IBM's plans to consolidate its $60m global PR business from
an unwieldy 50 agencies to a more manageable three or four means more
than just a lot of cash to a few lucky firms. Big Blue's decision
represents a watershed for the growth of the PR agency business
For years, the focus of agency management has been on developing global
networks for increasingly global-focused clients. But the problem has
been that, despite the undoubted prevalence of global brands, there have
actually been few concrete examples of a client picking a single agency
to serve its PR needs everywhere across the world.
Of course, there are cases of the single-agency phenomenon. However,
until recently, they were largely restricted to product PR, particularly
global healthcare brands. But the number of instances in which corporate
PR is handled by a single agency is also - slowly - increasing. For
example, Hill & Knowlton picked up an international brief from Marconi
in May, while Fleishman-Hillard has just completed its first year
working with Canadian telecoms firm Nortel Networks across the world. In
addition, Ketchum supports the communications needs of the Lions Club in
15 countries, and Manning Selvage & Lee works with Western Union in four
There are plenty of big players who are eager for the cost benefits of
consolidation. But in many cases, the internal organisation necessary
for such a move has so far proved prohibitive. Older companies such as
Procter & Gamble and Unilever, built organically through years of
acquisitions, toe a constantly tricky line between forcing through more
centralisation in their marketing communications and allowing local
New-economy firms, with the benefit of a more speedily created,
centralised international structure, have found it less problematic.
This is just as well, as it is the new-economy firms (most notably those
in telecoms) that now need to find ways to trim costs. Consolidation of
PR and advertising arrangements are coming high on the list of methods
by which to make cuts.
But no-one calls the dilemma easy. Nortel V-P of global communications
Andy Lark, an early convert to the benefits of working with a single
global PR agency, reports that he has had calls from a number of his
peers in other global organisations, wanting to find out how he has
managed the process. 'It's a tough call,' he says. 'The biggest
challenge is working out how to get our own people to use the agency
resources wisely, without disposing of their own accountability.'
Internal politics and organisational structure are the two biggest
reasons why the use of a single global agency isn't more prevalent. For
old-school companies - especially in the consumer goods sectors, where
strong local divisions lead to more effective marketing - it has been
particularly hard to enforce the use of an agency chosen from thousands
of miles away.
'There can be huge resistance internally,' says one PR director. 'The
local guys can be very reluctant to give up on their specialists.'
The answer to this sensitive issue, believes Aedmar Hynes, Text 100 US
chief executive, is often to let them keep their relationships with
local shops. 'Although we are big believers in the benefits of the
single global agency, in that situation we would recommend to the client
that they hang on to particularly valued agencies on the ground,' he
says. 'If the business comes up for pitch at some point in the future,
we would bid for it.'
This is a popular approach for companies in the middle stages of trying
to consolidate their agency arrangements. Text 100, for example, is the
global agency of record for web service company BEA, but it also manages
the work of local shops in various countries. The Hoffman Agency handles
3Com in Europe, US and Asia-Pacific, but co-ordinates local work of
Ogilvy in India and Burson-Marsteller in Latin America.
Motorola, although retaining Hill & Knowlton as its global agency for
strategic PR planning, still works with a variety of local agencies for
implementation, but H&K sometimes manages the relationship with that
agency, giving the client only one contact.
'It's often not practical to dictate to the local communications people
which agency they should use, especially if they are already working
with one that is the best in that market,' says Harlan Teller, H&K
worldwide head of corporate practice .
Besides which, says H&K CEO Howard Paster, no agency yet has the global
presence to match many multinational clients, despite years of
acquisitions and office openings. 'You can't talk about "globality"
without the network capabilities,' he says. 'Demand hasn't been that
great for it so far, but I'm sure it will increase. We have been
focusing on building our presence in Latin America, and Africa will be
the next priority.'
Agency coverage notwithstanding, Shelagh Lester-Smith, Motorola
vice-president and director (corporate communications and public
affairs), doesn't believe it is possible to use only one agency in every
area of the world that a major company needs PR support in. 'We'd never
shoehorn an agency solution like that if it wasn't the best for our
business,' says Lester-Smith. 'Even the biggest agencies need to
recognize that they can't offer you the best thinking in every
Motorola's year-old solution is to use H&K on a global level for its
strategic skills, and make sure H&K gets on the pitch list of local PR
reviews. 'Sometimes they win and sometimes they don't,' adds
'My role is to make sure the agency is picked fairly and
Although clients such as Motorola have reservations about the
feasibility of the blanket PR agency approach, the biggest PR groups
have been pulling out the stops to acquire offices in key overseas
markets (Australia, China and Africa being three of the current hot
prospects). Mega-mergers such as last year's Weber Shandwick marriage
(and more recently the addition of BSMG) have at their heart the desire
to be everywhere a client might want them to be, with as many
specialists as they can cram under one roof.
'The key to global PR is to offer the client the specialty they need on
a global basis,' says Harris Diamond, recently-appointed WSW chief
executive. 'Peter Gummer was ahead of his time in his vision of a global
PR agency,' adds Larry Weber, CEO of Advanced Marketing Services, the
diversified services arm of Interpublic that houses both WSW and
Golin/Harris. 'The mistake he made was that the agencies he bought had
Some of the agencies have gone one step further, creating special
entities with enough global coverage to attract the IBM prize. Omnicom
is putting together a group encompassing staff from Ketchum,
Fleishman-Hillard and Brodeur.
Although this gives these groups maximum coverage across the world, the
question remains of how it will work at a day-to-day level. History has
proved that these type of pasted-together agency groups often fall down
when previously competitive people have to work in tandem.
Even when a single distinct agency works on one client's business across
the world, how can it guarantee that the client will receive the same
quality of people and similar processes from Boston to Brisbane? In a
business as reliant on individual styles and skills as PR, there is
ample scope for a variety of differences of procedure, pace and tone.
Communications disciplines such as direct marketing and media buying
have been way ahead of PR in the race to go global for precisely this
reason - it is simpler to regiment the offering.
Judicious use of technology and a strong agency culture are two of the
answers to this problem, according to those who have spent time trying
to make it work. The largest agencies have spent the past few years
trying to institutionalise their processes with the help of
sophisticated databases and intranets, in an attempt to standardise
Sometimes, says Andrea Carney, Brodeur CEO, it is as simple as creating
a manual. 'We have all sorts of standard procedures for things such as
evaluating campaigns and conducting local research. We also make sure
that everyone working on a global account is given specific training on
the complexities it involves.' This is especially important for an
agency such as Brodeur, which has grown by acquisition.
Having the right processes is one thing, but for an agency to truly
achieve consistency across the world, it needs the kind of internal
culture that can be exported, says PR management consultant Jerry
Swerling. 'This is the most pressing challenge for agencies,' he says.
'Those agencies that have a strongly defined culture will find it much
easier to bring about internal change.'
But getting the global balance right often has as much to do with what's
going on inside the client company. Swerling believes it is those
clients that have appointed someone to have real jurisdiction over local
PR managers who stand the best chance of effectively managing one agency
across the world.
'A number of the world's largest companies are in transition to a more
global view,' says Swerling. 'The challenge is thinking through the
organisational issues that will allow them to manage globally.'
PR is the last of the marketing services to consolidate globally. 'PR
works at a number of different levels: with CEOs, CFOs, legal counsel,
marketing V-Ps and government affairs,' says Jack Leslie, WSW
'But the corporations themselves are becoming more adept. We're seeing
real change at the client level.'
In the end, says Hynes, the organisational issues boil down to who holds
the purse strings. 'For the client, control is where the budget
resides,' he says. 'If an agency has a "global" client who is in the US
and only directly controls the PR budget for the US, they aren't going
to be able to dictate what happens in other markets.'
'They'll be dependent on the art of persuasion - countering the "What
does headquarters know about our business?" effect,' notes Lou Hoffman,
The Hoffman Agency president.
The extent to which an organisation chooses global agency representation
is also affected by the level of PR support it needs. For Swedish auto
firm Saab, which recently picked GCI to handle its PR on a global basis,
the work is predominantly going on in GCI's Stockholm office, with local
adaptations handled by local branches of the agency across the
Western Union, however, has chosen to focus its global PR operations
around hubs in the US (New York), Europe (London) and Asia (Hong
'We've mirrored (Western Union's) organisation so we can serve them
better,' says Manning Selvage & Lee account director Jeremy Jacob.
'They're active in 190 countries, but only need PR support in around 15
countries that people tend to send money from. We can plan activities
from the three hub countries and I co-ordinate the strategy.'
The jury is still out on whether the use of a single agency will
increase. While Hynes 'definitely' sees more clients demanding their
services right across the world, Paster believes that clients are more
keen to adopt consolidation at regional level.
'We made a strategic decision four years ago to accelerate our
transnational account management capabilities, so that, for example, we
could win accounts for the whole of North America or all of Europe,'
This appears to be an identifiable trend. Our report on Canada (see p19)
refers to the increasing number of both American and Canadian
organisations that are choosing to pick one agency that will handle PR
for both countries.
For Swerling, the IBM experience will prove pivotal: 'If it doesn't
work, that will be a message for everybody.'
On the other hand, Weber notes: 'A number of Fortune 500 companies are
watching the developments at IBM with interest - and even envy.'
A DAY IN THE LIFE OF A GLOBAL ACCOUNT DIRECTOR
'I fell asleep at 1am in the Admiral's Club at JFK a few weeks ago. When
I awoke, I was staring at that "daylight" map that tells you where the
sun is shining at any given time around the world. It occurred to me
then that the title of worldwide account director is really odd. It's
not possible to be "worldwide" without staying up 24-hours-a-day so you
can have same-day conversations with Australia. While I'm certainly
dedicated, I'm not available to talk to Melbourne at 4am.
'Given this geographical challenge, one needs to make adjustments. On
Western Union, for example, we've set up regional "hubs" in the US,
Europe and Hong Kong. Each office has an account director who reports to
me, usually via e-mail. We supplement our e-mail communication with a
monthly conference call that takes place at 8am New York time, 1pm
London time and 8pm Hong Kong time. This seems like the least painful
option, although our Hong Kong director (and his wife) may disagree.
'My day begins and ends with e-mail. When I get to the office, there's
always a dozen or so e-mails from Europe, South Africa, India and
Asia/Pacific. Europe is the easiest to respond to as they're still in
the office. India can be contacted if they are still there late in the
evening, but Hong Kong has already left for the day.
'Once the morning e-mails are dealt with, I can focus on managing our
global Western Union business, which covers the US, Africa, Western and
Eastern Europe, India, Hong Kong, Thailand, Korea, Taiwan, China,
Australia and the Philippines. Global strategy is set at the highest
level, but implementation needs to be handled locally.
'On any given day, I may be in touch with the president of the company
(based in New Jersey) or the local marketing executives responsible for
individual regions. We're currently planning a programme to celebrate
the 100,000th Western Union location, likely to be in India.
The client contact for that region is in Dubai, and we're in touch on a
daily basis. Today's a religious holiday in Dubai. That would have been
useful information as an important deadline is upon us. Oh well, another