REGIONAL FOCUS OHIO: Ohio pins hopes on 2002 - The clouds of 2001rained on large and small agencies alike. But John Frank discoverswidespread optimism that a new year will bring new life to Ohio PR

When Ohio PR executives were toasting the start of 2002, they

probably were also muttering something else under their collective

breath: Thank God 2001 is finally over.



Battered by the tech wreck, by problems in the industrial base of the

northeastern part of the state, and by general client reluctance to do

anything after September 11, most Ohio PR firms couldn't wait for 2001

to end.



"2001 had a double cliff to it," explains Scott Chaikin, CEO with Dix &

Eaton in Cleveland. "We saw a drop early in the year, and then September

11 sucked whatever optimism there was in the system right out."



The resulting bottom-line carnage spared few firms. Even mighty

Fleishman-Hillard, which charged into Cleveland in 1999 by buying a

local shop, couldn't dodge the bad-business bullet. At the start of

2001, Fleishman was predicting major growth for the year, saying its

Cleveland revenues would leap from $4.2 million to $6

million. The reality was that revenues fell to $3.4 million, a

19% plunge. "No question we were overly optimistic about this year,"

says Jay Lawrence, a Fleishman SVP who was shipped in from Cleveland in

October to help revive growth there.



In downstate Cincinnati, formerly fast-growing Northlich also hit a

wall.



The firm had seen PR fees grow 31% in 2000 to about $5.4 million.

It started 2001 projecting 15%-18% growth. Instead, revenues fell

15%-25% and staff shrunk by 13 people to 22, says EVP Richard Miller.

Northlich saw 20% of its business evaporate in just 10 weeks early in

2001 as the tech wreck hit full force.



Most other major Ohio shops, not as heavily involved in tech as

Fleishman and Northlich, saw smaller, single-digit losses for the year.

Those that eked out small gains or stayed even with 2000 are feeling

lucky.



"I'm proud to be flat for the year, which is not something you would

normally say," says Kathy Obert, CEO with Cleveland-based Edward

Howard.



With a year like that, it's no wonder Mark Nylander, EVP and GM with

Cleveland-based Liggett-Stashower Public Relations, says: "There seem to

be more firms struggling in this market than I can recall in recent

years. It will almost be a relief to turn the page for the year."



Better days ahead?



With that January 1 page now turned, Nylander and others are expressing

optimism that the worst has ended.



Already, those who work with consumer goods companies are seeing clients

who postponed new product introductions in late 2001 gearing up to bring

those products to market this year. Howard Landau, president of Wyse

Landau Public Relations in Cleveland, says he has three clients

preparing new product rollouts this year.



That list includes the school supplies division of Mead, an account his

firm recently won back after two years when the paper company used a

different agency. "Our consumer products clients seem to have more

optimism associated with them," says Landau. "Business-to-business is

more unsettled."



Some Ohio companies in the b-to-b market are planning PR pushes this

year as well. Mettler-Toledo, whose four divisions deal in everything

from laboratory equipment to supermarket scales, expects to introduce

new scales and new software this year and sees PR as a major part of its

marketing mix, says Sheila St. Jean, marketing communications

manager.



When it comes to reaching the sophisticated business audience she wants,

"You get more from third-party endorsements in the media than you do

with ads," she says.



While Cincinnati-based Procter & Gamble is always quiet about its

marketing plans, some see its recent rollout of a new type of corn chip

- packaged in cans like its familiar Pringles potato chip - as a sign

P&G has finished its internal cost-cutting and is again ready to roll

out new products.



The food business has generally been one of the few safe havens in the

slowing economy. Some pundits note that Americans staying closer to home

after September 11 means more demand for at-home meals and eating at

local restaurants rather than far-off destinations.



Bob Evans Farms, an Ohio-based chain of folksy family restaurants, has

seen its business hold steady after September 11, helped by more people

driving rather than flying to destinations, says Mary Cusick, VP of

corporate communications. Cusick didn't cut her PR spending in 2001, and

she doesn't expect to this year either. "Our business is in decent

shape, so we're feeling pretty confident," she says.



Nonprofits could be a bright spot for PR this year as charities and

community groups strive to maintain a public profile in the wake of the

September 11 rush of donations to the Red Cross and other

disaster-related causes.



Sara Neikirk, executive director of the Columbus-based Communities in

Schools, says her group plans to roll out a new logo and a newsletter

for corporate donors this year. "We're trying to make ourselves more

visible," she explains.



Neikirk's group provides social services to Columbus' 65,000 public

school children.



Making the best of a difficult situation



Another area where PR firms are seeing business grow is a direct result

of the slowing economy. Whether called "change management" or corporate

restructuring, PR firms are getting more business from clients hit by

the recession.



"This is a hotbed of activity for us right now," says Obert of Edward

Howard. The firm has had a turn-around and reorganization practice for

years, usually handling one to three clients a year in that area. As

2001 ended, however, it had eight clients dealing with bankruptcy or

other business issues. Obert expected that practice area to account for

15% of her 2001 revenues, roughly three times normal levels.



Chan Cochran, head of Columbus-based Cochran Public Relations, expected

to end 2001 with single-digit revenue growth, and was looking ahead to

double-digit growth this year, thanks to his work in corporate change

management and public affairs.



The state capital, Columbus, has a base of public affairs work that

makes it the strongest market for PR of Ohio's three major metro areas -

Cleveland, Columbus and Cincinnati.



Lord, Sullivan & Yoder Public Relations, another Columbus firm, saw

revenues down in single digits last year. He expects 10% growth this

year as clients ask for more internal communications and crisis

work.



Dix & Eaton, which also expects 2001 revenues to be down by

single-digit percentages, would have done worse if not for a steady

stream of IR business related to Reg FD, says Chaikin.



While firms can find bright spots for this year, no one is saying the

gold rush days of 2000 are coming back anytime soon. The business

climate has caused clients, and PR firms, to change how they do

business. "Nobody wants to spend a nickel they don't have to," says

Chaikin.



That means clients want better measurement of results and a definable

return on their spending. That's been good news for firms like RMD

Public Relations in Columbus, which charges clients only after they

receive placement in various media. Vince McMorrow, director with RMD,

expects revenues to grow 15% this year after a 5% gain last year, thanks

to the firm's performance-based fee structure. "Performance-based is

something clients can take back to their superiors and say 'here's what

we got for our money,'" he maintains.



Even firms that don't follow the pay-for-play route agree clients are

spending less but expecting more. Project work, not long-term

commitments, is the norm now. Says Landau, "My clients, particularly on

the b-to-b side, don't like the R word anymore. The R word is

retainer."



Neil Mortine, LSY's president, notes that 2001 was his firm's best

new-business year ever with 25 new accounts, yet overall revenues still

fell.



"We had a great new business year, but the wins are smaller, in the

$5,000-$10,000 a month range versus $20,000-$30,000," he says. With revenues down, Mortine is examining all costs,

from seminars to subscriptions, to try and lower spending.



Dan Pinger of Dan Pinger Public Relations in Cincinnati, says his

revenues were flat last year, but his net was higher because of expense

cutting.



Pinger let his staff drop through attrition from 60 to 40 as 2001 turned

from a good year into a tough one. "July 2001 was better than July 2000,

August was down a little, and September just dropped," he says, with

business off 28% compared to September 2000. That continued with

business off 28% in October and 21% in November compared to the same

months in 2000. December saw a 10% increase, however, a hopeful sign to

Pinger.



Landau says he ended 2001 with many clients unsure of their 2002

budgets, a fact that's making it difficult for him to predict how this

year will go.



Other clouds also are on the horizon. In industrial Cleveland, the area

is still reeling from the after-effects of the bankruptcy of LTV Steel

last year, says Landau. "LTV's demise sends a signal to the community.

The feeling is downbeat right now. You hate to see those smokestacks

idle," he says.



Ohio PR shops don't want to be idle this year. If business keeps

improving, as many hope, they may pop champagne corks to celebrate 2002

sooner than New Year's Eve.



OHIO PR AGENCIES

Firm Name Revenue Increase Staff Location

(dollars) 69

2000

Edward Howard & Co 6,413,146 10 52 Cleveland

Northlich Public

Relations 6,188,875 37 39 Cincinnati/Columbus

Fleishman-Hillard 4,207,000 94 34 Cleveland

HSR Business to

Business 3,176,000 N/A N/A Cincinnati

Liggett-Stashower PR 1,922,365 32 17 Cleveland

Marcus Thomas PR 1,444,590 -12 10 Cleveland/Youngstown

Gerbig Snell/

Weisheimer & Assoc. 1,400,000 8 15 Westerville

Public Relations

Partners 1,272,004 9 14 Cleveland

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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