REGIONAL FOCUS: Los Angeles - LA recuperacion - Niches like theHispanic market offer a recovery for LA's PR, says

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

remain upbeat.

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

firm FRB.

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

experimental tactics.

"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

tourism rebound.

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.

Hispanic boom

California's Hispanic population has soared by 43% in the last


According to, 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

Awards presentation.

"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.



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.

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