With clients inside and beyond the city limits, local firms ruleThe big multinationals have withdrawn from the nation's sixth-largest metropolitan area. The homegrown agencies and independent PR consultants are winning more choice work in and out of the market. Philadelphia is reaping the benefits of its ongoing civic revival. And more PR practitioners are transplanting roots from other cities. "Philadelphia can be described as a region where the independent public relations agencies rule," asserts Dina Tau, president of the PRSA's Philadelphia chapter. "Many national firms, including Ketchum, Golin/Harris and, more recently, Earle Palmer Brown, have come and gone, yet the local independent firms have survived, and in many cases are thriving." A number of local PR leaders attribute this trend to several factors: the close proximity of Philadelphia to New York and Washington, DC makes it unnecessary for big agencies to sustain a local presence, especially when they are mindful of their overhead; the decrease in the number of major corporate headquarters such as Alpo Foods, CoreStates Bank, General Accident Insurance, and Scott Paper, have left fewer marquis opportunities; and because modern communication tools and services make geography less critical. The last factor has worked in favor of Philadelphia drawing PR work from other markets. "Increasingly, we're seeing companies selecting agencies based on resources, chemistry, and expertise - not geography," says Beth Kaufman, PR director of The Brownstein Group. "Non-Philly-based companies are increasingly open to using Philadelphia-based agencies, whereas years ago they viewed New York or hometown agencies a must." In spite of the lingering recession, many of the nearly 40 agencies with PR services in the marketplace report modest growth for 2001. It is expected to be higher in 2002, with 15%-20% a common projection. Nearly every agency that reported losses for 2001 is expecting to at least recover them this year, with the exception of Tierney Communications, an Interpublic Group subsidiary. Tierney, which has been the largest player in the marketplace since the mid-1990s, posted an 18.6% loss in 2001, and expects earnings to remain flat in 2002. This reflects a trend afflicting other large agencies. Wendell Potter, assistant VP at CIGNA, one of the largest public companies headquartered in Philadelphia, observes, "Smaller agencies within the Philadelphia market seem to have come through the recession less impacted than some of their larger competitors outside of the region. Many agencies within this market have very talented professionals that are servicing small- to mid-size accounts, enabling agency PR billings to remain profitable." One of the tactics many firms are embracing for growth is to expand the geographic reach and selectivity of their business-development efforts. "Agencies that have focused on winning business outside of the region have been most successful," says John Moscatelli, SVP and COO of Anne Klein & Associates. "You've got to broaden your horizon." Indeed, a large number of agencies report that a majority of their revenue is coming from clients outside the market. Local agencies have faced certain challenges along the way. Corporate consolidations and acquisitions have impacted the marketplace, particularly in the financial sector. "There was a time when every agency in town had one of the big banks as a long-term, loyal anchor client, and now they're all gone," says Kate Allison, president of Alta Communications, which was founded in April 1999 through the acquisition of the Philadelphia office of Golin/Harris International. Corporate moves affecting Philadelphia The pending merger of Comcast Corporation with AT&T Broadband stands to benefit the Philadelphia area. It would create the nation's largest cable and high-speed internet company with 22 million subscribers in 41 states. The merger cleared a major hurdle in mid-July with overwhelming shareholder approval, which came despite decreasing stock prices that continue to devalue the deal. "The Comcast deal is a big story, and offers a number of interesting prospects for the city," says Allen Greenberg, editor of the Philadelphia Business Journal. He predicts that one communication challenge they may face is "trouble from consumer advocacy groups that are critical of them for having too much power in the hands of one entity." Another increasingly prominent corporate citizen is Lincoln Financial Group, which relocated its headquarters from Fort Wayne, IN in 1999, and recently invested nearly $140 million for the naming rights to the state-of-the-art stadium under construction for the NFL's Philadelphia Eagles, which will be called Lincoln Financial Field. Lincoln's VP of media relations and corporate communications, D'Arcy Rudnay, says, "There has been a void of corporate leadership in this city, and that is one of Lincoln's values. We have worked quickly and clearly to establish ourselves. Being an outsider to Philadelphia has enabled us to bring a fresh view to the city and its issues. We pursued the naming rights as a very good branding decision for the company to effectively reach affluent people throughout the US." In addition to improved leadership among local companies, another factor contributing to regional stability is the strength of the healthcare sector. According to the Greater Philadelphia Chamber of Commerce, the region boasts the nation's second-largest concentration of healthcare resources with 120 hospitals, 200 pharmaceutical and biotech firms, and 135 medical manufacturers. As a result, agencies that specialize in healthcare are reporting even stronger growth, ranging from 30% to as much as 50%. These firms include Dorland Global Health Communications (formerly Dorland Sweeney Jones), Sam Brown (a network-model agency that has out-pitched top New York shops for large pharmaceutical accounts), and Signova (a division of Vox Medica). Signova president Eve Dreyer explains, "As a leading center for medical care and a regional hub for the pharmaceutical, biotech, and managed-care industries, Philadelphia is an incubator for trends, a barometer for performance, and a crossroads for industry leaders and influencers." While most agencies in Philadelphia have yet to achieve national brand recognition, many of the clients feeding them business have. Agencies disclose that work is coming from well-known local companies like Siemens Medical Solutions, DuPont, Campbell's Soup Company, Bristol-Myers Squibb, Sunoco, Aramark, Rohm & Haas Company, AstraZeneca Pharmaceuticals, Lincoln Financial Group, GlaxoSmithKline, Gateway Computers, and Krispy Kreme Doughnuts. Additional business is coming into the market from Microsoft, BASF, Verizon, Procter & Gamble, and Panasonic. While these accounts typically focus on specific products, business segments, or regional activity, they are creating an ever-expanding proving ground for the PR community to demonstrate its prowess. "As a global Fortune 500 company, we work with firms across the world, and hold them to high standards," says Kate Groark-Shields, manager of brand communications for Campbell's Soup Company. "We are pleased to find the caliber of service in our own backyard is absolutely the same." Keeping PR in-house Some area organizations rely more on their in-house operations, and call on local agencies to add depth on special projects. Such is the case with the University of Pennsylvania, one of 80-plus institutions of higher learning, and the largest private-sector employer (with nearly 23,000 faculty and staff, including its health system). "We run the university communications office similar to a full-service PR firm," says Lori Doyle, VP of communications. "We have 17 people doing strategic planning, crisis and issues management, media relations - just about anything a PR firm would do. When we need arms and legs, we've found there are a lot of talented PR professionals in these mid-size firms that are comparable to large, multinational agencies in other markets, and are more reasonable in cost." Many local PR pros say the talent pool continues to improve as senior practitioners either remain or are drawn to the market, and because academic programs are much stronger in preparing young people pursuing careers in PR. "With larger agencies under enormous profit pressures and no offices here, we've been able to hire a lot of great people as a result," says Rita Sweeney, president and COO of Dorland, which recently opened an office in San Francisco. "The West Coast demands expertise, and it can be very hard to find good talent, so we export it." A number of experienced professionals are also relocating from larger cities, including new PR directors who have arrived at agencies like Dudnyk Advertising & Public Relations, which also acquired Earle Palmer Brown's Philadelphia office, and The Brownstein Group, another firm that recently established a West Coast presence. "There's a great deal of incredibly talented PR practitioners in Philadelphia, and a great mix of both native Philadelphians and transplants from other cities," says Brownstein's Kaufman, who came from Porter Novelli in New York. "Everyone's reasons for being here are different, but in general, people seem to want to be able to blend great career opportunities with great quality of life." City in transition In its "Mid-year Market Report," the Philadelphia Business Journal noted the region's business sectors largely mirror those in the rest of the nation. Technology is severely weakened, but remains strongly represented by software makers SAP America and SunGard Data Systems, as well as Unisys. Healthcare is prominent, but is challenged by rapidly escalating premium costs and the reduced coverage availability. Telecomms have mostly experienced lows, though the pending merger of Comcast and AT&T Broadband remains a high point. The hospitality industry has struggled with an oversupply of hotel space, but is also being buoyed by significant civic development. In finance, consolidation has slowed as businesses ride out the economy, which banks are navigating fairly well, boosted by low-cost core deposits. And in real estate, the commercial market has seen landlords make concessions to keep tenants, while the office vacancy rate has increased. Philadelphia is undergoing extensive civic revitalization, particularly in its historic district, arts and culture scene, and sports attractions. "This puts the spotlight on our region, and is good for our industry," says Steve Rosen, managing partner and president of STAR/Rosen PR. Independence National Historical Park is undergoing a major transformation with a new Visitor Center, Liberty Bell Pavilion, and National Constitution Center. Also, the renamed Avenue of the Arts is anchored by the new $255 million Kimmel Center for the Performing Arts, home of the Philadelphia Orchestra and seven other resident companies. And further down Broad Street is the progressing 66,000- capacity home of the Philadelphia Eagles, Lincoln Financial Field, which will open in August 2003. Under tandem construction is the 43,000-seat Phillies Ballpark, set to open in April 2004. But with revitalization comes challenges. At the forefront is the Pennsylvania Convention Center, which has high-profile labor woes and weak management issues. The problems stem from turf wars among the six unions that set up and dismantle conventions and trade shows. Leading convention operators are aware of the problems, and are steering their clients elsewhere. But a proposed $468 million expansion to double its size is needed to help it compete in the Northeast. The fallout could have a profound ripple effect on the local economy, resulting in layoffs, hotel and restaurant closings, and a drop in tax revenue for already stretched city coffers. In spite of its challenges, the overwhelming sentiment is upbeat. "It's time for Philadelphia to proudly brand itself as Philadelphia," says Beth Kaufman, PR director of The Brownstein Group. "Not Philadelphia in comparison to New York."
PHILADELPHIA PR AGENCIES
Rank Firm Name Revenue (dollars) Growth Staff
2001 2000 (%)
1 Dorland Global Health Comms 2,638,000 4,110,000 -36 19
2 Signova 1,775,676 1,158,090 53 11
3 Toplin & Associates 1,456,758 1,353,000 8 13
4 Anne Klein & Associates 895,800 865,000 4 10
5 Breslow Partners 800,000 na na 9
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.