Because of Canada's heavy reliance on the US, its biggest trading
partner, you'd think that the loud bang of the American technology
bubble bursting would have shaken the PR foundations north of the
border. Not so. "Last year, we were lamenting that US firms had far more
of the dot-com business than we did," says Linda Smith, SVP and GM of
Fleishman-Hillard Canada in Toronto. "Now this year, we don't mind so
Not that the technology downturn hasn't been felt by the country's PR
agencies. In June, five-year-old Pydea, a hi-tech firm in Toronto whose
clients included Media Metrix and travel Web site Exit.ca, laid off its
entire staff. However, that casualty is not indicative of the current
market, especially when you consider Pydea was a boutique with only four
full-time employees. Most hi-tech firms in Canada - and the technology
divisions of multinationals - are experiencing growth, but not at the
rates that forecasts projected last fall.
Take, for example, Maverick Public Relations in Toronto, something of a
tech darling in the Canadian PR landscape, that has rapidly grown to 25
clients and over $1 million in revenues in just two years. "In
the first quarter of 2001, we were 40% over 2000 revenues," says
president Julie Rusciolelli, who adds that she's only had to lay off one
employee this year. Maverick currently has 13 staff members. "But that
growth is way, way lower than projected."
What is continuing to drive the Canadian market is globalization, or at
least North Americanization, as companies look for agencies that can
service both Canadian and American markets, especially in the tech and
While some tech businesses went belly-up or scaled back their budgets,
several major new accounts outside the tech sector have been put up for
grabs in competitive pitches this year. Electronic retailer Best Buy of
Minneapolis hired the Toronto office of Edelman as part of its drive to
enter Canada with 65 stores over the next three years, while Levi
Strauss Canada hired its first ever PR agency of record in Apex Public
Relations, a Toronto shop with about $2 million in revenues.
But the biggest trend steering the industry is the blurring of the
border, with many firms both big and small reporting at least 25% of
their work being done south of the border, either for Canadian-based
clients or, to a lesser but still significant extent, for US-based
clients. That has resulted in multinationals continuing to buy up
independents, and Canadian-owned PR firms fighting back by expanding
outside their native land. This trend is expected to continue over the
next few years.
Although accurate figures for the Canadian PR industry are difficult to
come by because many firms are privately owned, industry estimates value
it at between $200 million and $300 million (C$290
million to C$435 million). While the branch offices of US giants
such as Hill & Knowlton, Cohn & Wolfe, and Edelman have long competed
neck-and-neck in the Canadian market, last year Fleishman-Hillard broke
away as a dominant force, thanks to its aggressive acquisition
Fleishman's 2000 billings skyrocketed to $27.9 million, up from
$4.1 million in 1999. That massive growth is a result of
Fleishman Canada reporting revenues that for the first time include a
merger with GPC International of Toronto (which has offices in 16
countries, eight of those in Canada), and the acquisition of High Road
Communications (the largest hi-tech PR firm in Canada, with offices in
Ottawa, Toronto, and San Francisco). In recent years, High Road has
enjoyed annual growth rates between 70% and 75% (although this year it
expects those numbers to drop to a modest 5% to 10%). For High Road, the
blurring of the US-Canadian border was never more apparent until this
year. With revenues exceeding $4 million, High Road has grown by
concentrating on the US market, which accounts for 85% of its work. Its
Canadian clients - for which it does mostly US work - include Northwood
Technologies (a wireless telecom software solutions provider) and
Synamics (a developer of voice and data applications for
Citing the reaction to a shrinking US tech market and the higher profile
of Canadian companies such as Nortel Networks and Research in Motion
(the maker of the hand-held e-mail gadget BlackBerry), High Road's
managing partner and cofounder Rick Doyon says American PR firms are now
pursuing Canadian clients looking for US exposure. "In the heyday of
1999 and 2000, they would never have looked twice at any of these
companies because the Canadian budgets were too small," says Doyon.
"They wouldn't talk to you unless the account was at least $30,000 a month. Now they're saying to clients, 'We can do that work for
$15,000 a month.' They're promising the moon and stars to some
Canadian clients, but what happens when those expectations aren't met?
Something will have to give." He says High Road has pitched against such
US firms as Fitzgerald Communications of Boston.
Fleishman Canada's acquisition strategy is to keep itself, GPC and High
Road operating separately, so clients are not lost due to conflict, and
work can be referred to one another. But Fleishman Canada's main barrier
to dominating the market comes from two Canadian-owned firms, both of
which are gunning to become global players - or at least a force in the
North American market.
Canada's largest PR firm is National Public Relations in Toronto (49%
owned by Burson-Marsteller), whose billings this year total an
impressive $46 million, up from $27 million in 1999. That
growth includes the June acquisition of Labrador Communications of
Vancouver, which takes the number of national offices in Canada to five.
National also has a New Jersey office.
Partner Colin Buchanan says National's main push is to become an
international player. "It's our dream to open in London, and we hope to
be there next year," he says. The healthcare business is helping to
stimulate that expansion dream, with European clients such as
Swiss-based drug company Sarona.
Toronto-based Environics Communications is the other leading Canadian
independent, with total revenues of C$7.2 million. In June, it
opened its second US office in Washington, DC. Its first office in
Stamford, CT opened in 1995, and now has 19 employees. The Washington
office is being headed by senior VP and general manager Dave Groobert,
most recently a senior managing director at H&K in Washington and
formerly director of PR at global satellite communications company
COMSAT in Bethesda, MD.
Bruce MacLellan, founder and president of Environics, says the
Washington office will service clients like the Association of Hispanic
Advertising Agencies and the National Safe Kids Campaign.
But the Canadian independents are aware that the market will likely face
further consolidation. Echoing a statement expressed by the heads of
Apex Public Relations and Maverick, MacLellan says he receives calls
from "two or three players who are constantly prowling for
Maverick's Rusciolelli compares it to being at a ball, with many suitors
looking to fill your dance card. "It feels good to be wanted," she says.
"But we tell them we're not interested. Not yet, anyway." No doubt those
suitors will take a rain check.
GLOBAL AGENCIES OPERATING IN CANADA
RANK AGENCY NAME CANADA INCOME (dollars) %
2000 1999 2000 1999 CHANGE
1 5 Fleishman-Hillard 27,928,000 4,121,000 578
2 1 Hill & Knowlton 15,146,000 11,830,000 28
3 3 Weber Shandwick Worldwide 8,696,000 5,823,000 49
4 2 Edelman Public Relations
Worldwide 6,817,645 8,038,593 -15
5 4 Optimum Public Relations 6,620,000 5,420,000 22
6 6 Porter Novelli International 4,001,000 3,042,000 32
7 7 Environics Communications 3,203,879 2,761,635 16
8 8 GCI Group/APCO Associates 3,112,296 2,428,226 28
9 N/A Manning Selvage & Lee 2,926,000 - N/A
10 9 Waggener Edstrom 444,259 237,884 87
SOURCE: PRWeek US Agency Rankings
NOTE: This is a list of global PR firms in Canada. It does not include
Canadian independents Company notes: Fleishman's revenues include income
from GPC in an Omnicom merger, as well as High Road Communications;
Burson-Marsteller owns 49% of National Public Relations.