EUROPEAN SURVEY: Looking at Europe - The European public relations industry is expanding rapidly as clients demand both cross-border coverage and local insights

PR agencies in Europe enjoyed a boom year of growth in 1998 as clients demanded global reach for their messages and reputation management on an international scale.

PR agencies in Europe enjoyed a boom year of growth in 1998 as clients demanded global reach for their messages and reputation management on an international scale.

Most agencies had a buoyant year. Porter Novelli International, which has been a European brand for only two-and-a-half years, is now the top agency group in the region. Income grew 38% to more than dollars 100 million during 1998. Chairman Peter Hehir says the rise was boosted by the group's acquisition of additional shares in firms it already had stakes in, including shops in Italy and Spain.

But there is no doubt PNI's European agencies have also benefitted from strong organic growth within its network. German agency Kohtes & Klewes Porter Novelli grew 40%. New addition Parmenide Porter Novelli in Paris turned in more than dollars 960,000 from a standing start, while Comunicacion Empresarial in Spain?in which PNI has a majority share?contributed more than dollars 4.8 million. PNI also appointed affiliates in Austria, the Czech Republic, Croatia, and Slovenia.

Additionally the group has just bought one of the leading Belgian agencies, Ellips, which next year will put it at the top of the Belgian table above Burson-Marsteller. Hehir promises there is more in store. 'We are doing a lot of international business,' he says, 'and we intend to consolidate our position further in the coming year with some serious European development.'

Business methods change
To cope with the growth of pan-European business, agencies are changing the way they do business, with many groups following BM's lead in building a practice structure.

GCI European chairman Ralf Hering believes this trend will become more widespread. 'We are heading toward creating a system of highly specialized practice structures with global reach, to compete with the niche boutiques. We're working in a three-dimensional matrix now, consisting of local offices, pan-European practice leadership, and global account management.'

GCI Europe made a major structural change to its business at the beginning of last year, setting up seven centers of excellence in disciplines including corporate, consumer and public affairs. At the European headquarters in Dusseldorf, a network coordinator and a marketing and development director were hired to work with the centers.

Ketchum also integrated its European offices into six global practices.

'Worldwide, about 30% of our work is on multi-country accounts, and a substantial part of our profit is generated by these accounts,' says Jerry Olszewski, senior partner, international.

This trend is confirmed by Shandwick Europe's new managing director, Lutz Meyer. 'We have been invited to several significant pitches during the latter half of 1998 and this year, where international companies have asked for PR representation across Europe.'

Hill & Knowlton's impressive growth in fee income was also driven by a rise in international work. 'More than 50% of our work is transnational?that is, for clients who use us in two or more offices,' says president Paul Taaffe. 'It's no longer just US, but also European-based companies who want us to do this kind of work,' he adds.

The rolling out of the euro in January is already making its mark on the way European businesses work. Richard Price, managing director of EMC Euro PR?part of the Euro PR network?says it has allowed networks to appear more 'European' by quoting prices in the new currency.

The currency has not yet affected the UK's position as the leading PR market in Europe, despite the fact that it has opted out of being part of the first wave of participating countries. The big players with head offices in the UK and the US still dominate the tables.

But there are signs that groups based on mainland Europe are beginning to flex their muscles. Trimedia, based in Zurich, and Kreab, based in Stockholm, are both in the top 15. Kreab will open its first London office this fall. London managing director John Brill says, 'Some continental PR companies now have a very serious presence in Europe, and there is every indication that the big agencies based in France, Germany and Scandinavia are going to become increasingly important.'

Trimedia VP Michel Gutnecht expects more groups to come up through the ranks. 'In the past, everything in Europe has been done in English. But the activity around the European Commission and Parliament means that much more is being done in French and German. It's a chance for European businesses to develop outside of the Anglo-Saxon world of PR,' he says.

But while the number of pan-European campaigns is increasing, Euro RSCG International Communications group chairman Graham Lancaster says US clients are also looking for local solutions. 'People want cross-border messages and positioning, but understand execution needs to be carried out in local markets.' The group is retaining the local names of its agencies, and Lancaster says that 80% of the group's business is now derived locally.

PNI's Peter Hehir also places emphasis on local markets. 'We believe international PR is best effected by having very strong national agencies in each country,' he says.

In Europe as a whole, some of the biggest growth was in the relatively young Scandinavian PR market. This was particularly true of Sweden, where many agencies saw growth of 20% or more in 1998. Many leading groups, including H&K and BM are now established in the region and 1998 saw a number of new start-ups.

GCI has stated its intention to be one of the strongest brands in Scandinavia, buying Swedish agency Rinfo in July 1998 and looking for other acquisitions in the region. The Nordic region was also a magnet for Ketchum, which extended its reach by signing up Stockholm agency Effektiva as an affiliate and asking it to coordinate activities in the area. 'We're finding more and more requests from clients who want to be present in these markets, particularly healthcare and technology companies,' says Olszewski.

H&K's Paul Taaffe also reports ongoing growth in Eastern Europe, where agencies have been set up in Moscow and Latvia. GCI recently strengthened its capability in Central and Eastern Europe, creating offices in Warsaw, Budapest, the Ukraine, and Croatia. Fleishman-Hillard Europe enjoyed its best growth for five years?with major contributions from Italy, Germany, and Ireland. The firm added a full-service network in Central and Eastern Europe.

With cross-border mergers and acquisitions, initial public offerings, privatizations of telecommunications and utility companies, financial issues drove a significant amount of PR work during 1998. Shandwick, whose European offices are included under the International PR banner, is expecting a significant amount of its growth to come from investor relations. At the end of 1998, it successfully pitched with sister advertising agency McCann to win the privatization work in France for Aerospatiale.

BM also began to take IR increasingly seriously. A pan-European IR group was set up in the UK and is now being rolled out across the major European markets.

The flurry of financial activity has had a major impact on the industry as a whole, elevating PR to the status of a strategic consulting function. GCI Group, for example, is in the process of setting up a consulting arm that will cover IR, crisis management, change management and labor relations.

Ralf Hering sees the ability to dip into these specialized areas as the 'fourth dimension' in his model of the modern European PR agency. GCI's acquisition of financial PR firm Focus in the UK helped the financial and IR practice turn in a very strong performance.

Creating networks
As in the US, PR across Europe is now playing a crucial role in building and protecting brands. At Shandwick, Meyer says: 'Our pleas to the heads of marketing to involve us earlier have finally been heard.'

Last year Shandwick created seven specialist groups across mainland Europe and began to roll out its reputation management model. 'Multi-national clients are looking much more at reputation management as a whole, rather than individual services like PR and advertising,' says Meyer.

Agencies without access to owned European networks are forming ever-larger groups of affiliates. These tend to be coordinated from the UK, mostly because US firms seeking entry into Europe usually choose the UK as a base for linguistic reasons.

Ogilvy PR Worldwide?which grew 24% in Europe last year?is somewhat unusual in that it has its own network, while also managing a selection of independent agencies. Paul Philpotts, Ogilvy president of Europe says, 'We've spent a lot of time developing systems so that we can manage other agencies. We're saying to clients, "use your incumbent agencies and we'll incorporate them into our virtual network."'

More typically, networks begin when a UK-based firm looks for partners overseas to help serve its clients' international needs. At some point, a US partner is found, funneling more business into the network as its clients spread across the globe.

Recently, agencies in specialized fields, such as hi-tech outfit Brodeur, have been expanding internationally?specifically to Singapore and Australia.

Jonathan Simnett, director of corporate development for Brodeur EMEA, says, 'In South America and the Pacific rim, we are now mirroring the same affiliate-to-ownership model we have used in Europe.'

Non-specialist agencies have also seen growth beyond their European roots.

The International PR Network added five new members in the last year, including agencies in Australia and Argentina. Ellis Kopel, who heads the network of independent PR operators, says the newcomers take combined fee income up to dollars 59 million.

Meanwhile, the Global Technology Communications network is currently in the process of re-inventing itself as Tiger International, in order to reflect a broadening beyond purely hi-tech PR.

Sophie Spyropoulos, associate board director at the network's UK agency Grant Butler Coomber, says: 'With consumer technology clients in your portfolio, the edges between hi-tech and consumer start to blur. We are re-branding our network because all our clients are changing?there is a need for more than IT expertise.'

Apart from their increasing geographical reach, there are signs that networks are growing more sophisticated. Kestrel Communications is part of the Worldcom network, and Kestrel president Roger Hayward says the network is beginning to split into specialist sub-groups. 'We are growing parallel networks for technology, IR, travel and tourism. In a sense there will be four or five different networks within Worldcom in a few years time.'

One of the most notable developments for networks in the past year has been an increase in the level of integration between member companies. Networks are becoming more efficient at sharing information, thanks to technology that allows separate agencies to see the whole picture while working on related projects.

'A lot of time in networks can be spent messing about with paperwork, rather than doing what is important,'Spyropoulos says. 'Tighter communications are needed to run pan-European campaigns effectively. For example, we are putting in an extranet that will allow us to share information across the network a lot more easily.'

Training employees so that they work better together across the network, sharing best practice and pooling problem-solving skills, is another area which is growing in importance. Spyropoulos says, 'We have regular international training programs, not just at the top, but at the account director level, too. Everyone needs to understand how to communicate efficiently. You also need to understand what is going on in other markets. For example in Spain, nothing happens in August. We also have account manager exchanges on shared clients.'

Seek added value
Many networks are looking for additional ways to add value, beyond offering regional coverage. David Watson, international director of Key Communications, part of the IPREX Network, says, 'It is a question of adding easy-to-access global services. We are working on packages that can help, such as systems to give companies rapid and accurate sustainable quotes and follow-through evaluation.'

Standardizing procedures across the network in spheres such as evaluation is an active area of development. These refinements are beginning to bring benefits, not just as tools for winning and executing business, but for what they bring to the PR profession overall. Agency bosses say being part of an efficient PR network is such an asset that much closer partnerships with clients are developing.

'The client comes to you to buy PR but they get much more,' Hayward says. 'It gets an intelligent observer of their business in each country.'

For example, for its client Rhone-Poulenc, Kestrel carried out an audit of the issues the company was facing. 'This led them to adopt an open-door policy to environmentalists. We did a similar thing for Amnesty International and came up with 20 recommendations on how they might change their structure. This was done by all companies in the network,' says Hayward.

At EMC Euro PR, Richard Price agrees. 'Having networks gives us greater status. We are now asked much more to give advice on things like how to carve up the budget, and increasingly clients will come to us for our knowledge of local markets.'

Note: Network rankings will be published in our August 16 issue.


Rank Company Fee income (dollars) % Growth

98 98 97

1 Porter Novelli International 100,550,834 72,792,000 38

2 International PR* 76,656,000 73,462,400 4

3 Burson-Marsteller 69,761,600 65,632,000 6

4 Euro RSCG Int. Comms (ERIC) 69,449,600 68,193,600 2

5 Hill & Knowlton 57,515,200 46,780,800 23

6 Edelman PR Worldwide 31,044,390 25,846,056 20

7 GCI Europe 30,688,000 21,888,000 40

8 BSMG Europe 20,962,402 18,295,296 15

9 Ketchum 19,724,410 13,078,450 51

10 Kreab 17,776,000 12,920,000 38

11 Text 100 16,797,482 12,944,746 30

12 Grayling Group 16,342,560 13,838,400 18

13 Trimedia International 15,200,000 11,584,000 31

14 Cohn & Wolfe 13,755,067 8,304,221 66

15 Fleishman-Hillard Europe 13,677,656 9,479,470 44

16 Manning Selvage & Lee 13,547,200 12,574,400 8

17 Ogilvy PR Worldwide 12,742,400 9,680,000 32

18 GPC Group 10,243,698 9,350,621 10

19 Sanchis & Associates 6,432,480 4,432,206 45

20 Herald Communications 5,037,989 4,765,206 6


Rank Company Staff Clients Income Location

98 98 97 98

1 Porter Novelli International 929 691 4,251,663 New York

2 International PR* 919 1,590 10,701,000 London

3 Burson-Marsteller 278 n/a - London

4 Euro RSCG Int. Comms (ERIC) 608 953 - London

5 Hill & Knowlton 599 655 - London

6 Edelman PR Worldwide 290 514 - Frankfurt

7 GCI Europe 293 409 2,520,000 Dusseldorf

8 BSMG Europe 167 261 - New York

9 Ketchum 193 243 3,300,191 London

10 Kreab 98 84 - Stockholm

11 Text 100 216 199 - London

12 Grayling Group 144 159 8,265,270 London

13 Trimedia International 170 250 - Zurich

14 Cohn & Wolfe 111 107 - London

15 Fleishman-Hillard Europe 154 321 - Paris

16 Manning Selvage & Lee 122 209 - New York

17 Ogilvy PR Worldwide 120 229 - London

18 GPC Group 85 142 - London

19 Sanchis & Associates 53 97 - Madrid

20 Herald Communications 73 78 - London

1998 Rankings: The facts on the figures

The 1999 PRWeek UK Top European Agencies table ranks owned groups and agencies in leading European markets by calendar year fee income for 1998. PRWeek has enlisted the help of the trade associations in some of
the main continental markets in order to produce the most comprehensive cross-border table available.

To avoid misunderstandings in different markets, advice on criteria was taken from: Syntec Relations Publiques in France; Gessellschaft Public Relations Agenturen (GPRA) in Germany; Associazione delle Agenzie di Relazione Pubbliche a Servicio Completo (Assorel) in Italy; Bund der Public Relations Agenturen der Schweiz (BPRA) in Switzerland; Precom and the VPRA in the Netherlands; the BGPRA/ABCRP in Belgium and Precis in Sweden.

According to PRWeek's criteria, European income includes fees for PR work carried out in the EU and Switzerland. It does not include income relating to non-PR activities such as advertising, direct mail or exhibitions. Agencies were asked to submit fee income only. To avoid an imbalance in the tables caused by different exchange rates, agencies were initially asked to provide sterling fee incomes for 1998 and 1997 in pounds sterling according to average exchange rates. These were then converted to dollars at a rate of 1.6 dollars per pound. Trade associations in the relevant countries have checked members' figures against their own records to ensure the accuracy of the PRWeek rankings.

NOTE: Spain is absent from the 1999 table as PR association Adecec is required to present its members' figures to the Spanish ministry of finance before making its income public in July.

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