Thanks to an overall improvement in the economy, it was another outstanding year for the German PR firms, with many businesses posting fee income growth well into double digits. 'PR is still growing tremendously in Germany,' says Stephan Fink, managing partner of hi-tech specialist Fink & Fuchs, 'and the growth will go on further. At the moment agencies appear to be growing by an average of just over 20%.'
Kohtes & Klewes Porter Novelli, Germany's leading agency, last December acquired a stake in Dusseldorf agency Deekeling & Fiebig, subsequently merging the acquired firm with one of its subsidiaries to create Deekeling Kommunikation. This year K&K is listed in the rankings under its new umbrella name, European Communications Consultants, which encompasses all its PR interests.
Another top-end deal was the acquisition of Reporter by Trimedia, propelling the combined entity up the chart to fourth place.
'The German PR market in comparison with the British PR market is still very underdeveloped,' says Bodo Bimboese, who has stepped up from running Trimedia's German operation to take on an international role for its Swiss-based parent, in which he now has a personal stake. 'The potential remains huge. Slowly but surely, people are realizing that PR is an important instrument.'
A number of factors contribute to the boom. There has, says Ralf Hering, GCI Germany CEO and managing partner, been an upsurge in demand from the FMCG sector. 'There is a certain renaissance in the consumer business,' says Hering. 'Big spenders like Mars and Procter & Gamble are more focused on PR than ever before.' Hering also predicts that Germany's mittelstand?the medium-sized businesses that make up its economic backbone?will generate much more business for consultancies in the future as they wrestle with issues such as globalization and change management, in the process requiring more corporate reputation and business-to-business communications programs.
One particularly vibrant sector in Germany is financial PR. In common with other countries in the euro zone, there are plenty of projects related to the issues surrounding the new European single currency. Above and beyond this, however, there is an escalating need for investor relations, from larger firms that are already listed, and from smaller companies planning stock offerings.
'Frankfurt is a boom town for the banks,' says Bimboese. 'And there is still a big interest among Germans in shares. So a lot of companies are planning their initial public offerings, which offer communications opportunities.'
As the 39% hike in fee income at Fink & Fuchs illustrates, demand from the hi-tech sector also remains strong. The Internet has really taken off in Germany, and many companies are trying to cash in on e-commerce.
According to Judith Huss, managing director of Herald Communications Germany, which had fee income of dollars 1.6 million and fell just outside the top 25, demand for PR support from technology companies is still 'booming'.
But added to this is an increase in assignments promoting e-commerce sites to the general public, such as Herald's work for Internet wine seller Chateau Online.
The liberalization of the German telecommunications marketplace has also created a huge amount of work in the past year as new entrants vie for visibility. And another area where communications opportunities are expected to develop is the healthcare sector.
'There are quite a few drugs coming up that have a broad audience and that is changing a lot of communications in that area,' says Media Concept owner and managing director Bernhard Fischer-Appelt. 'Advertising to the public is quite limited for legal reasons, so PR is a good communications path,' he adds.
Last year Hamburg-based Media Concept?at number eight?more than doubled its fee income. It established an operation in Munich, to be closer to IT and media clients, formed an Internet/multimedia division Mindways, and boosted the size of its Berlin office. 'The eastern German market is picking up and getting more interesting. We have a lot of clients there, like the public lottery for the state of Brandenburg,' says Fischer-Appelt.
But it is what is happening in the city of Berlin itself that is preoccupying many. As more and more arms of the federal government move there, interest among agencies and client companies grows proportionately. GCI has opened an office in the city, and so has Media Consulta, the 10th-largest agency.
The latter operation in the newly restored capital is to include a media center with facilities such as a state-of-the-art post-production suite and satellite uplink technology. However, Media Consulta carries out a lot of work for institutions such as the Bundesregierung (the German parliament), the European Commission, and the United Nations. But managing director Harald Zulauf cautions that Berlin may not become the commercial honeypot some may expect. 'Many agencies are looking for representatives in Berlin. But just because the politicians are moving to Berlin it does not mean the budgets will go there as well. Berlin is not London or New York,' he says.
In comparison with leading European countries, Germany's public affairs is underdeveloped. This could be caused by an entrenched cultural mindset which expects officials to be beyond reproach and frowns on the use of third parties for lobbying. However, some agency heads see change as inevitable as a result of closer European unity and expect more opportunities to arise.
Rupert Ahrens, managing partner of independent agency Ahrens & Behrent and president of the German PR firms association the GPRA, believes that leading firms will benefit from increased international business. According to recent research, the GPRA's 34 members account for 46% of market share by income among Germany's top 100 consultancies.
'The growing strength of the German PR industry in the domestic market will gain future importance for its performance in the international markets,' says Ahrens. 'Besides the US and the UK, Germany possesses a highly developed market for strategic consulting and PR services. The dynamic development of the German PR market will increase future international competition to a larger extent.'
He continues, 'Already this year, 17% of the annual revenue of the GRPA members has been obtained from international business. This trend will continue over the coming years and will give further impetus to the German PR industry as a whole,' adds Ahrens.
Finally, one of the big problems facing PR firms is recruitment. It has been estimated that there are about 20,000 people working in PR in Germany, the majority in-house. The rapid expansion of the consultancy sector has led to a shortage of qualified staff, a situation which could put a brake on growth for some firms.
Fink says he would like to see vocational university courses on PR introduced, as has been the case in the UK.
If the German PR market can overcome the recruitment issue, its growth could be even more dramatic in the coming years.
EUROPEAN AGENCIES: GERMANY
Rank Company Fee income (dollars) Growth
98 98 97 %
1 European Comms Cons*** 27,635,840 19,696,544 40
2 Sponsor Partners 10,976,000 8,048,000 36
3 Trimedia/Reporter* 8,000,000 5,376,000 49
4 Burson-Marsteller 6,345,600 6,702,400 -5
5 Leipziger & Partner* 6,077,333 7,062,000 -14
6 GCI Germany 5,936,000 4,608,000 29
7 Edelman PR Worldwide 5,296,000 5,196,800 2
8 Media Concept* 5,269,520 2,609,104 102
9 Shandwick Germany 5,243,200 4,283,200 22
10 Media Consulta 4,960,000 4,800,000 3
11 Ahrens & Behrent* 4,529,656 3,142,858 44
12 MPC* 3,776,000 3,521,600 7
13 PR Kaltwasser 3,264,000 2,320,000 41
14 Ketchum* 3,155,861 2,832,218 11
15 Vibrio 2,907,586 2,206,896 32
16 Manning Selvage & Lee 2,868,800 2,626,206 9
17 Public Relations Partners* 2,736,000 2,976,000 -8
18 Fink & Fuchs PR 2,703,440 1,947,200 39
19 CP/Compartner 2,694,157 2,199,312 22
20 WBPR* 2,628,800 2,054,400 28
21 Hiller, Wust & Partner 2,560,000 1,600,000 60
22 Fleishman-Hillard* 2,558,845 1,807,309 42
23 APR BSMG* 2,373,446 2,814,675 -16
24 Rugo Kommunikation* 2,000,694 1,555,200 29
25 Frahm & Wandelt 1,968,000 2,320,000 -15
Rank Company Location Status
1 European Comms Cons*** Dusseldorf PNI network
2 Sponsor Partners Bonn BBDO network
3 Trimedia/Reporter* Frankfurt Trimedia subsidiary
4 Burson-Marsteller Hamburg B-M subsidiary
5 Leipziger & Partner* Frankfurt PROI network
6 GCI Germany Dusseldorf GCI subsidiary
7 Edelman PR Worldwide Frankfurt Edelman subsidiary
8 Media Concept* Hamburg Independent
9 Shandwick Germany Bonn Shandwick subsidiary
10 Media Consulta Cologne Media Consulta network
11 Ahrens & Behrent* Frankfurt Independent
12 MPC* Munich Independent
13 PR Kaltwasser Nuremberg Inter PR network
14 Ketchum* Munich Ketchum subsidiary
15 Vibrio Munich Fireworks network
16 Manning Selvage & Lee Frankfurt MS&L subsidiary
17 Public Relations Partners* Frankfurt Pinnacle network
18 Fink & Fuchs PR Wiesbaden Independent
19 CP/Compartner Essen Independent
20 WBPR* Munich Pinnacle network
21 Hiller, Wust & Partner Aschffnbg Copithorne&Bellows
22 Fleishman-Hillard* Frankfurt F-H subsidiary
23 APR BSMG* Hamburg BSMG subsidiary
24 Rugo Kommunikation* Bonn Independent
25 Frahm & Wandelt Hamburg B-to-B network
All figures relate to the year ended 31 December 1998;
Fee income = PR fees only;
* denotes GPRA membership;
** Formerly listed as Kohtes and Klewes Porter Novelli