Australia had no shield for the global economic malaise that struck in 2001. In a market boasting over 1,000 PR consultancies, the 15% drop in PR spend hit the global multinational agencies hardest. As smaller, nimble local operators hung on to dwindling client business, global networks like Burson-Marsteller, Weber Shandwick Worldwide, and Hill & Knowlton were forced to rethink the viability of their costly multi-practice, and for some, countrywide operations. WSW's Melbourne operations closed in November 2001, turning Sydney into the long-term lynchpin of its business. Asia-Pacific co-president Andrew Pirie says: "The operations in the smaller markets like Adelaide, Melbourne, Hobart, Brisbane, and Canberra looked great on the map - but if the clients are not prepared to pay for that, it's not sustainable."
"Melbourne was a big, but low margin operation - as the business there declined, margins eroded quickly and, had we held onto it, it would have moved into a loss-making venture, Pirie says.
Not all the major players suffered however, and Ogilvy PR bucked the downward spiral with a maverick acquisition strategy uniting a quintet of high-end, niche PR specialists.
Its portfolio included corporate finance specialist Savage & Horrigan, boutique technology shop Howorth Communications, and others.
According to Ogilvy Australia managing partner Chris Savage, the business saw 30% growth in 2001."Clients are now cherry-picking the best practices to meet their business needs - specialization is the future of PR in Australia."
Consumer PR felt the pinch, and healthcare remained recession-shy, however public affairs work flourished thanks to federal PR budgets. Widespread corporate restructuring provided crisis and issues work for agencies.Savage concludes that while economic indicators may look strong, few in the market are is spending.
H&K, which has a strong presence, deflected recessionary pains with revenues of $1.19m, though Weber Shandwick sold its operations after 15 years. "The realities of the PR business are that you need people, says Pirie, "and with a total population of three million this is difficult.
Our business was profitable, but not strategically sound, he adds. In conclusion, future opportunities may be aided by a government eager to encourage telecoms and biotech industries.
GLOBAL AGENCIES OPERATING IN AUSTRALIA/NZ
Rank Agency Name Australia/NZ Income(dollars) %
2001 2001 2000 chng
1 Ogilvy Public Relations
Worldwide 7,681,000 NA
2 Porter Novelli 6,113,000 10,796,000 -43
3 Cordiant Communications
Group 6,086,000 6,292,800 -3
4 Hill & Knowlton 6,081,000 7,132,000 -15
5 Burson-Marsteller 4,793,000 5,747,000 -17
6 Edelman Public Relations
Worldwide 4,196,552 2,963,832 42
7 Weber Shandwick Worldwide 2,591,000 4,395,532 -41
8 Fleishman-Hillard 1,279,000 NA
9 Text 100 Public Relations 849,237 836,591 2
10 Brodeur Worldwide 400,000 NA
Source: Council of PR Firms Note: This is a list of global PR firms in
Australia. It does not include local independents