A network does not run itself. Bringing together the interests of global entrepreneurs, each of whom presumably had sufficient ego and drive to start their own business in the first place, can be daunting. "We're all a bunch of rebels,says Lori Booker, an Iprex partner from Carlman Booker Reis. "We're all type-A personalities, each of whom think we know our markets best.
Booker says disagreements are usually won by the partner with the most experience.
Neale-May admits issues will always arise when you bring strong pros together. "There's been some sensitivity and ego issues,
he says. "There's the fact that we have not necessarily given exclusivity in every market because we want to encourage a certain degree of competition. Managing entrepreneurs is always a challenge, but where they see a self-interest and a common good, we have very motivated people."
While Neale-May and his newly hired MD of GlobalFluency, Charles Caudill, are clearly leading the network, the more established agency networks have structures that more closely resemble industry associations, and have rotating leadership. Worldcom's regional chairs, currently Dunkin in North America, rotate annually, with each chair sitting on the board of directors. One of the partners handles most of the management of the network itself, and Worldcom also has an accounting person on staff.
Iprex has an administrator in Atlanta to handle day-to-day organization business, and an executive committee that rotates every two years. All members of the executive committee, including the president, are elected by the partners. Pinnacle's executive committee also serves two-year terms.
Its current chairman is de La Garza.
PROI's current president is Carl Courtney, MD of Icas PR in London, and he serves a two-year term as well. ECP Global's chairman, Les Schupak, was elected to a three-year term by the board of directors, who are in turn elected to one-, two- or three-year terms in a staggered system that is based on member votes. Plexus' board comprises the principals from each member agency, who meet by monthly conference call.
Not all networks have rotating leadership, though. PRConsultants Group, originally based on a network devised by the client, is managed by the three founders, Vallbona (president, CIM Incorporated), Barb Harris (president, Teamworks) and Solveig Thors-rud-Allen (president, The Firm).
Adding new partners
One of the most pressing issues for every network is bringing in new partners. Each group will tell you that it looks for the best independent firm in each market, which may be an impossible task given how many networks are competing for the good partners.
Pinnacle has a typically stringent selection process. The network may launch a search for a new partner in a previously non-represented region, or an existing partner may grow too large and opt out of the network.
In either case, each prospect is scrutinized as a business proposition, and for a good cultural fit.
"We do our homework to ensure who we bring in will really work out," says Pinnacle's de La Garza. Site visits to every prospect is required, and all shareowners worldwide eventually vote in the new member. Prospects are grilled on their approach to management decisions, staff turnover, major accounts, and media contacts locally.
Equally selective is Iprex, which also requires a formal application process, a site visit, and a vote of the board before the general membership is allowed to weigh in on the candidate.
Most networks have a clear definition of each region, be it by US states, like PRConsultants, by a combination of states and worldwide regions, or by countries, like Plexus. Most will offer exclusivity in a given market, or when another firm is brought in locally, it will usually offer a different set of skills than the incumbent member.
Each network has its own fee structure. Pinnacle has two levels of member - shareholder and associate. Membership dues for the shareholder include an $8,000 joining fee, plus dues of $1,050 a quarter. Non-voting or associate members pay $1,200 joining fee and $1,200 annual dues. All North American members must be full voting members, but other countries have the option of being one or the other.
Worldcom has one level of membership, but different membership fees depending on the region. In the Americas, partners pay an initiation fee of $4,500 to join, then group dues annually of $2,500, with additional Americas region dues of $1,500 a year.
Iprex charges dues to new members according to a sliding scale, ranging from $3,000 to $4,000, with no initiation fee. Firms in developing countries can become members of Iprex for less than $1,500. ECP Global's members buy one capital share each upon joining, which costs $5,000, and then pay yearly dues of $2,000.
Networks generally expect members to pay for their own travel to mandatory meetings that take place either annually or multiple times a year. The meetings are crucial to membership. "Every year, each member must agree to attend meeting so that you develop those relationships to be of great value to the client,
explains Iprex president Oltmanns. Three partner meetings are held every year in different regions around the world.
The opportunity to share experiences with peers is a big draw for many members. "It is an excellent resource for intelligence,
explains de La Garza. "All the partners are owners. You can be candid. Our meetings are largely devoted to professional development."
A portion of Pinnacle's budget, as well that of other networks, is dedicated to bringing in business speakers and setting up seminars tackling various issues impacting the running of a successful agency. "Agencies that come in are, within a year, using much better management, and are much more profitable,
de La Garza adds.
Other networks, however, reject the idea that the organization should focus on helping develop good business practices. "I can think of much less expensive ways of getting training,
says Vallbona. "We usually rely on PRSA for any training. A network is really to grow your business."
But Oltmanns says that there is often no one else for the entrepreneur to talk to about the complicated business issues that frequently arise.
A community of non-competitive colleagues with similar business objectives is a helpful forum for problem solving. "Trust me, when you are running a small or mid-size business,
he says, "that kind of management advice and support is invaluable."
De La Garza says new members are expected to come to meetings, to host a meeting in their city eventually, to serve on committees and as an officer on the board. "We expect you to be active. If you aren't, you're wasting your time,
he says. Unless you go and develop relationships with your partners, get intelligence and resources, then you really feel that you have not gotten anything for your money."
Without direct relationships with other partners, a member loses more than just an opportunity to share information. It is about building value for the client. "It's one thing to be able to tell clients you are a member of Iprex,
Oltmanns says. "Your real value is to know these firms, to have personal relationships with these partners."
That kind of relationship development is what builds bridges between these independent agencies, allowing the group to ultimately evolve a culture all its own. "I think the biggest misconception is that networks don't function as a seamless organization,
Dunkin says. A recent project involving 20 firms communicating largely by e-mail proved to her how well their system is working. "We bring a vigor and an entrepreneurial spirit to the client."
A VIEW FROM THE MULTINATIONALS
Multinational PR agencies and independent agency networks have more in common than one might think. Large PR agencies routinely tap into the local strengths of a network by subcontracting account work. Look closely at the "global
nature of accounts held by big PR firms, and they can be as prone to expansion and contraction as any network business.
But is one model ultimately superior to the other? According to the chairman of the world's largest PR firm, the answer to that question has changed.
Years ago, before BSMG merged with Weber Shandwick Worldwide, Jack Leslie would have agreed that large multinational agencies were not usually best equipped to deal with the needs of clients in multiple markets around the world.
"In the old days, indigenous agencies were really the leaders in their market,
he says. Praising the virtues of the independents with whom BSMG had relationships was part of Leslie's pitch. "You could go out and say 'I know who they are, I have an affiliation with them,' and you won't get pushed into a one-size-fits-all big operation that is good in some places and lousy in others.
Even five years ago, Leslie says, multinationals had trouble living up to global expectations. "Multinationals only used to be as strong as their weakest markets." That was the problem with big agencies then, inconsistent standards of service in each of an agency's global offices. But that has all changed, he says. "PR firms have now gotten to the point that the advertising and management consultants got to 5-10 years ago, where through both acquisition and organic growth they have premier presence in those markets, in both size and depth of service."
Leslie also feels that centralized ownership has its advantages. "You only have so much influence when it's a network,
he says. "If they have a large account in Hamburg and you come in with some mid-size account for them, you may not get their attention. In one office, we can make clear what the company's priorities are.
But Leslie knows that multinationals still must show they've really improved service in local markets, and the competition is fierce. "There really aren't many truly global, consolidated accounts,
he says. "We're banking on the fact that we can convince people."
Five Worldcom partners recently lost a pitch for a piece of international business, which would have tapped into the network's expertise in biotechnology and life sciences. But far from being dismayed, Cathy Dunkin, the chair of Worldcom's Americas region views the pitch as a successful opportunity to spread the network's message.
"The client was sort of skeptical,
says Dunkin, who is also principal of her own PR firm, The Standing Partnership. "But by the time we'd finished talking to them, they really thought Worldcom was a great system."
Dunkin, and others who join or start agency networks, find that negative perceptions about their operations sometimes prevail in the minds of clients and competitors. But networks have been around for quite a while now; one of the oldest, Public Relations Organization International (PROI), was founded in 1970. Worldcom, which touts itself as the biggest, with 100 firms in 35 countries, was established in 1988.
Networks are growing
Worldcom, Pinnacle, PROI, and Iprex are the names that spring to mind when networks are mentioned. But there are significant signs that more and more independent firms are looking for opportunities to affiliate with like-minded partners across the country and around the world. GlobalFluency, Plexus, and Over the Ocean have all been formed in the past year, with targeted goals for increasing business and client service.
There may be a common theme in the kind of industry that inspires new networks: both GlobalFluency and Plexus are focusing on the tech market in the US and overseas. Even Over the Ocean, founded by Zurich-based Werner Suter of Suter Global Communications, found its impetus in the influx of biotech clients in Europe. And last fall Applied Communications joined another tech-orientated network called WhiteOaks International.
Plexus began as a partnership between San Francisco firm Graham & Associates and Stewart-Muir in London, and now includes eight firms in nine countries.
"We wanted to form a very small group of agencies,
explains Lydia Graham, one of the founding partners and president of Graham & Associates. "There's a lot of these networks that are gigantic, huge, and you say you're part of a network, but you have no clue who these people are at the other end."
GlobalFluency, founded in 2001 by Neale-May & Partners president Donovan Neale-May, includes 38 firms in 26 countries. Neale-May sees a link between the demands of tech PR and the offerings of a tightly-focused global network.
"A lot of these tech companies are evolving and merging,
"Most of these companies have manufacturing facilities in Asia, markets in Europe, partnerships in North America - it is by its nature a global industry. The challenge they face is that they've grown rapidly, but don't have the expertise and knowledge in place, and they are all stretched to be more efficient and effective."
But even the older networks that operate across several practice areas believe they are becoming more relevant every day to clients in many industries, as companies become more global and want more choice about how their agencies are deployed. "One of the reasons we got started in the first place was to provide clients with a need for reach beyond their own markets with a viable alternative to the large multinational agencies,
explains Bob Oltmanns, president of Iprex, a network of 52 agencies across 20 countries.
Prior to the development of networks, he says, clients would, out of necessity, turn to multinational agencies in markets where their only competition was independent firms.
Dunkin sees no reason why a network will not win a major global account one day. Although many accounts grow to double-digit market size over time, it is far more common that new business will start with one network member, then spread throughout the system as the client's needs evolve.
Dunkin says that kind of flexibility is one reason why networks are the right model for some clients.
"Clients need choices,
she asserts. "There are clients who should hire Weber Shandwick Worldwide. There is definitely enough business for everyone.
Because clients are so different, the independents give a beautiful choice for someone looking for a single point of contact, entrepreneurialism, and in-depth local experience."
Typically, networks have avoided marketing their brand, beyond creating a website and logo, baseball hats and golf balls, and expecting member firms to display their affiliation on all their materials. That may be changing now, signaling a new commitment to reaching out for global business.
ECP Global is busy creating the group's first website. And GlobalFluency has from the very beginning mounted an aggressive marketing push.
Over the past two years, Iprex has begun to rethink its branding. "We just completed a global strategic assessment at the organization, and we are at the very early stages of implementing brand development," Oltmanns says. "We have a committee and a task force focusing on these questions.
PR will be a fundamental strategy."
The bottom line for any network has to be increasing business among partners.
Firms that do not see an opportunity to increase revenues through a network will abandon the model quickly. Marisa Vallbona, a founder of PRConsultants Group, says her business has grown "by tens of thousands of dollars - honestly in the six-digit range,
since starting the group.
More often than not, a client will come to a network through one agency, aware that the firm has the contacts to facilitate work in another market. Networks make a point of being flexible - it is part of their strategy to expand and contract the engagement as needed. If the client wants all billings to go through the lead agency, fine. If the company wants separate billing for each agency with which it works, that's OK too. There are as many different client relationships as billing models.
Sometimes the companies create the network themselves. PRConsultants Group was originally put together as 7-11's own agency network, by the in-house PR head. When that person left to take a job at Blockbuster, she brought her network model with her. So this affiliation of firms found itself working for both 7-11 and Blockbuster, and it seemed like a natural evolution to a stand-alone network. Two years ago, the existing firms on the accounts were offered the chance to join, and most did become part of the network. Each firm's territory is its own state, with the exception of California and Texas, which because of their size have been split into regions. Vallbona says that they look for a good cultural fit, and for firms that have worked on high-profile accounts, but the selection process depends a lot on personality and referrals.
Healthcare giant Roche ostensibly retains the Pinnacle network, but in reality a number of Pinnacle firms are part of Roche's own agency network, primarily so it could work better with the local media in key markets.
"By having a network of agencies, we have PR people in all parts of the country prepared to reach out to the media,
explains Charles Alfaro, Roche's public affairs director. "We've found these local agencies tend to be very aggressive, very focused on the media. They know the reporters, and what they don't know, they get to know quickly."
To coordinate network efforts, Roche also retains a national agency of record. Working with a network is different from working with large agencies in some ways. Alfaro says companies considering a network must make sure the agencies have the resources to handle the account. "It is vital to confirm up front that they are making the appropriate staffing commitments to the business,
Global eye-care company Bausch & Lomb retains Worldcom, through lead agency Buck & Pulleyn. Margaret Graham, corporate communications director, warns that some networks work better than others. "I find that when dealing with networks you must manage the lead agency very closely."
The lead agency has a huge responsibility to meet client expectations through its partners' work as well as its own. "When it is poorly managed, or projects are not specific enough,
Graham says, "it turns out to be a very, very expensive telephone operator.
She adds that it is easy for costs to get out of control when budget expectations are not clearly laid out ahead of time. "Make sure at the very beginning you know what you are getting."
Picking up global steam
So just how global are some of these accounts held by networks? To answer that, one must always be aware that relationships shift periodically.
A 12-agency account one year could be down to four agencies the following year - it just depends on the client needs. Interestingly, even the big multinational firms like WSW experience fluctuations in the number of markets involved in their global engagements. Mastercard and Ingersoll Rand, two of WSW's global clients, are not always active in the same number of locations on a year-to-year basis.
While networks have yet to win that really big global account, there is some notable activity. Pinnacle is working with a large financial company in the US across seven partners firms, plus Sydney, Australia. A North American insurance concern also retains the network across 10 partners.
Worldcom's Bausch & Lomb account involves 17 partners in 20 markets.
PROI is retained by a major chemical company in five territories, while a US biosciences corporation uses five of its firms for a corporate campaign.
Icas in London and Stanton Crenshaw, both part of PROI, recently won a reinsurance company account against a multinational firm. AT&T Wireless retained six Iprex firms for a project a year ago, while 12-15 of its member agencies were involved in a web-based business launch last year.
Michael Fineman, president of Fineman PR and an Iprex member, joined the network two years ago and says that since then he is pitching and winning more international business than ever before. For these independent PR entrepreneurs, it can be a mixed experience to work so closely with peers and to be held accountable for each other's success, as well as your own.
Fineman believes the system works. "Iprex partners go out of their way to do more than what is expected in other partners' eyes,
he says. He describes a problem his firm had in helping a partner service an account, which he solved by committing extra resources to resolving the issue.
"I didn't want to let that partner down, it was more than just business and numbers to me."
In PR networks, reputation is everything. "God help me if you screw up your partner,
agrees Henry de La Garza, president of Pinnacle and founder of De La Garza PR. "If you don't do a good job with your partner, it will get around the network. You don't want that."