MARKET FOCUS WASHINGTON, DC: District turning - Washington DC's PR scene is diversifying beyond politics and policy. Steve Lilienthal takes a look

Walk into a Xando's coffee shop in Washington on a fall day and the talk may be about how George W. Bush and Al Gore are doing on the hustings. Or discussions may include the latest on the AOL-Time Warner merger or a new tech start-up. Washingtonians still have yet to get a life, but they've diversified their wonkish interests.

Walk into a Xando's coffee shop in Washington on a fall day and the talk may be about how George W. Bush and Al Gore are doing on the hustings. Or discussions may include the latest on the AOL-Time Warner merger or a new tech start-up. Washingtonians still have yet to get a life, but they've diversified their wonkish interests.

Walk into a Xando's coffee shop in Washington on a fall day and the talk may be about how George W. Bush and Al Gore are doing on the hustings. Or discussions may include the latest on the AOL-Time Warner merger or a new tech start-up. Washingtonians still have yet to get a life, but they've diversified their wonkish interests.

PR in DC is also a different animal compared to 10 years ago - and not just in terms of dollar growth. 'Traditionally everything was focused on the Federal government,' says Mark Schannon, director of Ketchum's DC office. 'But we're beginning to see that companies outside the Beltway recognize that DC PR firms can offer multi-services.'

Public affairs, however, is still a driving force of DC PR income. Patrick Kincaid, partner in healthcare PR firm Garrett Yu Hussein, asserts: 'Washington is the point where media, outreach and policy converge.'

Expanding from public affairs PR

Tech's importance to the national economy partly explains industry diversification.

Kirk Monroe, president of KM Communications says: 'Ten years ago, the conversation at meetings in Washington would always start off about how the president or Congress was doing. Now, it's often about tech, dot-coms, MCI.'

It seems to be the same story with health.Shandwick Public Affairs president David Krawitz says one reason is 'healthcare is one of the most heavily regulated industries in the country, and the federal government is one of the biggest purchasers' when taking into account Medicare, Veterans Administration, military and federal employees' insurance systems. 'Almost every healthcare player in the US is interested in impacting what goes on here not only in terms of regulation but from a customer standpoint too.'

Foundations are becoming more active in undertaking information campaigns on policy and preventive medicine, and as medicine 'reinvents itself,' says Peter Segall, managing director of Edelman Health Washington, 'the need to make sure federal policymakers know the latest developments becomes more important to the clients' bottom line.'

The impeachment of President Clinton also proved to be a drag on public affairs at many firms. This year, however, the presidential election is reinvigorating public affairs work on issues, such as Medicare, that will have important repercussions for business.

Shandwick believes that public affairs at home and abroad has become so important to clients that last year, it shook the Washington PR scene when it bought The Cassidy Companies, a holding company that included PR firm Powell Tate. The deal catapulted Shandwick from ninth place in last year's Top 10 to number one this year.

Shandwick Washington's impressive 1999 income of dollars 69 million and its high growth rate aren't a true reflection of what really happened post-merger. Shandwick Public Affairs chairman/CEO Jody Powell concedes that the merger proved trying during the first six months but promises that Shandwick will end the year with a more 'unified company, a good book of business and prospects for continued growth.' His former company, Powell Tate, dealt primarily with public affairs and when the impeachment process started was one of those firms that started to skid when the brakes were slammed on. Now, Powell estimates that 30% of Shandwick Public Affairs' business will come from tech. The agency also has set up a Herndon office to build a stronger presence in the northern Virginia tech community.

The Interpublic deal also will bring it Weber's small tech PR shop in Virginia.

The recent realignment within Interpublic (PRWeek, September 25) is also giving what was Weber McGinn added momentum and capabilities. Weber cracked the top 10 last year based on growth in public affairs and strategic counseling services. But now it has merged with Golin Harris. Weber's Lane Bailey, now GH's managing director for the southeast, estimates the 2000 income for the two offices will be in the dollars 20 million range.

Chart toppers

The other big players have not been sitting back, as the double-digit growth figures posted by six of the remaining nine Big 10 firms attest.

Burson, Ogilvy, Fleishman and Porter Novelli had good years. Fleishman is placing more emphasis on diversifying into areas such as local consumer, pharmaceuticals and social marketing. This year it won the multiyear keting. This year won the dollars 10 million account for the American Association of Retired Persons.

Further down the list, The MWW Group has staked growth on public affairs and succeeded with an upturn of 205% thanks to more emphasis on coalition and grass-roots work.

The rising need for recruiting patients for clinical trials of new pharmaceuticals has been a lucrative addition to the social marketing campaigns that formed the base of The Matthews Media Group's business. 'One pharma executive told me that they spent as much in 1999 as they had in the past five years on clinical trials,' says MMG president Molly Matthews. Also, health specialist Garrett Yu Hussein reported growth of 258%.

Other triple-digit risers include tech PR firms RMR and O'Keeffe & Co., who claim to have been smart enough to avoid the dot-com shakeout.

Falls from grace

But there are also those who had a disappointing 1999 for a variety of reasons. Hill & Knowlton's lackluster 1%growth in 1999 is partly attributable to the lack of a general manager in DC for nearly a year. Torie Clarke joined from the presidency of Bozell Eskew Advertising in November and aims to build H&K's identity in consumer PR and tech. H&K opened an office in Reston, VA this year, and key sectors of the business are growing with consumer wins such as XM Satellite Radio.

BSMG's 35% drop in income for 1999 is due to the cessation of their multi-million dollar work for tobacco companies fighting tobacco control legislation, according to DC president Lance Morgan. And, he says, business in public affairs grew steadily when advertising was taken out of the mix. This year, BSMG will have a good-sized chunk of the dollars 50 million campaign to promote biotechnology for the Council for Biotechnology Information.

Nelson saw a drop in growth of 17%, but has been reorganized and operates under new leadership with the new name Sciens.

MS&L's fall in growth of 16% was thanks to the fact that the figures of its two other PR firms, Capitoline and Interscience, were reassigned to other offices of MS&L. MS&L managing director Joe Gleason claims that revenue grew by 35% in 1999. Interscience became part of MS&L/NY this year, and now, Gleason insists, the 2000 figures should be the baseline figure for MS&L in the future.

The Kamber Group's decline in income stems from management problems of three years ago. But president Vic Kamber says the firm's client base is being diversified. He insists its situation has stabilized and is back on a growth pattern.

Meanwhile, the outcome of the election will herald a significant change for some DC PR firms. If the presidency and the House or Senate remain in different hands, then that may very well ignite heated public affairs campaigns. Players such as The MWW's Bob Sommer and Burson's US public affairs director Cynthia Hudson sense lots of money will be spent next year as health and tech issues move to centerstage in congressional debates.

Some new firms bear watching, one of which will be Quinn-Gillespie. Whoever wins the White House, Quinn-Gillespie should benefit because its partners, Republican Ed Gillespie and Democrat Jack Quinn, have good connections to both camps.

Then there's Qorvis, the result of a merger between IR specialists The Poretz Group; public affairs and grass-roots firm the Weber/Merritt Company; and JAS Communications, marketing and PR specialists. Law firm Patton Boggs has formed a strategic alliance with Qorvis and is also the lead investor.

Terry Wade, CEO of Cohn & Wolfe's DC office, talks of trying to acquire a tech PR firm. 'We're committed to getting into that market. The growth is too big a piece of the pie to ignore,' he says.

Washington approaches year's end with the promise of more action to come.

THE WASHINGTON WIZARDS:TOP WASHINGTON, DC PR AGENCIES

Rnk     Agency Name                 DC income (dlrs)              Growth

99  98                                          1999                 (%)





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