Top European Agencies 1997: SPAIN - A bullish market and the promise of mass privatisations bodes well for the industry as a whole

Fifteen months after it displaced Filipe Gonzalez’ Socialist government, Spain’s centre-right People’s Party has achieved more than many observers hoped. The country’s rigid labour laws have been relaxed, interest rates have been slashed and consumer confidence is, at last, returning. Deep problems still remain, notably a stifling bureaucracy and a crippling unemployment rate of around 20 per cent, but Jose Maria Aznar’s government seems on course to meet the tough criteria for European monetary union in 1999.

Fifteen months after it displaced Filipe Gonzalez’ Socialist

government, Spain’s centre-right People’s Party has achieved more than

many observers hoped. The country’s rigid labour laws have been relaxed,

interest rates have been slashed and consumer confidence is, at last,

returning. Deep problems still remain, notably a stifling bureaucracy

and a crippling unemployment rate of around 20 per cent, but Jose Maria

Aznar’s government seems on course to meet the tough criteria for

European monetary union in 1999.



The upturn bodes well for PR, according to Joaquin Maestre, president of

both Shandwick Spain and ADECEC, the Spanish PR agency professional

body. ’After the very good year of 1992, when we had the Olympics in

Barcelona and the Expo in Seville, things went down very quickly,’ he

recalls. ’We feared things would be slow for a long time but the change

of government, and the reactions of Spanish entrepreneurs, suggest that

we have a very promising few years ahead.’



Carlos Lareau, market leader of Burson-Marsteller Iberia, which covers

Spain and Portugal, shares Maestre’s optimism. ’If the economy is

handled sensibly and there are no pan-European crises, I think we will

emerge with a much stronger economy than we did during the boom of the

late-1980s,’ he says. Arguably, since reshaping its management structure

along practice lines, Burson-Marsteller has endured its own pan-European

crises in terms of senior staff loss. B-M Iberia didn’t escape: in 1996,

after having lost four managers the previous year, it lost chief

executive Juan Astorqui to a leading savings bank.



Lareau stresses Astorqui’s departure was unrelated to the B-M

restructuring and that, through his membership of a B-M industry

advisory council, Astorqui retains links with the firm. Lareau also

points to B-M Iberia’s recruitment of Shandwick Barcelona’s former

general manager, Javier Curtichs, as proof that the agency is gaining,

as well as losing, good people.



According to Jose Luis Sanchis, president of number two agency Sanchis y

Asociados, 1996 was a year of consolidation. However, the agency - which

has six Spanish offices and others in Peru, Paris and Brussels - did not

stand still. It disinvested itself from financial shop Common Sense, in

which it acquired a 30 per cent stake in April 1996, and laid the

groundwork for the opening of a new Colombian office later this year.

Sanchis is also looking to open new offices in the Canary Islands and

the Balaeric Islands.



Despite hopes that 1996 would see a flood of privatisation-related work,

in the event, the only main projects involved telephone operator

Telefoncia, commercial bank Argentaria and the Basque steel organisation

Fidenor.



Signs are, however, that 1997 and 1998 will field more privatisation

activity.



Financial PRs should also benefit from a bullish stock market and the

growing number of private firms pursuing flotation.



PR’s distinctive role in the marketing mix is steadily gaining more

ground, according to Tony Noel, co-director of the Spanish Executive

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

stake.



Noel, who has worked in Spanish PR for more than a decade, says:

’Clients with marketing budgets are increasingly seeing the value of

public relations.



They are becoming much more sophisticated about the use of PR and

budgets are going up. In the near future, I think you will see

organisations that have not traditionally used public relations in

Spain, such as professional organisations, beginning to realise that

they really do need to use it.’



Agencies report different growth areas. Noel says business is

particularly good in consumer marketing and healthcare, Jesus Ulled,

chairman of Ulled y Asociados, relates a boost in internal

communications and crisis management, while Jose Luis Sanchis, reports

particular strengths in such areas as telecommunications, crisis

management, public affairs and corporate PR.



IT also continues to be a growth sector, attracting groups such as Text

100 which opened a new office in Madrid earlier this year. The new

office, headed up by Suzanne Smith is already working with clients such

as Globalink, Rank Xerox, Scientific Atlanta and Datapro.



Spain’s entrenched regionalism survived the post-Franco return to

democracy.



Its constitution recognises 17 autonomous regions, each with its own

government and parliament, and prime minister Aznar’s minority

government holds power due to regional party support. However, there is

disagreement about how much such regionalisation impacts on an agency’s

effectiveness in winning, and doing, business outside its area. Perhaps

unsurprisingly, with his six offices throughout Spain, Jose Luis

Sanchis, believes local branches are important. ’Most other Spanish

agencies, even the international ones, only have one or two agencies.

Having six offices is a great advantage as it allows us much wider

coverage,’ he says.



Looking to the future, SEIS’ Tony Noel predicts a scenario that will be

familiar to many UK industry-watchers. He says: ’Accountability will be

key over the next five years. To ensure budgets continue to increase,

public relations will have to prove that it can provide measurable

results.



I think there will also be a move towards agency networks. There will be

large international groups and small niche players. People in the middle

will find life much more difficult.’



- For the first time this year ADECEC (the Association of Consulting

Companies in Public Relations and Communications) members have been

required to present their figures to the Spanish Ministry of Finance

before making public their fee income. The new verification process is

part of a drive by ADECEC to underline the professionalism and increase

the transparency of the industry, however, as documentation is not

processed by the Ministry of Finance until July, several of ACEDEC’s 17

members were unable to submit figures in time for PR Week’s

deadlines.



EURO CONSULTANCIES: SPAIN

Rank Company          Fee income (pounds)    Location     Status

                             96          95

1    Burson-

     Marsteller*      3,611,643   3,198,766  Mdrd/Brclna  B-M

                                                          subsidiary

2    Grupo Sanchis

     & Asoc*          3,343,655   3,800,509  Madrid       Porter Novelli

                                                          Int net mbr

3    Shandwick-SAE

     de RP*           3,181,916   2,703,564  Barcelona    Shandwick net

                                                          member

4    JA Llorente & O

     Cuenca1          1,794,742     601,618  Madrid       Independent

5    SEIS*            1,065,202     887,376  Madrid       Ketchum PR net

                                                          member

6    Comunicacion

     Empresarial*       932,801     862,948  Madrid       Worldcom net

                                                          mbr

7    ACH y Asociados*   907,326     862,245  Madrid       MS&L net mbr

8    Hill & Knowlton*   836,653     676,062  Mdrd/Brclna  H&K subsidiary

9    GP Infopress*      577,952     555,106  Barcelona    Independent

10   CLAK               573,000   1,077,000  Madrid       Euro RSCG

                                                          subsidiary

11   Edelman PR

     Worldwide*         493,787        **    Madrid       Edelman PR net

                                                          mbr

12   PowerAxle*         435,940   413,327    Madrid       GCI Group net

                                                          mbr

13   Newsline*          205,000    61,000    Barcelona    Independent

*Denotes membership of ADECEC **Figures unavailable 1.

1995 figures from June to December only



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