TOP EUROPEAN AGENCIES 1998: SPAIN - A welter of privatisation activity has underlined the importance of investor and financial PR Clients are relying less on advertising, and using other tools like direct marketing and PR. Photograph (Omitted)

The upturn in Spain’s economy, started in 1997, looks set to continue. In the face of growing regionalism, this year’s GDP growth is expected to hit four per cent. The labour market and tax reforms introduced by prime minister Jose Maria Aznar’s centre-right Popular Party in the last two years, have brought greater consumer confidence and business activity.

The upturn in Spain’s economy, started in 1997, looks set to

continue. In the face of growing regionalism, this year’s GDP growth is

expected to hit four per cent. The labour market and tax reforms

introduced by prime minister Jose Maria Aznar’s centre-right Popular

Party in the last two years, have brought greater consumer confidence

and business activity.



This strong economic growth, allied to further new job creation, has

begun to bring unemployment rates down, which in 1996 reached the dizzy

heights of around 20 per cent. But despite last year’s spate of very

public disagreements with the government’s main ally in parliament, the

Catalan nationalist coalition Convergence and Union, Aznar’s current

position looks secure and Spain is on course to enter EMU in

January.



Naturally, this boom on the way to monetary union has boosted the PR

sector. ’The industry has been quite expansive over the past two years

reflecting the general state of the economy,’ says Carlos Lareau, market

leader of Burson-Marsteller Spain and vice-president of the Spanish PR

consultancies’ association ADECEC. Greater consumer spending has brought

new product launches and overall investment in communicating with

customers.



In common with much of the rest of Europe, the country’s stock market

also saw increased activity from privately owned companies going

public.



This of course has underlined the role of investor and financial

relations.



Burson-Marsteller has been working for Spanish fashion and textile

company Doggi on its initial public offering. Lareau says that as the

financial sector still has some way to go, barring a pan-European

disaster, he sees this work continuing to grow. However, B-M’s

Europe-wide policy of concentrating on clients which bring in fees of

over USdollars 50,000, means that 70 per cent of B-M’s Spanish income is

from major international clients.



Shandwick Iberia, on the other hand, combines the global reach of its

parent company with substantial strength in the local market. According

to CEO Joan Sola, Shandwick’s Spanish network consists of two main

offices in Madrid and Barcelona and a local office in Tarragona, serving

mainly chemical clients. Sola aims to open further local offices in the

key markets of Valencia, Andalucia, the Basque Country and Galicia.

Plans are already afoot to open a regional office in the agricultural

city of Valencia, following Shandwick Iberia’s partnership with

advertising group AGR.Continuing its expansion in the Iberian peninsula,

Shandwick has just acquired a minority share in Portuguese company

Documentos and Eventos. The top five consultancy has two offices and

clients include Lisbon Expot, Virgin, Dockers and Samsung. Sola says:

’Opening in Portugal is a very important move for us since our clients

are multinational or large Spanish companies which require us to give

the same level of quality coverage in Portugal as in Spain.’



New account wins for Shandwick over the year include Bayer, Canon, CCS

Software, Dell Computers and bread company Bimbo, which join established

clients such as McDonalds, Toshiba and Visa International.



The past couple of years have seen the government make bold moves in

selling off state industries. In 1997, it raised a record USdollars 11.6

billion from privatisations, including the flotation of the state’s

remaining shares in phone company Telefonica and energy group Repsol,

and 25 per cent of electric utility, Endesa. But, as the domestic market

matures, more national companies are accepting communications as an

integral part of their business. ’Companies realise the need to maintain

their position as corporate players’, says Lareau. He thinks clients are

increasingly taking a long-term view of their reputations and scope of

activities.



This has resulted in more sophisticated internal communications and a

growth in corporate sponsorships.



It is a view echoed by Joaquin Maestre, president of Shandwick Spain and

honorary chairman of ADECEC. ’Spanish companies are really opening their

eyes to the importance of PR’, he says. Maestre also highlights the

increasing trend towards public awareness and participation in clients’

business. As a result he thinks crisis communication is becoming more

important as organisations realise the need to tread more carefully.



But while communication services look set to increase, Maestre is not

sure exactly who will be doing the work. Advertising agencies,

management consultants and even lawyers are on his list of options. He

is not alone in his concerns. At the end of last year, Sanchis y

Asociados won the half a million pound Spanish Post Office account.

Among those pitching for the business, were two major international

management consultants.



Another concern expressed by Maestre is the number of colleges now

offering PR qualifications. On the one hand, he thinks young people’s

interest in the industry can only be good, but on the other, he has

serious doubts about the quality of training. ’I would like to see

well-trained writers coming to our offices, but I’m not sure such skills

are being taught.’



But despite this challenge to the reputation of the PR industry,

organisations are increasingly looking to use the whole marketing mix to

communicate effectively with their audiences. This growth is being

driven by the liberalisation of markets, such as the telecoms sector,

according to Tony Noel, chairman of the Spanish Executive Information

Service (SEIS), in which Ketchum has a 30 per cent stake.



Along with other EU countries, competition is hotting up among Spanish

telecom operators in preparation for a completely open market at the end

of the year. ’People are not sitting back relying on advertising, but

using all the tools available, such as direct marketing and PR’, says

Noel.



While existing multinational clients such as Disney, Merck and HJ Heinz

have traditionally brought in the bulk of income for his agency, Noel is

surprised at just how fast the domestic market is growing. ’There is a

definite move towards more Spanish clients’, he says. ’I think the trend

will increase as more companies and associations begin to take a more

professional approach.’



Noel also highlights that much of the current economic growth is from

heavy investment by Spanish companies in Latin America. For reasons of

language and culture, the region is of course the country’s natural

market for international expansion. But in the recession of the early

1990s, when US companies were scared of burning their fingers, the big

Spanish banks and corporations continued to invest. As the Latin

economies have started to bounce back, the financial risks have paid

off, big time.



Since last year, Latin America has also been the focus for independent

agency Sanchis y Asociados. While the major international players such

as Burson-Marsteller have made inroads into the region via Brazil and

Miami, Sanchis has concentrated its efforts on penetrating the Spanish

speaking countries.



In 1997, the agency bought majority holdings in Chilean agency Crisis -

now renamed Celedon Sanchis y Asociados - and others in Columbia and

Peru. The Peru office handles clients such as Coca-Cola, Reebok and the

country’s number one foreign bank, Santander.



To service the almost federal composition of Spain, the agency has six

named offices, with others in Lisbon, Paris and Brussels. ’We consider

regional differences to be extremely important’, says agency president

Jose Luis Sanchis. ’In Spain, it is important to be as close to your

audience as it is to your clients.’ If the Government continues to

devolve more power to Basque, Catalan and Canary Island nationalists,

and current trends in PR continue, this could prove to be a winning

approach.



- Spanish PR association ADECEC is required to present its members’

figures to the Spanish ministry of finance before making their fee

income public



- Shandwick Iberia aims to open local offices in the key markets of

Valencia, Andalucia, the Basque Country and Galicia. Plans are already

afoot to open a regional office in the agricultural city of Valencia,

following Shandwick Iberia’s partnership with advertising group AGR



- In 1998, Sanchis y Asociados extended its acquisitions to Mexico,

Argentina and Bolivia, while negotiations in Venezuela are still on the

table. This attention to regional sensitivities is very much part of the

Sanchis ethos.



EURO CONSULTANCIES - SPAIN

Rank Company                          Fee income (pounds)

97                                       97              96

1    Burson-Marsteller*1            3340567         2980321

2    Shandwick Iberica*             2631535         2625711

3    Sanchis and Asociados*         1888294         2759178

4    Imagen Uno Com                 1613000         1213000

5    S.E.I.S.*                      1120067          879003

6    Com Empresarial*                977326          769746

7    Eurocofin                       860000          688000

8    ACH. y Asociados*               784506          748723

9    Consejeros de Com*              721581          431911

10   Hill and Knowlton*              716546          690405

11   Inforpress*                     661923          476925

12   Edelman P.R. Worldwide*         551514          407472

13   Solsona y Filloy*               490905          228385

14   SCR, S.A                        360000          320000

15   Poweraxle                       311260          359737

16   Issues*                         289992               -

17   Lobby & Comunicacion*           277989          170851

18   Newsline                        211000          205000

19   Eikona Comunicacion*            177201               -

Rank Company                      Location        Status

97

1    Burson-Marsteller*1          Mdrd/B’lona     B-M subsidiary

2    Shandwick Iberica*           Barcelona       Shandwick member

3    Sanchis and Asociados*       Madrid          Hispacom member

4    Imagen Uno Com               Madrid          Independent

5    S.E.I.S.*                    Madrid          Ketchum PR member

6    Com Empresarial*             Madrid          Brodeur Worldwide

7    Eurocofin                    Madrid          Independent

8    ACH. y Asociados*            Madrid          MS&L member

9    Consejeros de Com*           Barcelona       Independent

10   Hill and Knowlton*           Mdrd/B’lona     H&K subsidiary

11   Inforpress*                  Barcelona       Entente

12   Edelman P.R. Worldwide*      Madrid          Edelman PR member

13   Solsona y Filloy*            Barcelona       Independent

14   SCR, S.A                     Barcelona       Pinnacle member

15   Poweraxle                    Madrid          GCI Group member

16   Issues*                      Madrid          Independent

17   Lobby & Comunicacion*        Valencia        Independent

18   Newsline                     Barcelona       Independent

19   Eikona Comunicacion*         Barcelona       Independent

* Denotes ADECEC membership

1 Figures supplied by ADECEC



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