While 2001 is regarded as one of the toughest years for technology PR, 2002, unfortunately, did not fare much better.
By the end of the first quarter, many client companies that had clung on during the steepening tech decline of the previous year began losing their grip. Some took drastic steps to reduce their budgets or simply went bust, while many US firms, whose European headquarters were based in the UK, cut their losses and scrambled back stateside to run their European operations.
Where clients lead in terms of sector downturn, agencies can only follow.
This February saw Gnash Communications, once the darling of the dotcom economy, go bust, while others responded to plummeting revenues with drastic job cuts.
In the face of such a sectoral mauling, the question is: how on earth did anyone survive?
Looking at this year's table, the answer is that few emerged from 2002 completely unscathed. Of the 31 listed consultancies that also featured last year, only nine have posted positive growth. Furthermore, any gains have mostly been modest and irrespective of whether operators are generalists or tech specialists.
However, despite a reduction in business across the board, there was still money to be made in both the consumer and B2B sectors, particularly around the introduction of broadband and mobile 3G technologies.
Similarly, while enterprise software and services remained popular with corporate audiences, the consumer love affair with gaming continued.
Looking at the 40 agencies in the table, it is evident that telecoms comprised 21 per cent of sector income, hardware 11 per cent, software and services an impressive 50 per cent, with a further 18 per cent coming from other types of technology.
As with PRWeek's main Top 150 report, the introduction of the Sarbanes-Oxley Act in the US has had a major impact on the appearance of this year's league table, with many of the larger agencies prohibited from supplying figures.
This means some notable absences from the table, including Countrywide Porter Novelli and Fleishman-Hillard. However, as these remain important players, we talked to, among others, Brodeur Worldwide and Ogilvy PR, as well as speaking to Hill & Knowlton and Weber Shandwick about their hi-tech business performance.
Weber Group MD Zoe Arden claims her team was the most successful Weber Shandwick technology practice in 2002. As a result, the division has avoided redundancies and continued recruiting, hiring four staff already this year.
'Business has continued to focus on delivering good value, results-driven programmes, which are about driving sales for our clients,' she says.
However, Arden admits the media environment is becoming much tougher, with journalists demanding more evidence and customer endorsements for technology claims.
H&K head of technology and corporate practice Sally Costerton reports she feels more confident about business now than 12 months ago: 'As people have got used to the fact the market is much smaller, the market has stopped panicking.'
Contributing to this positive outlook is H&K's recent triumph in bagging all four of Hewlett- Packard's UK business units and the tech giant's global corporate communications account. Yet, in such a tight market, Costerton adds that H&K has had to be much more discriminating about what business it seeks to win. 'You have to be very careful about deploying the resources you've got. I can't afford to put existing clients at risk, so I don't want to pitch for anything unless I'm sure we've got a fair chance of winning it,' she says.
Of course, one of the advantages the multinational agencies have over the rest of the tech PR market is the global nature of their business, and the safety net of other specialised skills. For example, at Citigate Technology, chairman Suzy Frith points out the agency is increasingly examining the opportunities in vertical sectors, a move primarily driven by the needs of clients.
'There is a big change among the big IT companies, the likes of IBM, whereby a major source of their revenue is outsourcing services rather than selling products,' she says. 'This means they're having to market themselves properly to the financial or health sector, for example, so no longer necessarily want to talk to the IT sector.'
Naturally, this focus away from classic IT audiences to decision-makers in specialised markets raises training issues for consultants. But Frith adds: 'That's where we're able to work more with our specialists across Citigate's other business.'
This move into vertical markets also holds true for some smaller multi-discipline consultancies, including Firefly and sister agencies August.One and Bite, while Brodeur Worldwide is holding up its business by building on its B2B credentials outside the IT sector.
The other route to survival for tech players is to offer new PR services to clients. This is what Chime's tech arm, Harvard PR, opted for when it launched specialist division Harvard Business Intelligence in August to provide industry analyst relations and speaker programme advice to firms.
Likewise, Brands2Life, which achieved fee income growth of 42 per cent in 2002, offers an online speaker bureau service - marketingdesktop.com - featuring an aggregated listing of all English-speaking conferences for the IT and telecoms market across Europe. Last year the agency also launched a 'thought leadership' service, designed to help clients reach senior decision-makers within their sector through commissioned research or joint projects with business schools.
Others have been using technology itself to become more cost-efficient for clients. 'We try and use clients' money for what we do best - consultancy - so we've kept investing in our technology infrastructure to provide extranets and media monitoring services,' says Costerton.
Lewis PR has gone one step further, recently launching an SMS news update service for clients, desktop-to-desktop video conferencing - which facilitates pan-European briefing sessions - and a video cuttings presentation service.
'You've got to use the technologies the industry itself will be using tomorrow to drive down costs and admin,' explains agency CEO Chris Lewis.
Nevertheless, as budgets have shrunk, so agencies have also had to get their act together in seeking out new business. In some cases, this has resulted in long pitch lists, as clients have forced agencies to the wall on pricing and services.
Yet, this has also led to the larger agencies trying to muscle in on the territory of smaller IT players and freelancers. 'Agencies are constantly trying to poach our clients,' claims Stewart-Muir MD Louise Stewart-Muir.
'I've got some (clients) who receive three phone calls a week from various agencies, plus innovative mailing gimmicks.'
Accountability has also become a hot issue, as clients increasingly have to justify and show value for their PR spend to internal audiences.
'Three words sum up what clients wanted last year: results, results, results,' says Kaizo CEO Crispin Manners. He points out that, in 2002, companies increasingly looked to remove risk from the PR buying process by trying out agencies on a project basis, rather than committing to a retainer. The planning process became all-important, with clients demanding to see outcomes before work had even begun. 'As client expectations continue to rise, you're no longer as good as your last piece of work. It's what you can do tomorrow that counts,' Manners adds.
On the plus side, this only serves to highlight how far the agency market has adapted to the demands of a shrinking market. With a raft of new services and skills on offer, and in many cases a much lighter management load, the prospects for the tech PR sector look brighter.
Certainly no one expects the market to revive significantly in the next 18 months, but on the whole, consultancies seem better armed to respond to change.
TOP TECH CONSULTANCIES 1-25
Rnk Agency Tech fee income (pounds) % Total PR fee
02 02 01 growth income 02
1 Lewis Communications 5,486,466 5,204,078 5 5,486,466
2 Firefly Communications* 4,789,196 7,216,545 -33 5,568,833
3 Bite Communications* 3,704,016 3,651,016 1 4,215,510
4 Citigate 3,516,366 4,936,417 -28 23,442,443
5 Write Image 3,213,276 - - 3,906,582
Communications* 3,010,421 - - 4,631,418
Communications1 2,932,000 - - 4,229,000
8 Band & Brown
Communications2 2,683,000 3,586,393 -25 5,299,712
9 AxiCom 2,605,852 4,229,234 -38 2,605,852
10 Nelson Bostock
Communications* 2,181,888 1,991,246 10 3,636,480
11 Johnson King 2,126,545 2,305,229 -8 2,126,545
12 Kaizo* 1,955,969 2,195,700 -11 2,818,458
13 Insight Marketing
and Communications 1,880,000 - - 1,880,000
14 Portfolio Group3 1,766,884 1,555,959 14 3,963,847
15 Text 100 International 1,761,166 2,812,548 -37 1,761,166
16 Beattie Media 1,746,265 2,152,111 -19 7,058,467
17 AD Communications* 1,506,091 1,829,736 -18 1,506,091
18 hatch-group* 1,422,021 1,555,105 -9 4,785,876
19 Edelman* 1,401,000 2,008,016 -30 14,563,087
20 Hotwire PR* 1,385,564 - - 1,385,564
21 The Whiteoaks
Consultancy* 1,359,147 1,414,018 -4 1,430,682
22 Brands2Life 1,305,657 917,812 42 1,332,303
Communications* 1,211,579 1,731,982 -30 1,421,603
Communications* 1,209,597 1,357,607 -11 1,525,156
25 The Red Consultancy 1,201,827 1,118,467 7 7,693,111
PR International 1,118,068 1,279,704 -13 1,118,068
27 Oast Communications 1,089,000 1,100,000 -1 1,361,926
28 Rainier PR 1,073,612 920,000 17 1,073,612
29 Roger Staton
Associates* 973,580 1,634,094 -40 973,580
30 EML 966,382 1,084,553 -11 966,382
31 Spark Marketing
Communications 886,414 - - 886,414
32 The ITPR Group 881,489 864,484 2 881,489
33 Fox Parrack Hirsch 865,201 - - 865,201
34 SNS Group 849,300 - - 1,132,400
35 Lighthouse PR 764,749 799,964 -4 764,749
36 Pinnacle Marketing
Communications 762,250 - - 762,250
37 Multimedia PRM 754,082 806,510 -7 754,082
38 eclat Marketing 747,520 - - 747,520
39 Euro PR Group* 684,963 971,000 -29 1,287,172
40 Buffalo Communications 580,073 - - 580,073
41 Chameleon PR* 511,519 - - 511,519
42 Spreckley Partners 491,453 735,283 -33 1,404,152
43 Houston Associates 468,526 - - 468,526
Communications 468,170 - - 508,881
45 Ruder Finn UK 443,221 - - 2,954,811
46 HBL Media 370,620 - - 1,051,692
47 Market Engineering 363,800 - - 472,500
48 Neesham Public Relations 345,207 - - 345,207
49 Lexis Public Relations* 333,004 - - 4,757,207
50 Kinross & Render1 306,593 778,693 -61 1,824,023
Rnk Agency Staff % fee Location
02 02 income
1 Lewis Communications 102 100 London
2 Firefly Communications* 72 86 London
3 Bite Communications* 57 89 London
4 Citigate 39 15 London
5 Write Image 108 82 London
6 August.One Communications* 60 65 London
7 Harvard Communications1 55 69 London
8 Band & Brown Communications2 65 51 London
9 AxiCom 24 100 London
10 Nelson Bostock Communications* 49 60 London
11 Johnson King 24 100 London
12 Kaizo* 40 69 London
13 Insight Marketing and Communications 34 100 Cheshire
14 Portfolio Group3 55 45 London
15 Text 100 International 29 100 London
16 Beattie Media 126 25 Glasgow
17 AD Communications* 20 100 Surrey
18 hatch-group* 65 30 London
19 Edelman* 122 10 London
20 Hotwire PR* 19 100 London
21 The Whiteoaks Consultancy* 34 95 Surrey
22 Brands2Life 22 98 London
23 Companycare Communications* 25 85 Reading
24 Midnight Communications* 34 79 Brighton
25 The Red Consultancy 106 16 London
26 Berkeley PR International 24 100 Berkshire
27 Oast Communications 28 80 Kent
28 Rainier PR 9 100 London
29 Roger Staton Associates* 15 100 Bucks
30 EML 19 100 Surrey
31 Spark Marketing Communications 12 100 London
32 The ITPR Group 15 100 Surrey
33 Fox Parrack Hirsch 8 100 London
34 SNS Group 12 75 Cambs
35 Lighthouse PR 14 100 London
36 Pinnacle Marketing Communications 7 100 Solihull
37 Multimedia PRM 14 100 Chepstow
38 eclat Marketing 9 100 Berkshire
39 Euro PR Group* 16 53 London
40 Buffalo Communications 10 100 London
41 Chameleon PR* 9 100 London
42 Spreckley Partners 21 35 London
43 Houston Associates 11 100 London
44 Stewart-Muir Communications 9 92 Middlesex
45 Ruder Finn UK 46 15 London
46 HBL Media 15 35 London
47 Market Engineering 7 77 Oxon
48 Neesham Public Relations 7 100 Herts
49 Lexis Public Relations* 63 7 London
50 Kinross & Render1 30 17 London
All figures relate to the year end 31 December 2002. Fee income=PR fees + mark-up.*Denotes PRCA member 1 Last year submitted figures as part of Chime Online. In spring 2002, Chime Online was renamed the Harvard Communications Group 2 Includes Pan Media, iJack, Larkspur Communications, Playmaker Communications and Band & Brown Communications (Bristol) 3 Includes Portfolio Communications, Portfolio Metrica, The Answer, Clear Communication Specialist and income from PR accounts from Metrica Research
All figures relate to the year end 31 December 2002. Fee income=PR fees + mark-up.*Denotes PRCA member 1 Includes income from ECCO International Public Relations, in which K&R has a 24.35 per cent stake since the end of 2002
- As a result of the Sarbanes Oxley Act in the US, PR companies owned by Grey, Havas, Interpublic, Omnicom, Publicis and WPP have not entered the league tables this year. The following consultancies, which appeared in last year's ranking, were affected: Brodeur Worldwide, Cohn & Wolfe, Countrywide Porter Novelli, Fleishman Hillard, GCI/APCO, Grayling Group, Hill & Knowlton, Manning, Selvage & Lee, Ogilvy, The Shire Hall Group and Weber Shandwick
- Of the 31 listed consultancies that also featured in last year's ranking, only nine posted positive growth. Any gains have mostly been modest and irrespective of whether operators are generalists or tech specialists.