Harris Diamond saw an office that didn't fit the practice area or
geographical coverage needs of Weber Shandwick Worldwide.
Christine Barney saw an opportunity.
Walk into her office, and Barney will show you yellowed newspaper clips
detailing the business dealings of Hank Meyer, the granddaddy of PR in
Miami. She's worked in the market since its infancy - 1989 - when she
left New York's Burson-Marsteller office for a smaller shop in the sunny
south. Larry Weber purchased the office in 1997. A little over a month
ago, she bought it back, returning to her old title of CEO of RBB Public
Relations.
"I'm excited about the future for us," Barney says. "You lose the safety
net of being part of a large global agency when you're on your own, but
if I decide tomorrow that I want to build a capability in
telecommunications, say, and I want to make an investment, sometimes I
can put resources against that based on a gut feel. In this day and age,
I think speed is of the utmost importance in terms of garnering market
share."
Diamond says he wishes Barney well. "Sometimes the business doesn't make
sense for us, but local management and local offices can make it make
sense for them," Diamond explains. "When it's a good operation, I've
always believed local management should have an opportunity to give it a
try on their own."
Large firms typically react to economic recession by closing local
offices.
Over the past few months, Cohn & Wolfe shuttered its Atlanta office,
folded its DC office into Burson's, and closed its Austin, TX and
Chicago offices; Edelman closed its Boston and Austin offices; Hill &
Knowlton closed the US offices of its Carl Byoir & Associates brand; The
Weber Group closed its San Francisco office; Citigate shuttered its
Miami outpost; and tech shop Niehaus Ryan Wong closed its New York and
Austin offices. Layoff statistics are similarly far-reaching.
Good news on the local front
But while the big guys prune their branch offices and personnel, local
agencies tell PRWeek they are benefiting from the changes in
competition, some excellent executives recently released into the job
market, and the chance to undercut large agency retainers.
Jack Bergen, president of the Council of PR Firms, confirms that
closures and layoffs are an opportunity for local agencies to hire top
talent and to angle for clients angry that their account executive has
been fired.
Because large firms in top markets often rely on two or three major
clients nearby who require national or international work, they are more
susceptible to budget cutbacks, Bergen says. Local offices have many
smaller accounts.
"There's a stability that is much more difficult for the larger agencies
to achieve," says Bergen of small and mid-size shops. "Often their
threshold of account size is higher. They're not going to pick up the
local bank or local car dealer as a client. The larger agencies, they're
going after the regional headquarters of the car company, not the car
dealer."
Ray Kotcher, CEO of Ketchum, says there is excess capacity in agency
networks. In the quest to be large, some agencies, Kotcher explains,
have over-invested, making brick and mortar decisions that he finds
questionable.
He says large networks are now considering alternatives to building out
geographical offices.
"You no longer need a presence in a market to service a client," says
Kotcher. "You see a lot of large agencies, ourselves included, working
with clients in a virtual manner."
Kotcher also thinks opening a service office within a client's company
can be a cheaper alternative to building out a separate office. He
characterizes the current environment for local offices as an ebb, which
he says will soon flow again.
Helene Solomon, president and CEO of Bishoff Solomon Communications in
Boston, says she's having no problem with the ebb. Multinational agency
networks that built up to service Boston's once-highflying dot-coms have
become so hungry for business, they are trying to poach local accounts
they wouldn't have gone near in economies past. Solomon says she isn't
overly concerned by the competition, and two months ago she even
expanded her agency beyond New England into PR's most competitive market
- New York - to continue earning the local and regional work she
enjoys.
"Our profit and loss objectives are our own, and are not dictated by a
holding company in another city in another country," says Solomon, who
performs regional work for McDonald's, Six Flags New England, and
Pfizer.
"Our interest is in developing community-based, almost grassroots
programs that keep our clients in public focus in New England. That's
not to say the global agencies couldn't develop that expertise, but that
hasn't typically been their focus."
Home for PR's wayward souls
Large agency CEOs say they are constantly approached by smaller agencies
who want to be bought out or partner with a network. Major consolidation
by large corporations, such as IBM, also point to the need for large
agencies with global reach.
But the siren song of entrepreneurship remains strong, even in this
worst economy in ten years, and Siobhan Olson, VP and director of PR for
Clarity Coverdale Fury in Minneapolis, says she knows why. In operation
for one year, her division has posted close to $1 million in
business, has nine clients, and increased its staff from one person to
six. Meanwhile, Weber Shandwick Worldwide recently had what sources say
was a 10% layoff at the original flagship Shandwick office nearby. Olson
said that both clients and employees tell her they feel "lost within the
system" of the larger agencies.
"The multinationals have gotten too big," says Olson. "If you're a large
PR client, yes you need an office that has multiple offices around this
country or around the world. But we have picked up clients who have
gotten lost within the system and want to go to one place."
Olson says a lack of defined career paths and a dearth of day-to-day
client contact at senior levels has also driven employees to her
agency.
That trend even trickles down to individual departures from smaller
agencies.
According to the Bureau of Labor Statistics, of the 122,000 PR
specialists in 1998, the most recent year for which figures are
available, 13,000, or roughly 10%, were self-employed. Last month,
Valerie Zucker left local agency The Apple Organization to launch her
own practice in North Miami Beach, FL. Zucker employs herself plus one
other person.
"It's really interesting," she tells of launching her small agency in a
recession. "I believe most companies whether they are small or midsize
businesses to big corporations, do not want to pay big retainers
anymore. What I have is actually in demand."
Some companies choose small agencies or sole practitioners, as Zucker
explains, because they are cheaper. Others believe as Barney does, that
smaller agencies can move faster and adapt quicker. But some just don't
want to throw business to the giants. As Allan Hirsh III, president of
Thurman House publishing company, told PRWeek a few months ago when
queried why he had hired an independent publicist for a major story: "We
believe - and always have - in the little guy."
