COURTING THE CLIENT: With agencies hustling for new biz again,Claire Murphy reports on tactics, priorities opportunities

Taking the pulse of PR agency business right now, it's hard to find

out what's going on. Just as hard as it is to work out the state of the

economy. With layoffs at most agencies (either publicly announced or

privately executed), it's clear that the PR business is feeling the

pinch. But how bad is it?

The Council of PR Firms found that at the end of March, agencies had

halved their 2001 growth predictions to 11%, which is still not at all

bad. But this average masks some wildly different figures, as PR agency

heads reveal tentative, and conflicting, predictions about their growth

prospects for the next six months.

Are things picking up?

After new business shriveled up almost completely at the start of the

year, some agency CEOs have reported an upturn. "We're seeing existing

clients starting to turn the budget faucet back on in quarter two," says

Fleishman-Hillard's chairman and CEO John Graham. But there's not too

much consensus. Many quietly predict a tough year. When Graham forecast

growth of 36% in PRWeek in April, he says he received plenty of

disbelieving phone calls.

There are two schools of thought on the value and volume of work that

has emerged in the last six months. Some agencies, principally the

largest shops, contend that new business is increasingly coming from

large consolidations, with businesses taking advantage of the economic

climate to rearrange their PR into one agency. The current IBM review of

its 40 agency roster reflects this trend.

"A number of Fortune 200 companies have been calling IBM to say 'We

should have done this ourselves, we need to do it too,'" says one agency

CEO, anonymously.

"Global PR is just happening now," adds Weber Shandwick Worldwide CEO

Larry Weber. "Finally, clients are saying I want you in six or seven

countries. The IBM review really is global, and the same is happening

with Coke and GM too. If you had told me two years ago that we'd be

seeing PR budgets from dollars 10-60 million, I would not have believed


Other agency chiefs contend that new business is becoming more focused

around project work and specialists for different PR disciplines, with

clients seeking to extricate themselves from agency of record


The Sun account, which was recently split four ways, is a perfect


Either way there are now more agencies chasing each piece of new

business, and that has come as a rude shock after last year's bounties.

"Last year everyone got fat and happy," observes Edelman president and

CEO Richard Edelman. "Now, it's so much more competitive. We have to

shine, we have to hustle."

Getting business - old and new

Shining and hustling has meant that agencies are using a variety of

tactics to crank the new biz machine back into action. Ketchum has put a

lot of effort into sprucing up the new business resource on its intranet

so that teams can scramble a wealth of information on a new client in

minutes and find out which employees have experience in relevant


Some agencies employ a new business or business development officer (see

sidebar). But it's a team effort. Ogilvy has gotten back to the

fundamentals in order to win back the business that has been lost by the

tech crash, mobilizing senior people onto pitches has been the priority,

with directors, practice heads and regional presidents being directed to

spend more time identifying and attracting new prospects. The plan

worked - Ogilvy's new business haul for the first quarter was a robust

dollars 29.9 million - a 41% increase from the dollars 21.9 million the

agency brought in over the same quarter the year before.

The fact that Ogilvy has done better than last year, when business was

so buoyant, at winning new business, serves to illustrate one of the

great ironies of the market. There is new business out there; but much

of the new business being brought in through the front door is

effectively replacing business walking out the back door.

Burson-Marsteller lost the Sun account, worth an estimated dollars 10

million, earlier this year; but the tech practice brought in dollars 7

million of new business in the first four months. (Overall, Burson

reports dollars 29 million in new work since the start of the year

across all practices).

Many agencies are also trying to decide whether to focus efforts on

"new'" new business or look at expanding projects with current clients.

Graham believes that existing clients must be the primary focus. "Our

golden rule has always been to not let the new business effort get in

the way of servicing current clients," says Graham. "We've found that is

the best plan, and it's coming to fruition as we're starting to see our

clients raise their PR spending." Fleishman won dollars 17.2 million of

new business in the first four months of this year (although this figure

includes wins from existing clients).

The fact is it's cheaper to cross-sell to current clients than to reel

in totally new ones, and you run the risk of losing your roster if you

take much more than an eye off them. "You've got to be sure that you're

buttressing your existing clients, or people will poach them," says


Although many agencies are suffering from hiring freezes, some have

invested in strategic hires that help them "buttress" clients while

potentially expanding the agency's offering to new clients. For

instance, Burson took on aviation expert Jim Cunningham to lead a new

aviation group. Designed to center on client American Airlines, the unit

has succeeded in winning projects from Qantas and Cathay Pacific.

Similarly, Edelman hired Greenpeace's head or PR Jonathan Wootlif in

December, allowing the agency to provide corporate social responsibility

work to existing clients Home Depot and Mastercard.

Ogilvy chairman and CEO Bob Seltzer believes it is a mistake to focus

too heavily on cross-selling to current clients. "We've got this great

client who really likes our work, but has just had his budget cut by

20%. No matter how good our service is, they're limited."

So even if focusing on current clients is top priority for some

agencies, that isn't going to keep the wolf from the door, and winning

new clients in this market is essential. There is no perfect mix, but

clearly a balance is helpful. Porter Novelli reports dollars 17.5

million of new business, with 45% from existing clients and 55% from new

ones. Meanwhile, Golin/Harris reports dollars 17.5 million of business,

with a slightly higher proportion of new business (dollars 10.2 million)

in the first four months.

The changing client landscape

Agencies are also confronting the fact that the client has become a very

different, and often difficult animal. Some business wins are "won"

because the client wanted to pay less. Clients are strapped with their

own pressures and expect agencies to prepare far more detailed pitches

with ever-shorter time to prepare. Many clients are also taking longer

to make up their minds after the pitch, having to go through evermore

layers of their own management to get budgets approved.

"There was a time when we would pitch 10 ideas to a prospective client,

knowing that we'd probably never be actually asked to execute them,"

says Cathy Lugbauer, COO at Weber Shandwick. "Most of the time we didn't

have enough proper market information to be able to produce something

realistic anyway."

"Today, the client is smarter about what they want, will give a tighter

brief and knows that we have access to the relevant information," she

adds. "They expect ideas that they can hit the ground running with. The

pitch is no longer just about chemistry between them and us."

There is a wealth of new business out there, however. Corporate work

tops the list of fertile PR ground. All agencies agree that this has

been a prime area of new business, albeit involving the vulture-like

strategy of helping companies in financial straits.

Agencies have been called on for their internal communications expertise

- Ogilvy CEO Bob Seltzer points to the particular need to motivate the

survivors after layoffs - and for their investor relations skills. And

while IPOs have dried up, leading to some problems, mergers and

acquisitions are still keeping corporate practices busy. Graham points

out that many companies are taking advantage of the current climate to

snap up bargains, while giving more work to agencies that can help

engineer changes in culture and identity.

Hill & Knowlton has been one of the hottest agencies for new business

this year, claiming dollars 30 million in new business during the first

quarter of 2001. Marconi and Compaq are two key client wins in recent


Marconi wants to expand its perception as principally a defense firm

into a more general electronics operation, while Compaq needs consumers

to understand that it is more about storage and hand-held devices than

the desktop computers it used to focus on.

New areas of growth

Healthcare PR has become the great white hope, and the recent shift in

Senate power brings initiatives such as the patient's bill of rights and

Medicare reimbursement for prescriptions back on the agenda.

Biotech has become the real engine of growth for many agencies, and has

provided a neat way of switching hi-tech skills. Medical devices and

technology is another booming area that has allowed a similar

transferral of agency resources.

Consumer remains a reasonably healthy area for new business

opportunities, with food and drink a particularly bright spot of

development. Porter Novelli picked up a global account for Mars in

January and followed it up over the next few months with wins from

Krispy Kreme and Wrigley contributing to the agency's new business haul

of dollars 17.5 million since January.

Ketchum attracted business from Hershey's and drinks company Roll

International, while WSW has managed to get extra work from its

Coca-Cola client by winning the brand's Harry Potter promotion work. WSW

(which has attracted dollars 30 million in new accounts since January)

also picked up an account last month to help the US dairy industry

manage public fears about mad cow disease and foot and mouth disease -

another lucrative issue for many agencies.

Non-profits don't yet appear to have been hit as hard as commercial

organizations by the recession. Many have brought in outside PR help,

typified by P-N's recent win of a seven figure account to promote the

American Cancer Society.

There is work out there, and, for the most part, agencies are finding

it. But the question remains whether some agencies, in their eagerness

to sustain their bottom and top line growth, are blundering into any

work they can bid low enough to get their hands on.

As Ogilvy's VP of marketing Derek Creevey observes: "The challenge is to

work out which business is really worth pursuing and to identify who we

want to be working with in five years and be strategic about chasing it.

We're not going to just pull down any low hanging fruit."


JIM COX, senior MD and director of client development, Hill &


Began in May 2000 after spending 18 months running H&K's New York

corporate practice. Previously headed GCI's US corporate practice.

On H&K's new business effort: "I hold a weekly teleconference with all

practice heads. We go through a list of 50-75 new business prospects and

work out which we want to go for. Luckily we started this in the middle

of last year, when new business was good, to try to control our


DEREK CREEVEY, vice president, marketing, Ogilvy

At Ogilvy for two years. Previously held a similar role at Edelman for

six years.

On the state of new business: "I think the economy is more robust than

people think and there will be an upswing fairly soon. I see the signs

of it in the business we're currently chasing. But it will be a return

to normality, not the frenetic pace of last year."

ANDY EKLUND, worldwide creative director, Burson-Marsteller

Also responsible for training, and marshalling ideas across the


Added the new business role 18 months ago. Worked for the agency for six


On making the best of a tough market: "Even in the bad times there are

significant opportunities resulting from the business environment.

Companies need help to weather their stock performance, amongst other


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