SAN FRANCISCO AND NEW YORK: The economic crisis affecting the financial services market is causing PR firms in multiple industries to be cautious in their outlook.
Lisa Sepulveda, CEO of Euro RSCG Worldwide PR, said the agency hasn't seen much in pullbacks, but overall clients and agencies are more deliberate in approving 2009 plans.
“As clients are watching the economy, they are thinking about ways to get the most for their money,” said Sepulveda.
Because the tech sector was at the center of the last downturn, industry players are being more vigilant about responding to red flags. Sequoia Capital, a venture capital firm, reportedly hosted a recent mandatory, CEO all-hands meeting warning startups to rein in spending. Since then, PR agencies have noticed some startup clients scale back.
Shift Communications principal Todd Defren said his firm recently lost two startup clients.
“But we're not worried about clients,” he said. “Startups who were weak at the start have to strip out extraneous spending or they'll go out of business. But our pipeline is still full of new business opportunities.”
He added that larger clients are holding their PR budgets steady, but that “everyone is holding their breath.”
Sabrina Horn, founder of the Horn Group, said one startup client opted to move its entire PR function in-house and another has gone on hiatus until January. Both those low-retainer clients were based in New York, she noted.
Even so, she said the firm won two startup clients last week: Sportgenic and Syncsort. She added that one client cut its marketing budget 40%, but upped its PR budget 10%.
“We're calling every client to re-align and reaffirm their marketing goals,” Horn said. “For many clients, this means focusing on the essential rather than the ‘nice things.'” For instance, some clients are scaling back on trade shows and focusing on efforts that would directly increase Web traffic or sales.
In the film industry, entertainment companies plan further in advance than in other sectors, so the economy might not make as many immediate waves. The Los Angeles Times, however, recently reported that Paramount is under pressure from parent company Viacom to cut back and streamline operations in part due to the economic climate.
“The entertainment cycle being what it is, between now and the end of the year, there won't be many changes,” said Rachel McCallister, co-president of mPRm, whose clients include Miramax. “We're just looking at what will happen in Q1.”
One agency with confidence in the entertainment industry is DKC, which is looking to expand its work in Los Angeles, said president Sean Cassidy. He cited the popularity of movies and said, “When there is a sense of [economic] concern, people look to moderately-priced escapism.”
One multicultural firm is seeing mixed results. “There is some sense that maybe [multicultural] can wait or we can incorporate it into mainstream,” said Esther Novak, CEO and founder of VanguardComm in New Jersey. “But for some, leveraging the growth in the multicultural segment is something they are willing to consider.”
There is likewise a mixed picture on the hiring front. Horn said her agency is actively hiring several positions spread across all experience levels.
Anna Leonard, COO for tech-focused Blanc & Otus, said it is not actively hiring because it has the staff it needs, but it has not implemented a freeze. “If business demanded it – we'd be willing to hire,” she said, noting that the agency is working on three high-profile RFPs.
One agency executive in LA said, “Everyone has slowed down on the hiring front, [but] some of that happens naturally this time of year.”
And a tech-agency leader said the firm is seeing an influx of résumés from other firms and speculated that layoffs might be underway, because “it is rare to see people leave their jobs in a tough economy.”