Widespread layoffs, greater competition for fewer contracts,
incredible shrinking budgets and once-promising tech clients shutting
their doors for good. Add temperatures in the high 90s and humidity
levels on par with Costa Rica, and it's a wonder anybody stays in
Washington, DC for very long.
Luckily, that's not the whole story. There are plenty of things to be
optimistic about on the DC PR scene. Sure, the northern Virginia
hi-tech corridor - which two years ago was going to transform DC from a
one-company town into the next Silicon Valley - isn't quite meeting
expectations, but the healthcare business is booming.
DC isn't "recession-proof," as the emerging cliche would have it. But it
does react differently to a down market than any other city. The lion's
share of PR work still flows between K street and either end of
Pennsylvania Avenue - and regardless of what you may have thought during
the 2000 election fiasco, the government isn't going out of business
Right now, nothing makes DC agency heads happier than healthcare. "It's
the booming business," says APCO CEO Margery Kraus. A convergence of
several factors are making this so: rising drug costs, a host of new
medications coming on the market, privacy issues affecting HMOs,
hospitals and drug companies, and controversial "patients rights"
legislation on the Hill.
All these are driving concerned healthcare interests to DC agency
Public affairs, still the bread and butter of every major DC firm, is
also coming through. This is a pleasant surprise for many, as the
all-Republican government emerging from the election didn't promise the
sort of high-volume fights that bring in public affairs business.
"We came out of the election with a very homogenous government," says
Steve Dahllof, managing director of Ogilvy PR. "That does not lend
itself to a lot of public affairs work." But in May, when
then-Republican Senator Jim Jeffords of Vermont decided to become an
independent, thereby giving Democrats the upper hand in the upper
chamber, things began to change.
"Jeffords' switch changed the dynamic in the senate. PR has now become
an issue," says Hill & Knowlton CEO Tom Hoog. The former chief of staff
to Sen. Gary Hart returned to Washington when general manager Torie
Clarke defected to the Department of Defense in the spring. He will be
watching over the office until the end of the year. "Now there's a
general feeling that there will be contentious issues, so we're seeing
spending on public affairs go up."
Tech: disappointing DC
And then there's the big letdown.
"Tech is at the top of the disappointment list," says Dahllof, who
should know. In what he terms a reaction to the down market, his firm
merged its tech arm, Alexander Ogilvy, into its general operations in
February, resulting in nationwide layoffs and the closure of Alexander
Ogilvy's 21-person northern Virginia office.
Luckily for most, Washington agencies largely avoided the dot-com world
to begin with. "We were never so dot-com focused," says APCO's
"We have a couple of clients we've done tech work for that aren't
necessarily tech companies. That work has expanded dramatically into
seven-figure accounts. We're working for some dot-coms, but that work
At least two agencies openly bucked the trend. According to Jim Fabiani,
CEO of Weber Shandwick World-wide's DC operation - which does its tech
business in DC under the moniker of The Weber Group - made considerable
gains in the sector over the last year. "We built our practice on very
established tech businesses. So even though we had about 30% of our tech
revenue from new start-ups, when the tech market went to hell we've
continued to make between 18% and 19% profit in the area."
Fabiani also claims to see the light at the end of the long and winding
tunnel that was the 1999 merger between Cassidy Companies and WSW. Most
notable in 2001 was the return of the brand name Powell Tate on January
1, which had been taken away when the merger first occurred. "It was
ridiculous," he says, "It was simply failing to recognize brand
H&K went even further, acquiring five-year-old hi-tech shop ProMarc in
April, doubling its staff in the sector to nearly 30 people while other
agencies were making layoffs.
Government work galore
One of the primary perks of agency life in the nation's capital is the
opportunity to go after federal contracts. Of course, many firms -
particularly smaller ones - don't take the opportunity, citing the tiny
margins, red tape, and difficulty in turning profits. But those who have
often find that those contracts provide steady work in lean times.
Ogilvy and Porter Novelli have both built reputations on their agility
at making such work pay, though many believe PN has begun to remove
itself from the game. These beliefs were fortified when the agency
decided not to pursue renewal of a massive National Institute of Mental
Health contract in June.
Fleishman-Hillard has entered the fray, picking up work with the Library
of Congress in April, and continuing work with the Department of
Education, the Environmental Protection Agency, and the Office of
National Drug Control Policy.
Ketchum partner Mark Schannon also claims to be making "major inroads"
in government work. "We finally figured out government contracts," he
effuses. "It's very complicated, very difficult stuff, but the work is
terrific. Once you get the folks working on the account, they just love
it." Among the government work Ketchum has won are the Centers for
Medicare and Medicaid Services (formerly known as the Healthcare
Ketchum is also moving into lobbying, buying The Washington Group in
January for a reported $15 million. "We've been doing a lot of
joint pitches," says Schannon, "but the goal is to move very slowly at
integration because lobbyists don't understand what PR people do, and PR
people don't understand what lobbyists do."
Washington also offers the unique opportunity to represent foreign
governments, especially when a new administration comes into town and
foreign leaders look for ways to introduce themselves. Mexico, a major
player already on the foreign affairs scene this year, signed with APCO
last month, which also represents Singapore and Turkey. Ogilvy recently
won Switzerland work and signed on Puerto Rico earlier in the year.
Chile tapped Fleishman, and Haiti recruited Qorvis.
Special interest groups need PR help
And then there are all those associations and interest groups. If
anything in Washington outnumbers politicians and law students, it's
these. From the National Association of Secondary School Principals to
the National Association for the Advancement for Colored People to The
Salt Association, every conceivable interest has an outpost here, and
each is fighting to be heard above the collective din.
Fortune magazine's annual Washington Power 25 list ranks these
associations by influence. This year, the National Rifle Association
(NRA) took the top spot from the AARP (formerly the American Association
of Retired Persons), which had been there three years running.
Largely responsible for that was NRA director of communications Bill
Powers, who last month left behind his $100 million budget to go
to work for NRA agency of record The Mercury Group in northern Virginia.
His replacement is still being sought.
Ironically, some say the down economy has actually helped boost the
spending power of these groups. "When people are facing cutbacks,
they're going to rely more on their associations," says Public Affairs
Council president Doug Pinkham. "Some corporations may find they don't
have as many lobbyists as they once did. If they're in tune with their
association's legislative priorities, they'll lean more heavily on
Corporate in the capital
A flurry of newcomers opened their doors in DC this year, the most
notable of which was Bridgestone/Firestone. The embattled tire maker
installed former Clinton Transportation Department aide and Edelman VP
Steve Akey as head of government relations.
Others opening their doors included Conoco, PacifiCare Health Systems,
and Mirant. Notable closings not due to mergers included 3Com and
Most agency heads agree that these corporations are realizing more and
more that they don't need to go to New York for their straight corporate
work. Public affairs is what brings them in the door, they say, but they
soon realize that many of their other PR needs can be fulfilled in
"You have more companies that are coming to DC because they realize that
their interests can be affected by what's happening in Washington,"
observes MS&L COO Don Hannaford, "but by the same token you have a
bigger business sector in DC than you did 10 years or even five years
ago. The corporate reputation side of our business exploded with the
tech side. For a lot of agencies who had business in Washington with
tech clients, a lot of it was branding and positioning; making them look
good to VCs and making a name for themselves."
DC agencies emerging
Two major competitors on the agency front emerged in the past year:
Quinn Gillespie, formed when high-level operatives Ed Gillespie
(Republican), and Jack Quinn (Democrat) decided to join forces, and
Qorvis, brainchild of Mike Petruzello, who brought together The Poretz
Group, The Weber Merritt Company, and JAS Communications with financial
backing from lobbying shop Patton Boggs. Qorvis has had a particularly
active year, leading the fight for one of President Bush's pet issues -
drilling for oil in the Alaska National Wildlife Refuge - and bringing
aboard several top people from Petruzello's old agency, WSW.
As for the year to come, expect acquisitions of healthcare firms and
lobbying shops. One agency often cited as ripe for acquisition is GYMR,
formed by several ex-Fleishman healthcare specialists. Asked about a
possible sale, partners Peter Garret and Patty Yu Hussein will say only
that they are "concentrating on the future."
A good plan, according to Ketchum's Schannon: "There's a lot of fear out
there right now, but one thing you can't afford to do in the middle of
an economic downturn is ignore the future."
WASHINGTON, DC PR AGENCIES
Rank Firm Name Income Income Staff
2000 1999 (dollars) 2000 Growth
1 N/A Weber Shandwick Worldwide* 60,535,807 6 275
2 2 Burson-Marsteller 46,391,000a 9 179
3 4 Fleishman-Hillard 34,693,000 35 184
4 3 Hill & Knowlton 32,300,000 18 163
5 6 Ogilvy PR 29,320,100 33 219
6 5 Porter Novelli 27,490,000 23 169
7 7 Ketchum 26,549,000 32 137
8 11 BSMG Worldwide 21,804,747 62 84
9 36 Golin/Harris** 21,420,000 1,365 83
10 9 Edelman 20,551,852 25 104
11 10 GCI Group/APCO Associates 19,186,655 31 105
12 15 The MWW Group 8,644,619 22 12
13 16 Widmeyer Communications 8,500,000 20 66
14 NEW Triad Communication 7,189,856 5 17
15 NEW Gibbons & Company 5,600,000 17 6
16 22 Cohn & Wolfe 5,595,000 62 25
17 17 Manning Selvage & Lee 5,337,397 7 4
18 18 Equals Three Communications 5,000,000 12 60
19 20 RMR & Associates (Rockville, MD) 4,607,000 8 30
20 21 Brotman Winter Fried 4,200,000 0 12
21 23 Strat@comm 3,918,672 15 22
22 26 The Bivings Group 3,704,000 28
23 34 Fitzgerald Communications 3,684,811 145
24 25 Earle Palmer Brown/PR 3,590,727 16 25
25 24 Creative Response Concepts 3,440,172 10 19
26 28 Ruder Finn 3,074,000 25 27
27 NEW Spectrum Science Public Relations 3,056,980 30 25
28 31 DCS Group 2,392,930 15 15
29 38 Brodeur Worldwide 2,300,000 109 14
30 32 Hager Sharp 2,098,978 19 21
31 35 GYMR*** 2,051,031 13
32 30 Barksdale Ballard (Vienna, VA) 1,539,588 -29 18
33 39 Optimum Public Relations 921,000 21 8
(Falls Church, VA)
34 NEW Jasculca/Terman & Associates 586,180 N/A 5
35 NEW The Nixon Group 320,287 N/A 4
NOTES: 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 on the information in
* Weber and Shandwick merged in September 2000. The agencies were ranked
at 8 and 1 respectively in last year's listing. ** Golin/Harris' 2000
income includes revenue from Barbour Griffith & Rogers and Weber McGinn,
acquired during that year. Its third acquisition, MWW, is still ranked
separately. *** Formerly Garrett Yu Hussein.