TOP EUROPEAN AGENCIES 1998: GERMANY - A boost in business confidence has lead to an increased growth in consultancy work. If Schroder wins the general election there could be a rise in spin doctoring and lobbying Photograph (Omitted)

A marked improvement in the German economy over the past 12 months has boosted business confidence, to the advantage of the consultancy sector. Manufacturing orders are up and unemployment, though still high, is falling.

A marked improvement in the German economy over the past 12 months

has boosted business confidence, to the advantage of the consultancy

sector. Manufacturing orders are up and unemployment, though still high,

is falling.



According to the Gesellschaft Public Relations Agenturen (GPRA), the

trade association that represents over 40 of Germany’s leading PR

consultancies, 1997 was an outstanding year. Among those member

consultancies that published their figures, over half achieved double

digit fee income growth last year.’The nature of PR budgets is

changing’, says Media Concept owner and managing director Bernhard

Fischer-Appelt. ’It’s not just press any more, it’s about whole

campaigns. Many companies are now undertaking changes or introducing new

products using PR.’



This situation has given consultancy heads grounds for optimism as to

the future. ’I expect another period of two to three years of rising

growth’, says Kohtes and Klewes Porter Novelli chief executive officer

Rainer Zimmermann.



Over the past couple of years Kohtes and Klewes has established a

dominant position for itself in the marketplace, outperforming

traditional rivals such as Leipziger and Partner and the Euro RSCG

International Communications-owned ABC to land many key corporate

assignments. Zimmermann, however, feels it would be better for the

market if another consultancy were challenging Kohtes and Klewes more

closely at the top of the table. At present, he claims, only about 20

per cent of Kohtes and Klewes’ pitches are against other German

consultancies. In the vast majority of cases it finds itself up against

international consultancies, advertising agencies, management

consultancies or other types of marketing companies.



However, Shandwick prides itself on its strong local presence, which

accounts for between 60 to 70 per cent of operating income. It also has

the back-up of the Shandwick international network and all the

opportunities that brings. Lutz Meyer, chief executive of Shandwick

Deutschland says that with the acquisition in March 1998 of Munich-based

hi-tech, entertainment, tourism and healthcare agency Stinnes Marketing

Consultants, the picture is complete. The company’s two former owners

Katharina Stinnes and Claudia Dressler, have remained as managing

directors at the new office.



Meyer says operating income at Shandwick Deutschland has increased by 10

per cent in the last year, on the back of new client wins, including

Siemens; Barclaycard; Finland’s presentation in Expo 2000; AgrEvo -

sister company of chemical company Hoechst and Schering; and a corporate

identity account win from car component manufacturer EMPE. Sectors which

Meyer predicts will become increasingly important for Shandwick include

life sciences and financial PR. ’Anything in the area of life science

needs a lot of communication and information which is why there is

growth potential for both consumer and corporate communications,’ he

says.



One of the biggest changes in the corporate landscape has undoubtedly

been a boom in flotations. Next year, a second wave of companies are

planning to float, including airline Lufthansa, railway system Deutsche

Bahn and postal service Deutsche Poste. Companies which are considering

privatisation include Germany’s network of service stations and its

water industry.



In January this year, publisher Heinrich Bauer launched personal finance

fortnightly Geld Idee with an initial print run of 300,000. The

publication is designed to tap into this increased consumer interest in

investment.



’Now even the medium and smaller sized companies are raising capital by

going public,’ says GCI Hering Schuppener chief executive Ralf

Hering.



’The stock exchange is doing very well, and financial PR and investor

relations is one of the really fast growing businesses in German

PR.’



This was certainly a factor behind Weber PR Worldwide’s decision to buy

15-strong affiliate financial and IR agency B&L Corporate Communications

in April this year and bring it under the control of its own financial

agency Ludgate.



An example of the increased IPO (initial public offerings) activity is

provided by the PR sector itself. Market research and PR group Hunziger

Information, parent of Moritz Hunziger PR, floated in Frankfurt last

March as a means of raising capital to fund expansion. It has

subsequently been involved in talks with life sciences group Hoechst (an

existing client) with a view to buying its communications

department.



Healthcare is undeniably a sector with potential for PR growth.

Fischer-Appelt cites his client MSD Sharp and Dohme, for which Media

Concept is working on a programme for a hair restoring product, as an

example of how healthcare clients are increasingly developing consumer

programmes.



’Healthcare topics are changing,’ he says. ’It used to be very specific

medical work. But increasingly we are talking to the wider market.’



Following on from Deutsche Telekom privatisation a year and a half ago,

the German telecommunications market has also opened up. Fink and Fuchs

is one of the consultancies that has benefited from the increased

competition in the telecom sector and, more broadly speaking, the

continuing growth of IT PR. Wins such as First Telecom and Sony

PlayStation have more recently been augmented by the brief to work on

the whole of Motorola’s business, from semiconductors to mobile

phones.



But as the independently owned consultancy’s managing partner Stephan

Fink points out, this strong growth in IT PR is making it ever harder to

find staff with the right combinations of appropriate experience and

ability.



Deekeling and Fiebig managing partner Egbert Deekeling argues that PR is

also gaining ground in the marcoms sector. ’Companies that used to put

all their money into advertising have started to define PR budgets and

invest in PR,’ says Deekeling, a former managing director of ABC’s

Dusseldorf office. His three-year-old agency saw fee income rise to

almost pounds 900,000 last year.



The impact of reunification and the decision in 1991 that Berlin should

not only remain as the capital, but become the political powerbase of

Germany from 1999, is still being felt. Ministries currently situated in

Bonn will relocate to Berlin in waves, splitting the public affairs

departments of many PR agencies. Shandwick, for example, which started a

small operation in Berlin 18 months ago, is going to rent new space and

move a team of four over in the next four months.



A general election looms later in the year, raising the possibility of a

change of government. Social Democrat leader Gerhard Schroder has been

tipped by many to finally end Helmut Kohl’s tenacious grip on power. As

Herald Communications managing director Esme Page points out, Schroder

is often referred to in the media as Germany’s Tony Blair - although

there is a school of thought which has it that the similarities are only

superficial.



However, should Schroder triumph, Page wonders whether there could be a

political culture change that may bring about a rise in spin doctoring

and lobbying. ’PR in politics is still on the starting blocks here,’ she

adds.



- The GPRA has 36 members with 69 subsidiaries throughout Germany.

Members must be in existence for at least three years



- Economic factors aside, the upsurge in PR income can be ascribed to an

increasing acceptance by clients of the potential of PR. Greater belief

that the discipline can deliver results for a broad range of

communications objectives has led clients to up their investment in

PR.



- With Berlin becoming Germany’s political powerbase many ministries are

moving there from Bonn. However, not all ministries will move - health,

environment and technology are among those which will stay in Bonn for

the foreseeable future.



EURO CONSULTANCIES - GERMANY

Rank Company                            Fee income (pounds)

97                                           97            96

1    Kohtes & Klewes P Novelli*      12,750,000    10,150,000

2    ABC Agentur Fur Komm*1           4,811,000    11,542,000

3    Edelman*                         3,364,286     2,928,571

4    GCI Hering Schuppener            2,983,000     2,334,000

5    Koob and Partner*                2,978,571     2,650,000

6    Shandwick Germany*               2,772,000     3,004,000

7    MasterMedia*                     1,966,666     2,300,000

8    Ahrens and Behrent*              1,964,285       928,571

9    Public Relations Partners*       1,860,000     1,500,000

10   APR/Wilkens*                     1,822,000     1,138,000

11   MS&L Germany                     1,700,000     1,500,000

12   Media Concept*                   1,688,000     1,318,600

13   HBI Helga Bailey                 1,400,000     1,300,000

14   PR & P Rowland                   1,310,000     1,180,000

15   wbpr*                            1,284,000     1,500,000

16   Fink and Fuchs PR                1,274,976       961,215

17   PR-Agentur Trostner*             1,200,000     1,100,000

18   Fleishman-Hillard*               1,100,000     1,300,000

18   Hiller Wust and Partner*         1,100,000       786,858

20   Deekeling and Fiebig               893,000       678,521

21   Carapetyan & Kramer                821,000       786,000

22   Herald Comms                       764,569       631,875

23   Intervox                           714,285       714,285

24   PR Konzept                         700,000       650,000

25   Hill and Knowlton                  637,000       398,000

26   Dikom*                             464,000       464,000

27   Beuerlein and Partner              180,000       140,000

Rank Company                     Location       Status

97

1    Kohtes & Klewes P Novelli*  Dusseldorf     Porter Novelli sub

2    ABC Agentur Fur Komm*1      Dusseldorf     Euro RSCG Int net

3    Edelman*                    Frankfurt      Edelman subsidiary

4    GCI Hering Schuppener       Dusseldorf     GCI Group subsidiary

5    Koob and Partner*           Mulheim        Ind/Corporate Co mem

6    Shandwick Germany*          Bonn           Shandwick Intl subs

7    MasterMedia*                Hamburg        Independent

8    Ahrens and Behrent*         Frankfurt      Independent

9    Public Relations Partners*  Kronberg       Ind/Pinnacle member

10   APR/Wilkens*                Hamburg        FGB/Wilkens

11   MS&L Germany                Oberursel      MS&L subsidiary

12   Media Concept*              Hamburg        Independent

13   HBI Helga Bailey            Munich         Ind/Worldcom net

14   PR & P Rowland              Wiesbaden      Ind/Rowland affiliate

15   wbpr*                       Munich         Independent

16   Fink and Fuchs PR           Wiesbaden      Pinnacle member/Ind

17   PR-Agentur Trostner*        Filderstadt    Independent

18   Fleishman-Hillard*          Frankfurt      FH subsidiary

18   Hiller Wust and Partner*    Aschaffenburg  Ind/Copidhorne Bellows

20   Deekeling and Fiebig        Dusseldorf     Independent

21   Carapetyan & Kramer         Dreieich       Independent

22   Herald Comms                Munich         Herald Comms subsidiary

23   Intervox                    Munich         Independent

24   PR Konzept                  Frankfurt      Independent

25   Hill and Knowlton           Frankfurt      H&K subsidiary

26   Dikom*                      Dusseldorf     Independent

27   Beuerlein and Partner       Wehrheim       Independent

* Denotes GPRA member

1 This includes fee income for IPR&O, Goldfisch and Theemenverlag.



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