Cautious optimism is the mood of the New Year for Angelinos in the
communications business. While the recession battering the country
hasn't bypassed the West coast, LA's PR industry does have reason to
Staple industries like entertainment - along with more recent
opportunities, like the fast-expanding and largely untapped Hispanic
community - offer niches of activity and a general sense that business
will continue to pick up. Last year's layoffs and dot-bomb-induced
"right-sizing" are slowly fading memories of 2001's bleak economic
odyssey, and LA-area companies are sorting though piles of resumes to
snatch up top talent before fiscal recovery makes it hard to hire the
cream of the crop.
Weber Shandwick Worldwide's North American CEO Tom Tardio describes the
events of last quarter as a "microeconomic headwind," but adds that he
is seeing more clients "freeing up some funds in anticipation of the new
year." And much of that freed-up cash is funding a resurgence of
traditional PR tactics.
Back to basics
"The nature of how PR is practiced has changed dramatically in the last
three months," contends Bob Gold, president of boutique firm Bob Gold &
Associates. Gone are the days of splashy launches with high-priced
talent and streaming videoconferences, and the throw-money-at-it
approach to marketing.
"What we're seeing is a growing return to high-touch,
personal-relationship building," says Moira Conlon of investor relations
That revival of the favorite LA pastime of "name-dropping," as Gold
explains it, has left many PR agencies basing pitches on their network
of media contacts and access to analysts, rather than high-concept
"A lot of companies are asking agencies to leave the sizzle out of the
program," adds The Pollack Group's Stephen Pollack.
With old-fashioned PR priorities returning to style, smaller boutique
agencies claim more clients are interested in having them pitch
alongside top multinationals. And conversely, top agencies are opening
their doors to smaller clients who might not have been worth their time
- or able to afford their services - in previous years.
"We're not necessarily seeing the large RFPs as much as we did in the
past," acknowledges Hill & Knowlton's GM Bonnie Goodman. "We're
considering clients in a broader range of anticipated budgets than
LA's three driving industries traditionally have been international
trade, entertainment, and travel and tourism. The latter has been one of
the most hard-hit sectors, with local hotel occupancy rates plummeting
to the 30% range in recent months. Mayor James Hahn has pushed
aggressively for marketing and PR initiatives to help local travel and
Among his attempts are a $700,000 marketing campaign spearheaded
by the convention and visitors bureau that includes two-for-one rates at
hotels and attractions. Similar campaigns for restaurants and shopping
malls brought in a great deal of press attention, but the jury is still
out on their effectiveness. Many local businesses are cutting their own
PR budgets in the meantime.
On a state level, a $5 million campaign aimed at the Californian
driver market - dubbed the "stay and play" project - was recently
launched. However, the lucrative overseas tourist market remains
severely depressed. Foreign tourists tend to spend six times as much as
their domestic counterparts, so that lack of international cash infusion
has left Anaheim - LA's southern neighbor and home to Disneyland,
Disney's California Adventure, and numerous convention facilities - even
harder hit than Los Angeles.
"We're seeing more interest in understanding how to be smart about
reaching the street," says H&K's Goodman, pointing out why IR is one
sector that is experiencing niche benefit from the tight economy.
FRB's Conlon says that many large and mid-size companies, especially
those in service sectors, are seeking PR help to bolster stock prices
with media and analyst outreach in a time when struggling markets are
keeping prices lower than company executives would like. "We're
increasingly getting hired by companies to look at that value gap," says
Conlon. "In a year where the market is down tremendously, people need a
lot of help telling the story."
Most industry professionals agree that business-to-business for new
products and services in healthcare PR has suffered lately, with local
hospitals facing closures and layoffs in the past year.
However, PR spending by big insurers and HMOs is holding steady,
although not increasing significantly.
"The scope of needs of an insurance company are great," says Roger
Fischer of FischerHealth. "There are a lot of issues to be managed," he
adds to explain the continued strength of the market.
Susan Tellem of Tellem Communications says that declines in healthcare
may be offset by increases in the long-trumpeted bloom of biotech,
anchored by industry powerhouse Amgen and new alliances between local
universities and businesses.
California's Hispanic population has soared by 43% in the last
According to hispanic-market.com, the LA area's seven million Hispanic
residents represent about $77 billion in buying power, accounting
for one-fifth of all consumer spending in the region, and comprising the
largest Hispanic market in the country. That provides consumer goods and
lifestyle companies ample reason to spend their PR dollars in the area.
Miller Brewing and Sears have made forays into the market, with others
likely to follow suit.
"We have the vast majority of the money being spent on the Hispanic
market here in Los Angeles," claims WSW's Armando Azarloza.
Roxanne Lissa of RL Public Relations and Marketing sees those dollars
going to "marketers using a cross-cultural, 'bridge' approach," since
47% percent of local teenagers are Hispanic, but speak English.
The entertainment industry has the long-standing reputation of being
recession-proof, banking on the idea that the American public is drawn
more to escapism during economic hardships. While certain sectors - such
as the video game market - are proving that analysis true, others, like
television, are pulling their Gucci belts a bit tighter this season. The
much-talked-about drop-off in advertising was cited recently when
networks cut back on lucrative deals for writers and producers, but how
that will affect PR is still unclear.
"We're certainly going to see some adjustments in the way the networks
and producers do business," acknowledges Michael Nyman of Bragman,
Nyman, Cafarelli. "But the fact that they cut in-house staff means they
may be more reliant on outside help."
Advertising cuts may prove to be a boon to PR in other ways, as more
companies rely on less-costly product placement or sponsorships to reach
target audiences - or even, like upcoming projects from Ford and
Coca-Cola, produce their own prime time programs. Both Nyman and WSW's
Tardio cite these trends as proof of the successful marriage between
consumer marketing and Hollywood.
Road to the Oscars
Despite production cutbacks, however, the winter season always boosts PR
activity with the slough of awards shows leading to March's Academy
"The Grammys, the Emmys, and the Oscars are spike activities for us,"
says Tardio, "both in assisting producers and getting nominations."
With the Oscar race still wide open between a half-dozen contenders in
mid-January, studios are working overtime to mount extensive campaigns
pushing their films and celebrities. On the event side, the awards shows
themselves are under increasing pressure to differentiate from each
other, and carve out audience share. While the Foreign Press
Association's Golden Globes have achieved dauphin status in recent years
under Oscar's royal court, new offerings such as this year's AFI awards
are constantly trying for a coup. And despite cutbacks in other
businesses, Hollywood is still happy to spend major bucks for awards
parties, such as Vanity Fair's annual bash.
"The special-events business has been incredibly healthy, and will
continue to be," says Nyman, who projects that his company will do 40 to
50 live events this year.
Despite these tentative steps into an economic springtime, LA's
recession will likely chill business prospects until the fall of 2002,
according to a Milken Institute study, with job loses as high as 76,000
and an unemployment rate topping out at 7.5%.
Large PR firms, such as WSW, claim to have made their numbers last year,
and instituted modest increases for 2002. But, as MWW's Herbst points
out, "Whenever there is a slowdown in business, one of the first things
that gets looked at is a communications contract."
Perhaps Tinseltown isn't out of trouble yet.
LOS ANGELES PR AGENCIES
Rank Firm Name (dollars) Increase Staff
2000 2000 (%)
1 Hill & Knowlton 19,106,000 41 131
2 Weber Shandwick Worldwide 18,715,000 22 212
3 Ogilvy Public Relations Worldwide 15,576,300 27 141
4 Ketchum 15,073,000 -5 107
5 Manning Selvage & Lee 15,001,903 12 16
6 Golin/Harris International 13,288,000 22 79
7 Fleishman-Hillard 12,905,000 32 72
8 Rogers & Associates 11,109,647 36 88
9 BSMG Worldwide 10,396,380 11 54
10 Burson-Marsteller 6,967,000 20 68
11 The Bohle Company 6,532,832 55 56
12 Porter Novelli 5,576,000 11 52
13 Fischer & Partners 5,395,134 50 47
14 mPRm 4,962,268 50 N/A
15 Bender/Helper Impact 4,882,197 41 40
16 Edelman 4,705,721 26 37
17 Cerrell Associates 4,093,132 28 42
18 Cohn & Wolfe 4,055,000 119 22
19 Imada Wong Communications Group 3,659,000 231 31
20 Stoorza Communications 3,656,914 18 24
21 The MWW Group 2,089,000 28 16
22 GCI Group/APCO Associates 2,028,566 23 18
23 Ruder Finn 2,006,000 179 15
24 PainePR 1,996,320 46 13
25 Durazo Communications 1,184,720 -3 8
26 Stanton Crenshaw Communications 1,121,189 236 8
27 Agnes Huff Communications Group 767,444 18 10
28 Magnet Communications 754,000 N/A 6
29 Spelling Communications 680,000 30 15
30 Lippert/Heilshorn & Associates 670,344 126 4
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.