Kimberly Krautter finds Atlanta corporations adapting to the new PR climate.Take a walk down Peachtree today and instead of a storied hospitable grin, you'll likely get a deer-in-the-headlights stare. Atlanta lost 80,000 jobs in 2001, roughly a third of those lost in Georgia last year. Since January, 14,000 more were added to the jobless ranks, with still more to come as BellSouth and Delta continue their layoffs. With the city's unemployment rate at its highest since 1993 (5% as of September), the men and women pounding the pavement are packing resumes. The only other region to experience the largesse of the 1990s more than the Southeast was Silicon Valley. Unlike its West Coast peer, the Sunbelt was presumed to be recession-proof because of the diversity of its marketplace. Then came Enron, Global Crossing, WorldCom, Tyco, et al. Then the World Trade Center fell. Without heavy industry, Atlanta relies on the usually resilient service sector to bolster its economy. It is the home of two of the largest names in telecom, BellSouth and Cingular Wireless, with a significant presence from WorldCom and AT&T. It is the epicenter for the nine-state region's biggest energy providers, Southern Company and AGL Resources. Atlanta is also home to more Fortune 500 headquarters than any other city, except Chicago and New York. Its stature as an economic center was veritably built on Hartsfield International Airport. Telecom, energy, accounting, and travel were showered in red ink this past year. Fortunately, the conservatism for which local executives like BellSouth's Duane Ackerman were previously lambasted has enabled most of the region's blue chips to ride the gale and remain upright. It has, however, caused a retrenched marketing stance and a severe belt tightening on PR dollars. Edelman's Southern Region president Bob Kornecki is a newcomer to Atlanta, having previously managed the agency's Chicago flagship office. He believes the city's double-digit year-on-year growth in the past decade is slowing its ability to recover. "The city was hit not only economically, but psychologically as well," says Kornecki. "The impact is harder to absorb here than other areas of the country, where growth wasn't as dramatic and was more cyclical." Atlanta as PR paradigm This perceived atmosphere, coupled with the very real pressures on corporate governance, has significantly altered the communications paradigm. Kornecki feels that Atlanta is a microcosm of what is happening on the national landscape because of the range of market sectors represented here. As such, the city offers a unique look at the PR industry. In the not-so-distant past, issues of governance and reputation have been handled with a church-and-state-like separation. Reputation was the gravy on brand image, which was secondary to stock performance. Branding was the domain of the marketing group, Wall Street that of the finance group. Rarely did the two meet, and they were usually handled by two separate outside agencies. While PR has gained influence in the overall marketing mix, some local leaders think the industry as a whole has failed to educate clients adequately on how to build reputation through strategic stakeholder communications. As a result, when CEOs heard the word "reputation," they thought "Wall Street" instead of "customer." Bari Love, EVP-PR of local marketing firm Fletcher Martin Ewing says, "Where we all got distracted was relating too much to Wall Street because that was where the glamour was." Love says the PR industry is not solely to blame. Corporate management shares a measure of the fault by recruiting CEOs from the outside as hired guns to impress analysts. Such moves created a disconnect between the executive suite and the corporate culture, and often resulted in marginalizing key stakeholder relationships. While this was not precisely the experience at Coca-Cola, the company spent a few very tumultuous years because its focus on stock performance blinded it to failing relationships with bottlers, regulators, and consumers. Now under the tutelage of CEO Douglas Daft, a company veteran who managed ground-level operations in Asia, Coke's corporate communications is becoming an industry model. Company spokesperson Sonya Soutus says, "The department is getting resourced the way it needs to be with human talent, budget, and agency support." She says she now talks as often to bottlers as she does to the media, and she meets weekly with her IR, HR, and PA counterparts. Soutus says she is looking among the former agency ranks to build out her staff. It appears that reputation has become the new religion. Love, Kornecki, and their colleagues around town are beginning to see the belt loosen with indications of new business starts here in the fourth quarter. They report that nearly all the work is now wrapped around corporate reputation. "We're back to building client-service organizations," says Love. For Ken Sternad, VP-PR at UPS, the scramble around reputation is all too familiar. His company experienced its religious conversion a little earlier than its Fortune 500 brethren after the Teamsters strike in 1997. "That crisis was definitely a great wake-up call," he says. "We learned, no matter what else you do in PR, no matter what your products are, or what your advantages in the marketplace might be, all of that is secondary to your reputation if that is ever brought into question." Building a multitiered communications group modeled to function as an in-house agency was Sternad's response. While the company does have an AOR (Fleishman-Hillard), it uses a roster of other agencies to support the communications needs of individual divisions in the US. Changing relationships This more narrowly defined, project-oriented client/agency paradigm is fast becoming de rigeur. Atlanta agency chiefs almost universally report that new contracts are limited in scope. Some companies are asking external partners for strategic thinking while keeping the tactical execution in-house. For others the reverse is true. Coca-Cola is not the only one bolstering its ranks with those laid off by the agencies. Cox Enterprises hired Brian Farley to helm its communications department from the now defunct Atlanta office of Cohn & Wolfe. His senior manager of corporate communications, Colleen Brannan, is also a former C&W colleague who says, "We provide the same kind of counsel and support you would get from an agency, except we don't bill for our time." Brannan says many of her old agency comrades now run in-house PR for Atlanta-based corporations like NCR and First Data. AGL Resources is an old-line public utility that has been straining to convert to the post-deregulation, free-market dynamic. After the Enron scandal, the company hired public affairs magnate Betsey Weltner as acting corporate communications director. Weltner, who runs an eponymous PR boutique here, was charged with developing a strategic plan for the AGL's PR department. "You have to have people in place that have an agency mentality," she says. Her plan now in play, most of AGL's corporate communications staff hail from the agency world. "You have fewer people, but they have to be flexible and adaptable," says Weltner. "Agency people were multitasking before anyone came up with that cliche." So what does this mean for PR agencies in Atlanta? The consolidation PRWeek predicted in last year's regional focus certainly proved true. Edelman made the most daring move with its recent acquisition of The Headline Group. GCI and 360Thinc combined resources when Grey bought the integrated marketing shop and recast its local presence as Grey Global. Like Cohn & Wolfe, Hill & Knowlton has all but disappeared as a brand here after three decades. It is now operating under the aegis of subsidiary Blanc & Otus. Meanwhile, Tortoricci & Randolph has been reduced to an individual consultancy. Niche agencies lead recovery This volatility, however, does not imply a weakened market. On the contrary, strongly niched independent agencies are highly competitive, often outpacing their larger branded rivals. For example, Hope Beckham and Hayslett Sorrel project respective revenues of $5 million and $2 million. Honorable mentions for recovering well after disastrous performances go to Ogilvy and Golin/Harris. Tech-heavy Ogilvy was very nearly decimated last year, taking a more than 60% loss. GM Genna Keller earns kudos for stabilizing the shop by shoring up the staff and bringing on Lynn Duran, formerly of GCI, to build a healthcare practice. She also tasked EVP Dean Trevolino to build out the consumer group with strong food and beverage work for marquis brands like Coke and Allied Domecq. "We're not washing our hands of tech, there's still good work out there," Keller insists. She is, however, aggressively mining the region for clients. Golin recently leveraged its work for the Peanut Advisory Board into a megawatt deal with the larger interest group the National Peanut Board. GM Mitch Head has likewise scooped up senior talent laid off by Golin's competitors last year to add to the agency's capabilities. The bottom line in Atlanta, as elsewhere, is all about the bottom line. Every cost has to be justified, and everything has to be managed against a specific goal. Duffey Communications chief Lee Duffey says, "We're now joint venturing with risk-management companies and law firms so that we're able to bring a more full-service advice team to the table and give guidance on the big issues." Porter Novelli, Fleishman, and Ketchum also report client demands for strategies arising out of business objectives rather than brand image. Ironically, as painful and vilified as The Titan Network's break away from Cohn & Wolfe was, founder Tony Demartino declared this trend two years ago. I guess he earns a big "I told you so."
ATLANTA PR AGENCIES Rnk Firm Name Revenue (dollars) Chg Staff Location 2001 2000 (%) 1 Ketchum 20,037,000 20,583,000 -3 93 Atlanta 2 GCI Group/ 10,951,064 11,337,162 -3 66 Atlanta APCO Worldwide 3 MS&L 8,517,843 7,499,446 14 53 Atlanta 4 Duffey 7,497,360 7,209,000 4 38 Atlanta Communications 5 Fleishman-Hillard 4,818,000 5,957,000 -19 28 Atlanta 6 Ogilvy Public 4,572,276 11,580,500 -61 22 Atlanta Relations WW 7 Porter Novelli 4,366,000 3,730,000 17 25 Atlanta 8 The Headline Grp 3,002,055 2,724,217 10 28 Atlanta 9 Jackson Spalding 2,556,846 N/A N/A 18 Atlanta 10 Edelman 2,184,497 2,603,796 -16 14 Atlanta 11 The DeMoss Group 1,804,028 1,611,888 12 18 Duluth 12 Fletcher Martin 1,116,604 1,000,000 12 13 Atlanta Ewing PR 13 Golin/Harris 1,080,039 1,045,000 3 5 Atlanta International 14 Communications 21 593,000 640,000 -7 7 Atlanta 15 Text 100 529,745 54,690 869 1 Atlanta Public Relations 16 Ruane 512,550 200,000 156 6 Atlanta Communications 17 Hollingsworth, 400,000 400,000 0 4 Roswell Colborne & Assoc. Source: Council of PR Firms Auditing: No audit was required for inclusion in the rankings. The CEO/CFO/principal was required to sign a statement verifying the accuracy of the data and agreeing to possible participation in a random audit Disclaimer: While every effort has been made to ensure the accuracy of these figures, PRWeek cannot accept liability for, nor make financial guarantees based upon the information in this chart.