Because of Canada's heavy reliance on the US, its biggest trading
partner, you would think that the loud bang of the American technology
bubble bursting would have shaken PR foundations north of the
Not so. 'Last year, we were lamenting that US firms had far more of the
dot. com business than we did,' says Linda Smith, SV-P and general
manager of Fleishman-Hillard Canada in Toronto. 'Now this year, we
don't mind so much.'
Not that the technology downturn hasn't been felt by the country's PR
agencies. In June, five-year-old Pydea, a hi-tech firm in Toronto whose
clients included Media Metrix and travel web site Exit.ca, laid off its
entire staff. However, that casualty is not indicative of the current
market, especially when you consider Pydea was a boutique with only
four full-time employees. Most hi-tech firms in Canada - and the
technology divisions of multinationals - are experiencing growth, but
not at the rates that forecasts projected last autumn.
Take, for example, Maverick Public Relations in Toronto, something of a
tech darling in the Canadian PR landscape, that has rapidly grown to 25
clients and more than $1m in revenues in just two years. 'In the
first quarter of 2001, we were 40 per cent above 2000 revenues,' says
president Julie Rusciolelli, who adds that she has only had to lay off
one employee this year. Maverick currently has 13 staff, 'but that
growth is way, way lower than projected.'
What is continuing to drive the Canadian market is globalisation, or at
least North Americanisation, as companies look for agencies that can
service both Canadian and American markets, especially in the tech and
Other factors which have boosted the industry include Toronto's
unsuccessful bid to host the 2008 Olympic Games, with marketers like
Bell Canada running local ad campaigns.
And while some tech businesses collapsed or scaled back their budgets,
major new accounts outside of the technology sector were placed up for
grabs in competitive pitches. Electronic retailer Best Buy of
Minneapolis hired the Toronto office of Edelman as part of its drive to
enter Canada with 65 stores during the next three years, while Levi
Strauss Canada hired its first-ever PR agency of record in Apex Public
Relations, a Toronto shop with about $2m in revenues.
But the biggest trend steering the industry is the blurring of the
border, with many firms both big and small reporting at least 25 per
cent of their work being done south of the border, either for
Canadian-based clients or, to a lesser but still significant extent,
for US-based clients. That has resulted in multinationals continuing to
buy up independents, and Canadian-owned PR firms fighting back by
expanding outside of their native land. This trend is expected to
continue during the next few years.
Although accurate figures for the Canadian PR industry are difficult to
come by because many firms are privately owned, industry estimates
value it at between $200m and $300m. While the branch
offices of US giants such as Hill & Knowlton, Cohn & Wolfe, and Edelman
have long competed neck-and-neck in the Canadian market, last year
Fleishman-Hillard broke away as a dominant force, thanks to its
aggressive acquisition strategy.
F-H's 2000 billings skyrocketed to $27.9m, up from $4.1m
in 1999. That massive growth is a result of F-H Canada reporting
revenues that for the first time include recent acquisitions GPC
International of Toronto (which has offices in 16 countries, with eight
of those in Canada), and High Road Communications (the largest hi-tech
PR firm in Canada, with offices in Ottawa, Toronto, and San
In recent years, High Road has enjoyed annual growth rates between 70
and 75 per cent, although this year it expects those numbers to drop to
a modest five to ten per cent. For High Road, the blurring of the
US/Canadian border was never more apparent until this year.
With revenues exceeding $4m, High Road has grown by
concentrating on the US market, which accounts for 85 per cent of its
work. Its Canadian clients - for which it does mostly US work - include
Northwood Technologies (a wireless telecom software solutions
provider), and Synamics (a developer of voice and data applications for
Citing the reaction to a shrinking US tech market and the higher
profile of Canadian companies such as Nortel Networks and Research in
Motion (the maker of the handheld e-mail gadget BlackBerry), High Road
managing partner and co-founder Rick Doyon says American PR firms are
now pursuing Canadian clients looking for US exposure.
'In the heyday of 1999 and 2000, they would never have looked twice at
any of these companies because the Canadian budgets were too small.
They wouldn't talk to you unless the account was at least $30,000 a month,' says Doyon. 'Now they're saying to clients, "We can do
that work for $15,000 a month." They're promising the moon and
stars to some Canadian clients, but what happens when those
expectations aren't met? Something will have to give.' He says High
Road has pitched against such US firms as Fitzgerald Communications of
F-H Canada's acquisition strategy is to keep itself, GPC, and High Road
operating separately, so clients are not lost due to conflict, and work
can be referred to one another. But F-H Canada's main barrier to
dominating the market comes from two Canadian-owned firms, both of
which are gunning to become global players - or at least a force in the
North American market.
Canada's largest PR firm is National Public Relations in Toronto (49
per cent owned by Burson-Marsteller), whose billings this year total an
impressive $46m, up from $27m in 1999. That growth
includes the June acquisition of Labrador Communications of Vancouver,
which takes the number of National offices in Canada to five. National
also has a New Jersey office.
But partner Colin Buchanan says National's main push is to become an
international player. 'It's our dream to open in London, and we hope to
be there next year,' he says. Its healthcare business is helping to
stimulate that expansion dream, with European clients such as
Swiss-based drug company Sarona.
Toronto-based Environics Communications is the other leading Canadian
independent, with total (domestic) revenues of $3.2m. In June,
it opened its second US office in Washington, DC. Its first office in
Stamford, CT, opened in 1995, and now has 19 employees.
The Washington office is headed by senior V-P and general manager Dave
Groobert, most recently a senior managing director at Hill & Knowlton
in Washington and formerly director of PR at global satellite
communications company COMSAT in Bethesda, MD. Bruce MacLellan, founder
and president of Environics, says the Washington office will service
clients like the Association of Hispanic Advertising Agencies and the
National Safe Kids Campaign.
But the Canadian independents are aware that the market will likely
face further consolidation. Echoing a statement expressed by the heads
of Apex Public Relations and Maverick, MacLellan says he receives calls
from 'two or three players who are constantly prowling for
Maverick's Rusciolelli compares it to being at a ball, with many
suitors looking to fill your dance card. 'It feels good to be wanted,'
'But we tell them we're not interested. Not yet, anyway.' No doubt
those suitors will take a rain check.
INTERNATIONAL AGENCIES OPERATING IN CANADA
Rank Agency Name Canada Income (USdollars)
00 99 00 99 % chg
1 5 Fleishman-Hillard 27,928,000 4,121,000 578
2 1 Hill & Knowlton 15,146,000 11,830,000 28
3 3 Weber Shandwick Worldwide 8,696,000 5,823,000 49
4 2 Edelman Public
Relations Worldwide 6,817,645 8,038,593 15
5 4 Optimum Public Relations 6,620,000 5,420,000 22
6 6 Porter Novelli Intl 4,001,000 3,042,000 32
7 8 GCI Group/APCO Associates 3,112,296 2,428,226 28
8 - Manning Selvage & Lee 2,926,000 - -
9 9 Waggener Edstrom 444,259 237,884 87
Source: PRWeek US Agency Rankings Company notes: Fleishman-Hillard's
revenues include income from GPC in an Omnicom merger