Top European Agencies 1997: Germany - Despite economic difficulties German PR income has maintained steady growth

Despite Germany’s continuing social and economic difficulties - particularly an unemployment level of 4.5 million - 1996 was none too bad a year for PR consultancies. Members of the Gesellschaft Public Relations Agenturen (GPRA), the association of leading German PR agencies, posted a gross income of approximately DM200 million, up seven per cent on 1995.

Despite Germany’s continuing social and economic difficulties -

particularly an unemployment level of 4.5 million - 1996 was none too

bad a year for PR consultancies. Members of the Gesellschaft Public

Relations Agenturen (GPRA), the association of leading German PR

agencies, posted a gross income of approximately DM200 million, up seven

per cent on 1995.



As gross income in 1995 rose 6.5 per cent over 1994, the picture is of a

return to steady growth.



But talk of growth and consolidation masks the far-reaching changes

sweeping through German business and society. Many corporations have

restructured and refocused, increasingly to make themselves more

customer-friendly.



An emotional debate rages on as to whether the country can afford to

maintain its generous system of social benefits. The answer appears

overwhelmingly to be ’no’ but the public is understandably loath to give

up what is perceived as a cornerstone of Germany’s high standard of

living. Against this background can be seen privatisation programmes and

the outsourcing of services to the commercial sector as federal, state

and municipal authorities look to cut costs and raise revenue.



As Chancellor Helmut Kohl pursues his dream of bringing about European

Monetary Union - with the financial austerity that requires - a tighter

rein is being kept on expenditure at all levels of government.



’It’s a difficult picture to understand outside Germany,’ says Ralf

Hering, managing partner and ceo of fast-expanding Hering Schuppener GCI

which, together with consumer specialist GCI Ringpress, forms GCI Group

Germany.



’On the one hand many corporations in Germany are doing very well, but

the public sector is very low and they have been a big employer for PR

agencies in the past. PR companies are learning that there’s no big

business from the public sector and are refocusing on the private

sector.’



There has been change too at the top of the league table. Porter Novelli

International agency Kohtes and Klewes has taken the number one slot

from Euro RSCG. Kohtes and Klewes chief executive officer Rainer

Zimmermann divines the beginnings of a two-tier market among German

agencies, with a select few able to offer high level strategic counsel

while the majority stick primarily to implementation. ’There are six to

eight agencies which are really able to consult, which have people with

the senior experience who can consult even advisory boards and managing

directors. These are the consultancies that are really growing,’ says

Zimmermann.



ERIC’s German operation has been hit by the departure of key senior

executives in recent years including the resignation last year of chief

executive Dietrich Schulze van Loon, now a director at Kohtes and

Klewes’ Hamburg office.



There is at present no PR chief executive and the heads of each office

(ABC in Dusseldorf, Berlin and Frankfurt and IPR&O in Hamburg and Bonn)

now report to head of parent ad agency Euro RSCG’s German operation

Gerhard Schoeps. Second string agency ABC Zwei has been rolled back into

ABC.



Fleishman-Hillard Germany managing director Renate Stehle Wolters agrees

that strategic counsel is the way forward, pointing out that some

companies remain insecure and are trying to save money on communications

implementation wherever they can. She gives as an example chemicals and

pharmaceuticals giant Hoechst which is spinning off its entire

communications department as a separate entity with a view to it

eventually winning business from other companies.



Having privatised the first tranche of state telecoms giant Deutsche

Telekom last year the government is looking at further ways of raising

capital. The effect of this is a liberalisation of markets and increased

commercial competition. Rail and energy supply are among those sectors

becoming more commercialised.



’The market is opening up so we’re likely to see stiff competition,’

says GPRA vice-president and Media Concept owner/managing director

Bernhard Fischer-Appelt. ’All these companies have to become more

service-oriented, which is new to some German companies.’



This improved service ethic has also manifested itself through a greater

demand for financial PR and investor relations, particularly in and

around the major international financial centre that is Frankfurt.



While Frankfurt remains Germany’s undisputed financial capital, Munich

lies at the heart of the country’s hi-tech region. IT remains one of the

most dynamic growth areas, both in the economy as a whole and for

consultancies.



Corinna Voss, managing director of Munich-based hi-tech specialist HBI,

whose clients include Hitachi and Tektronix, identifies a ’major growth

in the consumer IT market’. But she adds: ’We’re growing steadily but

there are more and more players, and it’s been a tough fight. The

international agencies coming into Germany have taken away a lot of

business from local agencies.’



One of those international agencies is fast-growing, three-year-old

Herald Communications whose clients include CompuServe and Texas

Instruments.



’Germany is in a bit of a pre-Ab Fab era,’ says Herald managing director

Esme Page. ’The PR industry hasn’t been subjected to that sort of

derision and doesn’t criticise itself enough. PR in Germany is in a bit

of a complacent rut.’



Another buoyant sector is travel, with holiday companies and

destinations keen to get their hooks into the German public, whose

relative prosperity and wanderlust makes them a desirable target market.

Public Relations Partners managing director Hannemie Stitz argues travel

is being seen more and more as a money-spinner. Her agency has recently

picked up oger Tours, a tour operator to Turkey, and West Indies

sun-spot Barbados as clients.



Other sectors deemed by consultancies to be growing are telecoms, new

media, automotive, the service industries, healthcare and government

relations.



Crisis management likewise is earmarked for further expansion. ’Any

major company and even the mid-sized companies are learning that they

have to prepare themselves for the ’what if?’ eventuality,’ says

Hering.



Overall an estimated DM4 billion was spent on PR in Germany in 1996,

compared with DM26 billion on advertising. Within this expenditure,

Stitz and the GPRA identify a trend towards more ’dialogue-oriented’

communication which is increasing the need for evaluation.



As for newcomers to the consultancy scene, one agency to watch is

Deekeling and Fiebig, founded in July 1995 by Egbert Deekeling and

Norbert Fiebig the former managing director and deputy managing director

of ABC in Dusseldorf.



Its clients already include Sony Music Entertainment, Toyota and house

appliances company Bauknecht.



- The GPRA does not organise a formal ranking of agencies but does

publish a breakdown of the economic development of member companies.



Members of the GPRA must be in existence for at least three years,

employ a minimum of five staff and demonstrate that they have full

service capability.



Major agencies which did not submit figures for this year’s national

table include Leipziger and Partner and Edelman.



- As Chancellor Kohl tightens up on government expenditure, increasing

numbers of agencies are changing themselves and targeting the private

sector



Euro Consultancies: Germany

Rk  Company         Fee income (pounds)    Location      Status

                     96          95

1   Kohtes &

    Klewes*       12,200,000  10,213,000   Dusseldorf    Porter Novelli

                                                         Int sub

2   Euro RSCG*    11,542,000  13,650,000   Hamburg       Euro RSCG

                                                         subsidiary

3   Burson-

    Marsteller*    4,330,000   3,299,000   F’frt/Hmbg    B-M subsidiary

4   Trimedia

    Comm D’land*   3,300,000          **   F’frt/Dssldf  Trimedia

                                                         subsidiary

5   Charles

    Barker         3,250,000   2,291,666   Frankfurt     Charles

                                                         Barker mbr

6   Shandwick

    Germany*       3,004,000   2,724,000   Hamburg       Shandwick

                                                         subsidiary

7   Media

    Consulta       2,500,000   1,600,000   Cologne       Media Consulta

                                                         Int mbr

8   MPC*           2,416,667   2,291,667   Munich        Independent

9   GCI Group

    Germany1       2,334,000   1,241,200   Frankfurt     GCI group

                                                         subsidiary

10  Ketchum*       2,056,500   2,129,000   Munich        Ketchum

                                                         subsidiary

11  Backhaus/

    Togotzes/MS&L* 1,610,909     935,480   Frankfurt     MS&L network

                                                         mber

12  Reporter PR*   1,600,000   1,600,000   Frankfurt     Independent

13  Fleishman-

    Hillard*       1,541,497   1,356,722   Frankfurt     F-H subsidiary

14  Media Concept* 1,530,000   1,000,000   Hamburg       Independent

15  Public Relations

    Partners*      1,500,000   1,330,000   Kronberg      Ind/Pinnacle

                                                         member

16  WPBR*          1,500,000   1,400,000   Unterfohring  Ind/Pinnacle

                                                         member

17  PR Bonn Public

    Relations*     1,446,649   1,241,705   Bonn          Independent

18  Medical

    Relations*     1,363,000   1,168,000   Langenfeld    Independent

19  PR-Agentur

    Trostner*      1,354,167   1,270,833   Filderstadt   Independent

20  HBI Helga

    Bailey         1,300,000   1,100,000   Munich        Ind/Worldcom

                                                         mbr

21  APR/Wilkens

    fur PR*        1,138,000   1,017,000   Hamburg       FCB Europe

                                                         network mbr

22  Fink and

    Fuchs PR       1,104,000     952,000   Wiesbaden     Independent

23  Hiller Wust

    and Partner*     786,858     562,041   Momlingen     Independent

24  P.U.N.K.T

    PR*              696,746     616,715   Hamburg       Independent

25  Text 100         653,000     825,000   Munich        Text 100

                                                         subsidiary

26  Herald           631,875     255,783   Munich        Mathieu Thomas

                                                         subs

27  Dikom*           542,000     460,000   Dusseldorf    Ind/ECCO

                                                         member

28  Hill&Knowlton

    Dtschlnd*        481,000     278,000   Frankfurt     H&K subsidiary

29  FPR Fripress

    PR*              380,000     382,000   Cologne       Independent

30  ABL PR Service   350,000     325,000   Koenigstein   Independent

* Denotes membership of the GPRA **Figures unavailable 1 Includes

figures for Hering Schuppener GCI and GCI Ring



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