REGIONAL FOCUS: Florida: Ain't no sunshine

With tourism at a trickle, Florida firms are opting to diversify.

With tourism at a trickle, Florida firms are opting to diversify.

For many Florida PR firms, business in the Sunshine State has endured a prolonged cloudy forecast. Several of the state's top economic drivers - tourism, technology, and its position as a hub for Latin American business and tourist traffic - have slowed amid the recession. Even before September 11, the recession was taking its toll on the Florida economy. Corporate and agency PR efforts retreated in kind. Agencies retrenched, and some withdrew altogether. From around 4% in 2000, the state's overall unemployment has settled at 5.1% after peaking at 5.3% in April, according to statistics from the Florida Department of Labor. While the PR market is strong for some firms, for many others it's like waiting for the other shoe to drop, according to Joe Curley, partner in Curley & Pynn Public Relations Management in Orlando - a market hit hard by the recession and resulting consumer reluctance to travel after September 11. You can tell the state of the economy by two barometers, he says: client pitches and employee resumes. The former have been few and far between. The latter? Plenty. "Two years ago, I found a decent resume of five years' experience a rare commodity," says Curley, who has 32 years in Orlando. "In the past 12 months, I've seen an increase. PR is soft in this marketplace." Whether for corporate posts or firms, PR hiring has remained flat - unless you're a consultant, says Barbara Ryan, a longtime marketing executive and currently director with The Creative Group, the Ft. Lauderdale marketing and PR placement division of outsourcing firm Robert Half International. Corporations have taken to hiring external specialists, if only because they're watching their marketing budgets more closely - and consultants help them control costs during shorter projects, Ryan says. To wit, Ryan has not placed one full-time PR executive during the past year. "Given the economies of the situation, [consultant costs are] more controllable," she says. "They end up paying a PR specialist six out of the 12 months, instead of 12." While she doesn't see any region of the state headed toward recovery, South Florida, including Miami, is in a better position to recover. The region continues to sport split personalities. It is the heart of the state's most populous region (some 4 million people from the Keys to the Palm Beaches). But with a population in Miami-Dade County that is more than 50% Hispanic, many PR firms derive their business from serving that community. What's more, the city and its international airport long ago established themselves as a gateway to the Latin American market. So firms there find themselves servicing local general-market and Hispanic clients, as well as US clients doing business in Latin America and regional clients looking to do business in the US (see sidebar). Moving toward diversification Companies are diversifying. Fleishman-Hillard is contemplating opening new offices elsewhere in the state, says Rissig Licha, EVP and senior partner with the firm's Miami office, and has diversified into healthcare. Others are banking on diversification as well. At the end of October, RBB Public Relations in Coral Gables marked one year since its separation from Weber Shandwick Worldwide. Today, the midsize regional shop still serves as an affiliate - but the firm's independence allows it to vie for a variety of accounts, says CEO Christine Barney. Not being overly ambitious in the past year has served the firm well, she says. Revenues have stabilized at $2 million from clients like United Airlines, Florida Power & Light, The Florida Bar, and Verizon Wireless. But the lack of diversification for some has been exacerbated by the region's absence of a broad national corporate base. For savvy firms, that's signaled an opportunity, as smaller companies look to use PR to increase their competitiveness, says Licha. "It used to be that smaller destinations and properties didn't hire because they couldn't compete," Barney says. "There are a lot more smaller [clients] looking to take advantage of niches, like professional services, law firms, travel, and leisure." Farther North, the Tampa market is as flat as it is to the South, says Harry Costello, general manager for Hill & Knowlton's Tampa office. That market has seen stabilization, with large players - H&K, Public Communications, Tucker/Hall, and Roberts Communications & Marketing - facing similar tidings: tough times, but steady clients and a move toward greater diversity among specialty areas. For Costello, the agency has beefed up its investor relations, healthcare, labor relations, and marketing areas. "We're all coping with the economy," he says. On Florida's tech-heavy East coast, the tech slowdown has created a need to look wider for clients, says Jim Burke, SVP with Edelman in Melbourne. Top clients Harris Corp. and Verizon IT have been joined by GE Digital Energy in Atlanta, replacing, for example, AirNet, a wireless base-station technology provider. While growth is expected for 2002, Burke characterizes it only as double-digit. But it's the new type of client that is newsworthy. As recently as 18 months ago, the firm was 100% tech, he says. Today, it's 60% tech. "We are very much a microcosm of what has taken place nationally and globally - a softening in client budgets and the number who took on proactive PR campaigns in the past 18 months," he says. "It's understandable given the economy." In Tallahassee, The Zimmerman Agency has seen a flat 2001 followed by a similarly uneventful 2002, says agency president Carrie Zimmerman. But while the agency deals heavily in the hard-hit travel and tourism sector, the firm's international clients - including Six Continents, Atlanta, Bertram Yachts, Miami, and SkyChef from Germany - have kept it diversified and buffered from Florida's slide. What's more, declining ad budgets resulted in her clients, like Diner's Club, beefing up PR spending, she says. That, she surmises, may be the near-term answer to slow tidings in the Sunshine State's PR industry. "Post-9/11, the solution has been to spend more on PR," Zimmerman says. Waiting for change What does tomorrow hold? For his part, Curley won't hazard a guess. It seems everyone is waiting for something else - good or bad - to happen, whether it's an economic crash or another terrorist attack. With the state's economy so tied up in sensitive markets like tourism and even hi-tech, tomorrow's anybody's guess. "I've never seen a more unpredictable period to even allow for forecasting, given the world conditions," he says. "Day to day, things are having a huge impact on the economy. Terrorism and snipers. They ripple through big companies, consumer confidence and marketing plans." ---------------- Lessons in Latin It seemed like such a good idea at the time. In the mid- to late-1990s, when Latin America was red hot with new business development, scores of marketers and PR firms flocked to Miami - the "Gateway to Latin America." The Miami enclave of Coral Gables became home to more than 150 multinational corporations' Latin American operations. Business was booming. Then the recession hit. Agencies closed or relocated. In 2001, Ketchum closed its local office and relocated to Atlanta, and Weber Shandwick Worldwide pulled out of several local deals, including those with The Jeffrey Group and Rubin Barney Burger. New York marketing agency Len Dugow & Associates closed its Coral Gables office, and Citigate Dewe Rogerson shuttered its Miami office. Some agencies, it seems, misjudged the market, staying too focused on the Latin element and not broadening their scope to include the general market, Florida, or regional work, says Rissig Licha, managing director of Latin America and EVP and senior partner with Fleishman in Miami. "The businesses that stayed focused on Latin America have suffered with the economic issues that Latin America is facing," he says. Dealing in Latin America can be a roller coaster. The year 2001 was up 24% for The Jeffrey Group, a Miami Beach-based firm focusing on Latin America, then the first three quarters of 2002 were "slow," with business down about 20% for the year - mostly due to the firm's resignation of MasterCard Latin America, says president and founder Jeffrey Sharlach. While blue-chip clients like British Airways, Compaq, Discovery Networks, FedEx, Kodak, and Nintendo have kept the agency solvent, business only started to grow during late September and October with the addition of two new regional accounts: Handspring Treo and Toshiba Americas. The Latin American segments of many multinational companies are not run the same as other regional operations. Budgets are leaner, and execs are quick to get scared off. "A lot of big agencies came down here and tried to run Latin America the way they run Europe, Asia, and the rest of the world. Latin America is 2% of sales, and you'll never get the budgets," says Sharlach. "Companies who are not already in Latin America are not moving in. Those already there are looking for ways to work more efficiently." Agencies that came to South Florida in part to create multi-ethnic shops have been forced to broaden their focus. Throughout the state, healthcare business has grown: Fleishman was recently named to handle Proesa, El Salvador's foreign-investment promotion agency, and started a healthcare practice to handle the New England Journal of Medicine for Latin America, United Healthcare for the general market, and US Hispanic, as well as local and some national work for Pfizer. Today, healthcare accounts for 35% of the agency's billings. In fact, diversification into public affairs, healthcare, technology, and tourism has helped strengthen the firm, says Licha, whose office serves as the lead Hispanic agency for Fleishman. Today, Hispanic represents 12% of the office's revenues, up from 5% last year. Today, Latin America is 40%; it used to be 90%.

FLORIDA PR AGENCIES
Firm Name/Location                Revenue (dollars)     Change     Staff
                                2001          2000        (%)
Burson-Marsteller           5,436,000     7,983,000        -32        41
 Miami
The Jeffrey Group           4,013,538     3,250,000         24        27
 Miami
Fleishman-Hillard           3,967,000     4,625,000         -1        25
 Miami
The Nixon Group             3,487,114     3,010,841         16        33
 Miami, Tallahassee
The Zimmerman Agency        3,448,923           N/A        N/A        71
 Tallahassee
Thorp & Company             2,853,162     2,611,819          9        18
 Coral Gables
Pantin/JGR                  2,600,000     2,510,263          4        18
 Miami
RBB Public Relations*       2,264,709           N/A        N/A        23
 Miami
Porter Novelli              1,831,000     2,471,000        -26        18
 Fort Lauderdale
Edelman                     1,784,721     2,395,830        -26        13
 Miami
O'Connell & Goldberg        1,353,122     1,181,000         15        13
 Hollywood
GCI Group/APCO WW             907,114       370,082        145         3
 Jacksonville
Cheryl Andrews
Marketing Comms              900,000     1,100,000        -18        11
 Coral Gables
Everett Clay Assocs           894,100       732,192         22
 Miami
CKPR                          510,000       610,000        -16         6
Orlando
Publicis Dialog               400,029           N/A        N/A         2
 Miami
Incepta (Citigate)            288,133     1,023,279        -72         6
 Miami

* Known as Weber Shandwick Worldwide until October 31, 2001 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.

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