Right now, independent City PR firms are hot property. As global
marketing services groups fall over each other to secure a slice of the
financial PR pie, those in the PR community are left playing a game of
guess who will be bought next.
Two of London's few remaining independent City PR outfits look set to
tie the knot in the coming weeks.
Just last week, Finsbury founders Rupert Younger and Roland Rudd
confirmed they were undertaking due diligence with Sir Martin Sorrell's
advertising and communications group, WPP, which already bought out
Buchanan Communications three years ago in an earlier bid to capture the
financial PR market.
Younger and Rudd are reported to be holding out for a phenomenal pounds
50 million after earn-out.
Square Mile, run by founding directors Tim Jackaman and Susan Ellis, is
in the final stages of completing its own deal with US holding company
True North Communications, parent of international PR agency BSMG. If
the takeover - reportedly worth pounds 10 million - goes ahead, Jackaman
and Ellis stand to make their millions.
In the last six months, Havas Advertising of France has snapped up its
first London financial PR outfit, Hudson Sandler, in a deal reportedly
worth up to pounds 20 million. And British advertising group Cordiant
Communications has bought Lighthouse, the parent company of Financial
Dynamics, one of the biggest players in the financial PR market.
For the PR agencies, the benefits of such partnerships are obvious: they
grant them the backing of a strong balance sheet and the immediate power
to go global in an increasingly consolidated market.
Equally, for marketing services groups, financial PR firms are clearly
attractive acquisition targets - more so than the other PR sectors,
because they are hugely profitable and growing rapidly.
But there's a theory that these groups are buying in to more than just
high margins. They're buying into the key decision-makers of some of the
world's biggest and most powerful corporations.
Whereas advertising and other forms of PR, such as consumer, tend to be
commissioned and overseen by company marketing directors, financial PR
goes straight to the top.
When a company's share price is at stake, the chief executive stands up
and takes notice.
'Financial PR and IR are issues that can keep a CEO awake at night,'
says Robin Hepburn, CEO of Golin/Harris Ludgate in London.
'Share prices and mergers and acquisitions are CEO issues and if you can
solve a financial problem, you will be paid premium fees for doing so,'
he explains.
According to WestLB Panmure media analyst Lorna Tilbian, financial PR is
no longer relegated to the bottom of the company food chain.
'In the old days, the PR guy was out there with the printer, but now
he's with the CEO, the chief finance officer and the chairman,' she
says.
'For marketing services groups, having access to the CEO is right up
there on top of their list, alongside profits and margins,' she
adds.
In the all- important morning conference meetings, CEOs now want to see
three people round the table: the lawyer, the banker and the financial
PRO.
'Financial PR is totally unique in that it deals with the highest levels
within firms. By its very nature, you go straight to be board,' says
Hudson Sandler director Alistair Mackinnon-Musson.
'Not only are you dealing with share prices and large deals, but also
reputation management, of both the companies and the senior players in
companies - no other form of communication does that.'
CEOs are now recognising the importance of corporate reputation on share
prices, and therefore the importance of PR in the wake of the Company
Law Reform.
Chairman of the IPR's City and Financial Group, Neil Mainland, says:
'Around five years ago, the senior levels in companies didn't think too
much about communications.
'It was easy to buy advertising, because everyone bought that
automatically, but now communications has evolved and has a new element
- the effect on share price - and that has to be dealt with by senior
managers.'
With PR's high profile recognition, and the fact the advertising market
is becoming over-crowded, marketing services firms are cottoning on to
the idea of diversification and integrated offerings.
They want kudos in the boardroom and the chance to offer the big company
decision-makers an integrated, internat-ional, communications
package.
They want to be communications supergroups.
Richard Wolff, Golin/Harris International's US-based MD worldwide head
of global fin-ancial communications, says: 'Marketing services
organisations are moving towards integrated communications solutions and
a big part of that is IR and financial PR, because they have links with
CEOs.
'If you have the relationship in the C-suite (the CEO, CFO and chairman)
and you have the offering within the firm, then you can sell an
integrated communications solution straight to the key players.'
While this acquisition trail signals a new era for financial PR, it also
puts a great deal of pressure on the remaining independent financial PR
consultancies.
Those in the middle ground will most feel the push to sell and go
international, with neither the finance nor the time to grow
organically.
As Mackinnon-Musson puts it: 'Financial PR is no longer a cottage
industry. It's an international industry.'
