The Northwest's economy has mirrored its climate of late. Still, finds Andrew Gordon, some PR pros are offering hopeful forecasts.The Northwest's economy has been like the weather - dreary and overcast - but some people are seeing a few rays of light poke through the gray clouds. "We've been on the upswing," says Steve Bryant, president of Publicis Dialog's Seattle office. "We've hired several people, and landed some major new business, such as the Hazelnut Council. A lot of our business is in food. Despite the economy, people go on eating, which is good for us." A cynic would say Northwest agencies are seeing better times because the local economy dropped so low that the only direction it could go was up. The Northwest is littered with dot-coms whose demise took their toll on agencies. For the hi-tech companies that survived, the slump took a bigger chunk out of hardware-heavy Oregon than software-centric Washington. For example, chip maker Intel, which has a major presence in Portland, was hit extremely hard when demand for semiconductors began to dry up. But software giant Microsoft and consumer-oriented companies like Real Networks and Amazon.com have kept Seattle's economy a bit sunnier than Portland's. In fact, Portland now has one of the US' highest unemployment rates. The economy is so bad that the state has one of the nation's shortest school years - it can't afford to keep schools open longer. "Our sector didn't dive as quickly as everyone else's," says Kerry McClenahan, principal at McClenahan Bruer, a Portland hi-tech agency that focuses on back-end tech clients. "But by June or July 2001, we started feeling the pain. When you have an area based around the semiconductor industry, you can get hurt during a downturn. And we've been hit pretty hard here in Oregon." Rays of hope Still, McClenahan is one of those sensing an upswing. "A year ago, there were no pitches to participate in," he says. "But now we're starting to see more coming into fruition. We've participated in four or five pitches in the last few months. People are starting to recover." To say that the economy is better in Washington is not to say it's all rainbows. The region is still reeling from the departure of one of its resident behemoths, Boeing. When the company announced in May 2001 it was moving its headquarters to Chicago, it was both an economic (layoffs) and psychological blow to Seattle. "Boeing's relocation hurt the economy," says Deb Hagen, VP and GM of Text 100's Seattle office. "There was also a lot of dot-com work up here. We haven't had any major loss of clients or people, but we're also not in major growth mode. Things are flat right now." Washington is probably one of the few areas of the country where people sing Microsoft's praises, while the rest of the country grouses about its alleged anti-competitive practices. "We are very lucky that one of our largest clients, Microsoft, believes in the power of PR," says Katie Kemp, EVP of Waggener Edstrom, the region's biggest agency. "While they have not increased their spending significantly, they haven't cut into it either. And we've been able to expand into new areas with them as they launch new software products." "Thank God for Microsoft," Hagen echoes. "They've really helped us weather the storm. And while I'd like to think we've seen the worst of it, I'm not willing to bank our business on it." Hagen says that in a sense things are getting back to status quo - to how they were before the craziness of the 1990s. That goes for the kind of PR being practiced as well as the kind of clients being signed. "There's been a realignment of expectations," says Hagen. "Some company executives were clear on what happened, while some are still living in the [recent] past. If you are stuck in the days of thinking that cranking out three press releases a day will improve your stock price, wake up." Despite an economy that took some firms like Wave Rock Communications and New Venture Communications down with it, others saw opportunities among the ashes. Advertising agency Wongdoody started a PR practice, bringing in Jeff Hasen, former president of Publicis Dialog's Seattle office, to run the show. "I don't think we would have just opened an agency and targeted tech," says Hasen. "We've been able to leverage relationships Wongdoody has on the advertising side with the [Seattle] Supersonics, the [Los Angeles] Dodgers, and [energy-bar maker] Clif Bar to develop the PR practice. "There's definitely been a shakeout in tech versus non-tech agencies," Hasen adds. "When I was at Publicis, there was a big push into tech. In retrospect, those that didn't go heavy in tech have been able to ride out the storm." Fleishman-Hillard's Northwest office, which just last week changed its name from KVO Public Relations, began as a tech outfit, but apparently saw the writing on the wall. "Our client portfolio has changed quite a bit over the years," says Sharon VanSickle, GM of Fleishman's Seattle and Portland outposts. "We've grown into areas such as healthcare, social marketing, and issues management. We began as a tech firm, and our tech portfolio has always been quite large. But the reality is that in this moment in time, the tech market is very challenged." So luckily, as KVO, the Portland office used its connections at Fleishman to build its non-tech portfolio. And over at DDB Public Relations, the Seattle office has been able to pick up PR work for JC Penney and Dell thanks to DDB Worldwide's advertising work with those companies. Crisis work picks up Another result of the tough environment is the greater-than-ever focus agencies are now placing on crisis communications and reputation. "Much of what we've done is on the reputation management side," says Wongdoody's Hasen. "With what is going on in the market, the mistrust the public feels is justifiable. There's a need now to tie in PR to a company's business objectives." "We've been helping a lot of clients with crisis communications," says Wendy Lane, president of Lane Marketing. "We've also been using PR for legal strategy, and in the court of public opinion. There's a lot more work being done assisting clients with their current business issues. Companies are dealing with decisions about layoffs, downsizing, and protecting market share." Indeed, Text 100 has put more effort toward crisis communications, whether because of layoffs at clients such as Internap, an ISP, or because of a delisting, such as that of client N2H2, which makes internet filtering software. Many agencies in the area are looking beyond the immediate Northwest for business. "A lot of our business is not from local companies, so we've been able to survive the downturn here," says Jean Armstrong, principal at Armstrong Kendall, a PR and IR agency in Beaverton, OR. "And we're looking to British Columbia now. There are some interesting companies there." At the same time, these agencies are looking for new opportunities in their own backyard. Waggener Edstrom launched a successful biosciences practice, and has significantly strengthened its research department by luring the head of research from Amazon.com, the first time WagEd's research team has had an appointed leader. "This area is well positioned for new market sectors, like life sciences," says Text 100's Hagen. "And Seattle could really grow on wireless. There are so many wireless start-ups in town. The overall PR industry is hungry. We all want good clients."
NORTHWEST PR AGENCIES Rank Firm Name Revenue (dollars) Chg Staff 2001 2000 (%) PORTLAND, OR AREA 1 Waggener Edstrom 34,138,000 34,745,000 -2 279 2 Fleishman-Hillard (formerly KVO) 11,739,000 10,516,000 12 61 3 Pac/West Comms (Lake Oswego, OR) 4,850,000 4,500,000 8 20 4 The Bernhardt Agency 2,800,000 N/A N/A 8 5 McClenahan Bruer Comms 2,500,000 2,300,000 9 21 6 Weber Shandwick WW 2,410,000 N/A N/A 20 7 Conkling, Fiskum & McCormick 2,344,822 1,907,035 23 16 8 Lane Marketing Communications 2,321,433 1,437,491 61 21 9 Armstrong Kendall (Beaverton, OR) 1,525,629 1,277,177 19 8 10 Maxwell PR 785,000 580,000 35 7 SEATTLE, WA AREA 1 Waggener Edstrom (Bellevue, WA) 20,128,000 17,310,000 16 149 2 Edelman Public Relations WW 7,043,779 6,173,983 14 54 3 Weber Shandwick Worldwide 6,273,000 N/A N/A 44 4 The MWW Group 6,266,637 8,268,795 -24 40 5 GCI Group/APCO Worldwide 4,897,427 8,019,491 -39 33 6 Gogerty Stark Marriott 3,486,196 3,151,683 11 14 7 Text 100 Public Relations 2,950,787 3,647,662 -19 20 8 Publicis Dialog 2,949,403 3,089,637 -5 17 9 Porter Novelli 2,807,000 3,337,000 -16 33 10 Richmond Public Relations 1,491,285 1,563,396 -5 15 11 Connect Public Relations 200,591 231,562 -13 2 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.