REGIONAL FOCUS TEXAS: The star shines on in Texas - Diversificationhas helped the Lone Star economy - and its PR industry - rise from therubble of the tech fallout. Sherri Deatherage Green reports

Call it cockiness, call it economics, but Texans think they're

better off than their brethren elsewhere in the US. "When I look at my

peers around the country, I think we're doing fine," says Helen Vollmer,

CEO of Houston's Vollmer PR.

Texas is no stranger to booms and busts, but this time, traditional

industries have formed safety nets that are keeping the Lone Star

economy - and its PR industry - from falling too far.

Full of energy

Texas is headquarters to 45 Fortune 500 companies, trailing only

California and New York (which have 55 each). While tech businesses like

SBC, Electronic Data Systems and Compaq slipped in the magazine's most

recent list (along with AMR and JC Penney), energy companies, which

account for a third of all Texas companies on Fortune's list, are on an

upward curve that has been continuing for some time now.

ExxonMobil, which topped the rankings, sometimes uses Fleishman-Hillard

and Hill & Knowlton for projects. Houston's Enron, also in the Top 10,

is a diversified energy company with an in-house communications staff of

more than 60. Again, there's no agency of record, but it turns to

Fleishman, Middleberg, Quinn Gillespie and Marathon Communications for


High fuel prices and electric deregulation boost Texas, particularly

Houston, which still claims to be the world's energy capital.

During the 1970's energy crisis, when astronomical fuel prices burned

the rest of the economy while powering the fortunes of the Lone Star

State, Texans used to sing Freeze a Yankee - Drive 75. Today, however,

companies all along the energy stream face PR challenges.

Several of Burson-Marsteller's 32 Texas employees, for example, spend

their days convincing citizens their state won't repeat California's

mistakes when retail electric markets open next year. Burson won the

four-year state contract, worth up to dollars 36 million, in October,

but Dallas managing director Mike Lake says the legislature may adjust


A few arrows flung from California landed on Texas oil and gas

companies, as some Californians suffering from electricity shortages and

high fuel prices have criticized Texas-based fuel companies. "We're in a

period of both fixing blame and trying to fix the problem," says Enron's

corporate communications VP Mark Palmer.

Texas PR leaders also agree that oil and gas companies haven't always

communicated messages well. "The energy industry has a superb

opportunity to get its message across during this period of

controversy," says Paul White, GM of GCI Read-Poland's Houston office,

who doesn't believe most companies are taking advantage.


Energy has helped to cushion the blow from the Texas tech fallout. After

enjoying a 38% increase in revenues in 2000, several PR firms have

reported layoffs and closures this year.

Worst hit was arguably Springbok, which has cut 45% of its work force

this year, leaving only 48 employees in Dallas and 13 in Austin. It was

recently acquired by Cohn & Wolfe.

Stealing the headlines, however, was the closure of Alexander Ogilvy's

Dallas office in February. After posting dollars 2.9 million in revenues

in Texas last year, parent company Ogilvy PR announced the closure as

part of a series of nationwide job cuts. "Texas was the only market

where we did not have a multiple-practice presence," explains Ogilvy EVP

Dean Trevelino.

Another office to close was Edelman's four-person outpost in


Austin gets scrappy

Austin took a severe beating. The fastest-growing center of PR in 2000,

revenues grew by 132%. But Austin's hotbed of hi-tech cooled

significantly last autumn. Blanc & Otus closed its 17-month-old Austin

office, while Incepta's Citigate Cunningham, which ranked second in

state revenue, has cut its staff to 29 from 44 since October (although

it has hung onto its cornerstone Sprint account, says Austin director

Morris Denton.)

"I like to think of us as playing Survivor and not getting voted off the

island," quips Phil Morabito, president of Pierpont Communications.

He expects his company's Austin office, which opened last year, to

contribute dollars 1 million in 2001.

Other agencies also report counterintuitive Austin success stories.

Waggener Edstrom came to town in November and signed up Vignette and

Austin Ventures. SVP Claudia Husemann expects dollars 1.2 million in

revenue for 2001.

Porter Novelli opened an Austin office in September and boasts such

clients as PricewaterhouseCoopers' and BMC. VP Laura Beck anticipates

dollars 1.3 million this year. In March, London-based Lewis PR also

rented Austin office space and is hiring three people to occupy it.

However, most agree too many PR firms populated Austin and think the

"correction" may not be over. Locals expect a rebound, but vary on


"I feel a little parting in the clouds," says TateAustin president Kerry

Tate, as clients who previously put PR on hold are coming back with

smaller budgets. "I think it's going to be a long, hot summer," laments


With a Texan in the White House, some expect public affairs to heat up

in Austin. But those familiar with state government say the last few

legislative sessions have lacked contentious PA issues. Texas firms with

ties to the new administration, however, should do well in Washington,

notes Ken Luce, GM of BSMG in Dallas.

Public Strategies, Austin's PA leader, opened a DC office last year and

plans to move into New York within 12 months. The firm doesn't disclose

revenue, but CEO Jack Martin acknowledges billing more than dollars 20

million annually nationwide.


Despite the closure of some new PR ventures, Texas remains an important

attraction for national PR agencies. Cohn & Wolfe's acquisition of

eight-year-old Springbok in late April was its first in the Lone Star


Earlier in the month, GCI Group also entered Texas, acquiring

Read-Poland Associates shortly after R-P had snapped up Ogilvy's former

managing director, Don Bartholomew, to help launch a new tech practice.

With offices in Austin, Dallas and Houston, Read-Poland had revenues of

dollars 2 million in 2000, says Jeff Hunt, president of GCI



With Cunningham (No. 2 in Texas), Springbok (No. 3), Read-Poland, Lois

Paul and Socket PR all selling up in the last 18 months, the store of

all-Texan firms dwindles. Vollmer PR is now the leading independent,

with Pierpont and Shelton Communications also showing strongly.

Meanwhile, Fleishman remains on top in Texas with dollars 17.2 million

in fee income in 2000. Recent wins include United Healthcare, an account

the Dallas office will share with the Minneapolis office, says regional

president Janise Murphy.

Fleishman enjoyed double-digit organic growth in Dallas and Houston

during 2000. But last year's acquisition of Lois Paul, including a

22-person Austin office, gave it a big boost. The acquisition was

billing dollars 1.8 million on its own in 1999.

With long-term Texas clients such as SBC, Yahoo!, Nortel and Dell in the

troubled tech sector, it raises challenges for Fleishman. Dell is

cutting staff as PC sales soften. "Our assignments are much more

specific, and that's appropriate," Murphy admits. She also notes some of

Fleishman's work for Dell is shifting to Europe.

Weber Shandwick's problems have more to do with infrastructure.

Shandwick was No. 5 in the entire state in 1999, but the merged

operations slipped to No. 7, losing 2% of combined revenue after

Shandwick gave up Compaq to serve Hewlett Packard's PC business from

California. H&K, which picked up Compaq, doesn't break down its revenue

by region, but Houston managing director Megan Mastal estimated 2000

fees at dollars 6.3 million.

Several smaller independents didn't submit financials to the Council of

Public Relations Firms, but claim a healthy performance in 2000. These

include: TateAustin (up 14% to dollars 3.78 million); Dawson/Duncan in

Dallas (up 8% to dollars 2.2 million); and Dallas-based M/C/C (up 20% to

dollars 1.8 million).

Socket's Austin office (now owned by H&K) claims a 58% increase in

revenues to dollars 1.475 million.

Meanwhile, revenues at Levenson PR in Dallas slumped 24% in 2000, not

due to client losses, claims president Stan Levenson, but because its

staff spent otherwise billable time reviewing dot-coms that didn't

become clients.

Despite the general pain, executives agree that the slowdown has brought

PR back to the basics. "Last year, it was a gold rush," says Greg

Artkop, VP of Golin/Harris' Dallas office. "You could sit still and get

leads left and right from every dot-com that breathed. Reality has come

back. Instead of picking up your gold, you've actually got to jump into

the river to get it."

Some Texas PR executives will settle for lower billings in 2001,

although most hope to match last year or post gains. "Before the tech

boom, Texas was a good PR market. After the tech boom, Texas is more

sophisticated," Artkop observes. "Everybody learned over the last year,

for better or worse."


Firm Name Revenue Increase Staff

(dollars) %



Citigate Cunningham 11,240,883 53 44

Fleishman-Hillard 4,960,000 NA 35

Edelman Public Relations Worldwide 3,956,924 52 12

Springbok Technologies 3,305,464 96 24

Weber Shandwick Worldwide 1,765,913 429 10

Vollmer 1,445,459 NA 12

Corporate Technology Communications 1,296,800 276 10

Pierpont Communications 329,285 NA 6

PR21 116,304 NA 3

Waggener Edstrom 61,369 NA 5


Fleishman-Hillard 10,612,000 15 53

BSMG Worldwide 6,889,182 50 48

Springbok Technologies 6,645,987 61 65

Publicis Dialog 4,094,926 14 34

Shelton Communications Group 3,269,105 101 43

Alexander Ogilvy* 2,920,600 38 20

Burson-Marsteller 2,650,000 290 22

Michael Burns Company 1,700,000 84 NA

Edelman Public Relations Worldwide 1,647,457 12 32

Ketchum 1,593,000 59 17

Vollmer 1,590,459 96 15

Golin/Harris 1,469,660 72 13

The Powell Group 1,001,537 NA 9

Ackermann Public Relations & Marketing 883,031 114 2

TechCom Partners 618,759 39 6

Morgen Walke 325,697 34 1

Levenson Public Relations 763,794 -24 NA

BizCom Associates 503,920 434 5


Vollmer 4,447,380 5 65

Weber Shandwick Worldwide 3,466,000 -31 25

Pierpont Communications 3,298,662 28 31

Bates Churchill Public Relations 2,113,000 0 22

Fleishman-Hillard 1,656,000 28 10

Golin/Harris 790,340 0 9

Gibbs & Soell 519,300 -41 5

Edelman Public Relations Worldwide* 484,780 121 4


Dublin & Associates 1,442,473 8 19

S & C Advertising and Public Relations 772,000 -30 12

TOTALS 96,647,450

AVERAGE 2,543,354 38

*office now closed. 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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