MARKET FOCUS BOSTON: Is Boston in boom? - With hi-tech business flourishing and a number of large firms consolidating, is Beantown really a boomtown for public relations? Rebecca Flass reports

With mergers and acquisitions changing the competitive landscape on both the client and agency side and a number of start-ups entering the game, Boston is delicately positioned.

With mergers and acquisitions changing the competitive landscape on both the client and agency side and a number of start-ups entering the game, Boston is delicately positioned.

With mergers and acquisitions changing the competitive landscape on

both the client and agency side and a number of start-ups entering the

game, Boston is delicately positioned.

On the one hand, acquisitions such as BankBoston (by Fleet) and Digital

(by Compaq) are transforming Boston from a rich region of Fortune 500

companies into a regional office city. On the other hand, it

traditionally competes with Silicon Valley for the title of hi-tech hub

- companies include Lycos, Lotus, Polaroid and Raytheon. Others, like

Xerox, have major division in the Massachusetts region.

According to the Greater Boston Chamber of Commerce, nearly 180,000

people are employed by the region’s hi-tech companies, and more than

half work in the software industry. But even this predominance is being


Boston is now only the fourth-biggest center of hi-tech activity, after

Silicon Valley, Dallas and Los Angeles, according to the LA-based Milken


But it’s not a one-industry town. With approximately 100 biotechnology

firms, Boston has the nation’s second largest biotech revenue.

Healthcare is the largest employer in the state, creating nearly one out

of every seven jobs, and Boston is home to world-class hospitals such as

Mass General Hospital and Brigham and Women’s Hospital.

And the city is one of the nation’s top financial centers, home to

Fidelity Investments and Putnam Investments. More than 25% of all US

mutual fund assets are managed by Boston firms. The nonprofit sector

also plays an important role. And on the consumer front, Gillette, Ocean

Spray and Saucony are major brand names.

New-business potential

What this combination is doing for business is a bit difficult to


Figures from PRWeek’s Top 200 (see chart) show that the Top 25 Boston

agency offices had dollars 117 million of business in 1998. Stripping

out agencies that could not supply 1997 figures, growth was only 9%,

well below the 24% average nationwide. Looking at the Top 10 firms, and

stripping out Lois Paul and Schwartz, growth was a mere 4%. Clearly,

this is not an easy market right now.

What makes the market all the more tantalizing is that there is so much

potential for new business. Sixty-eight colleges and universities in and

around Boston, including MIT, Harvard University, and Tufts, have

spawned tech-savvy, business-minded individuals who are creating some of

the nation’s hottest start-ups. CEO John Brodeur of number one agency

Brodeur Porter Novelli advises: ’All agencies should try to do some work

with Internet companies. They could be the next Netscape, and if you

close your agency, you could miss the next wave of the technology


Combine this hi-tech savvy with the top communicators from Boston

University, Boston College, Emerson and Northeastern University, and

you’ve got the perfect blend of tech companies and PR support. Nine of

the 10 top agencies are hi-tech (consumer agency Cone is the exception).

Several of these have been bought out by larger global agencies in the

past decade (Brodeur, Weber, Miller Shandwick, Copithorne & Bellows).

But a number of big-name firms are still not represented in Boston,

including Burson-Marsteller, Ketchum and Edelman (although subsidiary

PR21 reports a dollars 54,000 presence). And while Hill & Knowlton

established a presence earlier this year by acquiring Blanc & Otus, H&K

has only succeeded after several attempts.

This lack of ’big boy’ agencies has enabled a new crop of independents

to take advantage of the flourishing tech market and establish their

reputation as hi-tech PR leaders, including Weber, Lois Paul & Partners

and Schwartz.

The biggest agency is Brodeur Porter Novelli, founded as Brodeur &

Partners in 1985, now employing 160 people and counting 35 clients from

its Boston headquarters. The agency’s 1998 income - dollars 15,942,000 -

grew 25% from 1997 and comprises approximately 54% of the agency’s US

income (see chart).

Focusing on technology, healthcare, consumer technology and

business-to-business, Brodeur’s clients include Pitney Bowes, IBM and


Number two ranked Weber Public Relations Worldwide, headquartered in

Cambridge, arrived on the scene in 1987.

It established its reputation in the late 80s helping Lotus launch Lotus

Notes, and it worked with Digital Equipment Corporation through the

mid-1990s, when CEO Larry Weber took the firm on a fiercely aggressive

expansion route that has seen Weber extend its PR tentacles to an

international scale.

Now, with a reputation as a global hi-tech PR leader, servicing Gateway,

3Com and Lexmark, the agency saw its 1998 income increase 5% from 1997,

a modest growth especially by its own standards.

The agency has also worked with consumer clients, such as Marshall’s,

since the beginning. With 25 to 30 clients in Cambridge and 110 staff

members, the agency generated dollars 14,954,134 in 1998 revenue, 26% of

the agency’s US income.

Lois Paul & Partners’ Burlington, MA headquarters generates 89% of the

company’s income (dollars 11,965,627), although founder and president

Lois Paul says that will number will decrease as the agency grows its

Austin office.

Founded in 1986, the agency provides strategic relations and IR counsel

to 23 hi-tech companies, including Lotus Development Corporation, Tivoli

and Bell Atlantic Data Solutions Group.

Schwartz Communications, founded in 1990, focuses on emerging growth

companies. With 137 employees and clients including Lycos, GTE and

Hewlett-Packard, Schwartz derives nearly 78% of its dollars 11,646,113

income from Waltham.

FitzGerald, the newest agency in the top five, experienced 17% growth in

1998 vs. 1997, with 1998 income totaling dollars 7,660,365. Founded in

1994, the agency’s Cambridge headquarters generated 86% of the agency’s

US income.

With 70 employees in Cambridge and 50 clients shared between the

agency’s Cambridge, San Francisco and Washington, DC offices, FitzGerald

provides hi-tech PR and IR services. While it represents a few

multinational corporations, including Newbridge Networks and GTE

Internetworking, the agency generally works with small, emerging or

mid-cap clients.

Several agencies, including Brodeur, FitzGerald and Schwartz say they

are turning away as much as 80-90% of new business opportunities because

they don’t have the staff to service the work.

Aftermath of acquisitions

But it’s not all rosy in the hi-tech garden. M&As have greatly affected

many Boston agencies, particularly the mid-size ones.

’Four or five years ago, we used to do PR for the Route 128 giants -

Wang, Digital, Prime Computers, the leaders in this industry,’ says

Sterling Hager EVP Jim Joyal. ’As their business went, so went ours.

Then, they were not in a position to afford our fees, and they had to

downsize or take PR in-house.’

For Miller/Shandwick the acquisition of Digital by Compaq brought a big

change in its fortunes in 1998. ’We used Compaq to go beyond the PC

hardware market, into the consumer tech space when Compaq launched its

first home PC product,’ says president Tony Sapienza. However, when

Compaq acquired Digital, Miller/Shandwick’s Boston office saw its income

decrease by 28% as the agency moved the business to its Houston office.

Today’s the agency is focusing on business, says Sapienza.

The merger also affected Golin/Harris, which opened its Boston office

primarily to service Digital. Following a downsizing and restructure

that shares administrative facilities with its New York practice, it is

now attempting to branch out to other practice areas such as financial

and business-to-business. With Miller Shandwick, TSI and Weber owned by

parent company Interpublic, it makes no sense to have a fourth competing

for tech, says general manager Richard Wolff of G/H New York.

Cunningham, which relies on large companies such as Motorola and IBM,

has also had trouble finding the large clients it is looking for in


’Boston has gone from a headquarters city to a regional office city,’

says Kristin Hilf, SVP/managing director for Cunningham’s Cambridge

office, which has no Boston-based clients. ’The large companies aren’t

headquartered here. Many have been purchased by West Coast companies. On

the flip side, there’s a lot of activity in the start-up arena. Their

budgets tend to be small, but the net companies are competing in a very

noisy market,’ she adds.

It’s the same story for financial institutions and their agencies.

McDermott O’Neill, which represents BankBoston, is unsure whether it

will retain the business once the merger with Fleet is completed, and is

currently researching other banks that may enter Boston.

New arrivals

Another source of competition generates from Chen PR, which opened in

Waltham in 1996. Chen is one agency that competitors say is causing them

to lie awake at night. With nine clients and 25 staff members, Chen is

ranked number 15 in the Boston market and boosted its 1997 income 60% in

1998 vs. 1997, from dollars 1,500,000 to dollars 2,400,000.

Fleishman-Hillard opened a two-person office in Boston in March 1997. By

the end of 1998, it was generating revenues of dollars 669,000, a 139%

increase from 1997. However, it comprises only 0.49% of the agency’s US

income, so it’s still a blip.

The agency currently employs six people, with plans to grow to 10 by the

end of this year, and services 14 clients, including Cellular One, SNET,

and Astra Pharmaceuticals.

UK-based Text 100 is also making waves. It arrived on the scene less

than two years ago, picking up hi-tech clients such as Xerox and


With 11 staff members, new GM Chris Nahil says the agency is generating

15% of Text 100’s global income and plans to double the office in terms

of revenue and employees.

While the number of hi-tech companies and agencies seems to outweigh

other industries, many of the public affairs and consumer agencies are

experiencing high growth, notably The Rasky Baerlein Group, which

recorded 65% growth.

Schneider & Associates, founded by Joan Schneider in 1980, specializes

in launch PR. The agency increased its revenue by 34%, from 1997 to


And with clients like Welch’s, Pepperidge Farms, CVS and Arthur

Andersen, Schneider is proving that hi-tech agencies in Boston aren’t

the only ones being selected by large multinationals.

Schneider says that with assignments increasingly spanning several

practice areas, she is now competing with almost all the agencies in


’Everyone in PR will be in the technology business, particularly with

the Internet,’ says Schneider. ’I don’t think assignments are all of any

one thing - consumer, business-to-business, technology, launch or crisis

communications. There’s an opportunity for hi-tech firms to work

hand-in-hand with other firms.’

Bishoff Solomon, established in 1989, represents major retail clients

such as Starbucks, and Yankee Candle; business-to-business clients

including Nextel and RE/MAX New England; and public affairs, non-profit

and crisis communication clients such as the city of Chelsea and Planned


McDermott O’Neill, founded in 1991, boasts more than 100 public affairs,

financial services, healthcare, real estate and transportation


With 40 employees in Boston, the agency is servicing Children’s

Hospital, Xerox and non-profit accounts like the Boston Food Bank.

According to Geri Denterlein, senior VP and managing director of

McDermott O’Neill, public affairs is a very strong segment in the Boston


’Boston corporations are so civic-minded and mindful of the public

process that public affairs firms have thrived,’ says Denterlein. ’I

predict that there will be a greater blending of public affairs firms

and hi-tech firms.’

She adds that any generalist PR firm not doing healthcare PR is missing

an important industry sector. Feinstein Kean Partners is the number two

specialized healthcare agency in the US, according to chairman Peter

Feinstein, and the 12th largest healthcare agency overall. Figures were

not supplied for these rankings, but the Boston Business Journal showed

revenues of dollars 9 million in 1998, up 50% from dollars 6 million the

previous year.

Meanwhile IR agency Sharon Merrill Associates says that with an absence

of local IR firms, their business is thriving. ’The field of IR is

growing immensely,’ says Sharon Merrill VP Jim Buckley. ’Over the last

few years, there have been so many people going public, and all these

folks need to communicate with investors.’


So which area of agency business will be most profitable in the future?

’The start-up business in Massachusetts is second only to California,’

says Weber’s EVP Phil Greenough. ’A tremendous amount of innovation has

spawned a myriad of Internet, networking, software and telecom


But with so many mergers and acquisitions, perhaps the brightest future

is offered by healthcare.

FitzGerald says hospitals, HMOs and medical technology will remain as

hot as the demographics of the population drive healthcare.

’Biotech, like real estate, has had its ups and downs,’ adds


’It can make a big entry into the PR scene, but it hasn’t yet. It might

be one to watch out for in the next couple of years.’

Boston: the top 25 PR players

Rank Company                         1998 Income    1997 Income        %

98                                                                Change

1    Broudeur Porter Novelli          15,942,000     12,795,000       25

2    Weber PR                         14,954,134     14,218,963        5

3    Lois Paul & Partners             11,965,627            N/A      N/A

4    Schwartz Communications          11,646,113            N/A      N/A

5    Fitzgerald Communications         7,660,365      6,562,592       17

6    Shandwick International           7,151,000      9,983,000      -28

7    Copithorne & Bellows              7,060,856      6,694,254        5

8    Golin/Harris International        4,600,000      4,800,000       -4

9    Cone Communications               4,505,000      4,685,000       -4

10   Cunningham Communications         4,120,000      3,975,964        4

11   The Rasky Baerlein Group          4,068,786      2,458,766       65

12   Agnew, Carter, McCarthy           3,656,451      3,040,996       20

13   Clarke & Co.*                     3,287,470      2,970,000       11

14   BSMG Worldwide                    2,840,000      2,758,000        3

15   Chen PR                           2,400,000      1,500,000       60

16   Schnieider & Associates           2,158,875      1,615,841       34

17   BB&K                              2,090,065      1,859,089       12

18   Manning Selvage & Lee             1,799,500            N/A      N/A

19   Blanc & Otus*                     1,795,763            N/A      N/A

20   The Horn Group                    1,023,000        566,801       80

21   Fleishman Hillard                   669,000        280,000      139

22   Morgan Walke Assoc.                 627,329            N/A      N/A

23   KVO                                 500,000            N/A      N/A

24   Technology Solutions**              355,800        234,000       52

25   KCSA                                330,000            N/A      N/A

Rank Company                   98 US income 98 Bos- 97 US Income 97 Bos-

98                                            ton %                ton %

1    Broudeur Porter Novelli     29,278,000      54   20,812,000      61

2    Weber PR                    57,866,543      26   49,020,178      29

3    Lois Paul & Partners        13,482,032      89          N/A     N/A

4    Schwartz Communications     15,019,646      78   10,930,159     N/A

5    Fitzgerald Communications    8,900,000      86    6,600,000      99

6    Shandwick International     91,485,000       8   80,292,000      12

7    Copithorne & Bellows        23,563,683      30   19,863,246      34

8    Golin/Harris International  48,612,000       9   47,327,000      10

9    Cone Communications          6,312,000      71    5,785,000      81

10   Cunningham Communications   20,437,000      20   17,390,000      23

11   The Rasky Baerlein Group     4,068,786     100    2,458,766     100

12   Agnew, Carter, McCarthy      3,656,451     100    3,040,996     100

13   Clarke & Co.*                3,287,470     100    2,970,000     100

14   BSMG Worldwide             109,537,000       3   58,136,000       5

15   Chen PR                      2,400,000     100    1,500,000     100

16   Schnieider & Associates      2,158,875     100    1,615,841     100

17   BB&K                         2,090,065     100    1,859,089     100

18   Manning Selvage & Lee       50,173,300       4   37,767,000     N/A

19   Blanc & Otus*                8,091,587      22    6,428,376     N/A

20   The Horn Group               4,373,000      23    3,658,000      15

21   Fleishman Hillard          136,272,000    0.49  115,193,000    0.24

22   Morgan Walke Assoc.         23,143,604       3   19,606,544     N/A

23   KVO                          8,800,000       6    8,300,000     N/A

24   Technology Solutions**      15,907,100       2   12,964,900       2

25   KCSA                         9,290,000       4          N/A     N/A

* Based on figures supplied to the Council of Public Relations Firms

** Also included in Weber WW figures.

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