novelli, which includes another 1997

purchase A-Plus, and finally, it is planning to extend the full service

agency Countrywide Porter Novelli across Europe with more offices,

particularly in Central and Eastern Europe.

Scope Ketchum Communications, a 1996 addition, remains under the wing of

Diversified Agency Services (DAS). ’Omnicom realises the margins in PR

are a little higher than advertising and is eager for us all to be

growing,’ says CCW vice-president and Countrywide chairman Peter

Hehir.

He confirms that there will be more acquisitions this year but is

guarded about discussing the kind of sector Omnicom is looking at

next.

A newcomer to the owner category is Incepta. Last year, the holding

company acquired public affairs firm Westminster Communications, hi-tech

agency Hunt Thompson and insurance specialist RLS. More recently it

bought two advertising agencies. They will join the direct mail company

LGM and event management firm Park Avenue, acquired from the marketing

group Incepta when it merged with Citigate in December 1996.

It is just the start of an ambitious spending spree, which group finance

director Kevin Steeds predicts will increase the size of Incepta six

times in five years.

Incepta’s plan is to grow the disciplines both organically and by

acquisition.

Between six and eight deals should be announced over the next 12 months

in the US, continental Europe and Asia Pacific. Like most of its PR

acquisitions, its advertising agencies will specialise in the financial

or corporate markets. The only unanswered question is what does Incepta

intend to do with its 11 per cent stake in the PR and direct marketing

group Lopex?

Steed’s answer is a tantalising ’no comment’.

Interpublic has continued to invest heavily in public relations. A year

ago, Larry Weber, chairman of Interpublic’s PR arm, Weber PR Worldwide,

announced his dream to build the advertising giant ’a top five worldwide

public relations network by the year 2000’. Weber’s dreams are coming

true. Just 12 months later, Weber PR is seventh place in the Top 150 and

10th in O’Dwyer’s list of the world’s top ten.

Armed with a seemingly endless amount of cash, Weber will continue to

tread the acquisition trail this year simultaneously growing eight

sectors.

It boosted its IT capabilities with the purchase of the US hi-tech firm

the Neva Group and added to financial by buying one of Germany’s largest

financial firms, B&L, and merging it with Ludgate.

Weber also has his eye on healthcare, consumer, sports, entertainment

and public affairs. In total there will be six or seven new

acquisitions.

’Interpublic said: ’whatever it takes Mr Weber’ and I took them

seriously,’ says Weber. He predicts that this time next year there will

be only five or six very large agencies and the gaps between them and

the niche players will widen. So where does that leave the smaller

independents? ’What will happened in five years is that a lot of people

will get tired of working for big firms,’ jokes Weber. ’And the whole

thing will start again.’