Orange County’s largest public relations firms continued to feast on the good times, according to this week’s Business Journal list, with total fee incomes jumping 16% to $77.6 million for the 12 months ended March 30.
It’s a double-digit jump, but not quite as impressive as the year-ago period, when the 35 largest companies reported a 26% increase in OC fee income.
The slower growth pace reflects an industry that encountered tough sledding in the second half of the period.
“It was a wild year in the PR business last year,” said David Jahr, strategic partner at Rodheim Marketing Group, Costa Mesa.
Many OC shops soared on fat technology accounts at the start of 2000, according to Jahr. Then, he said, the tech sector hit the rocks, and agencies felt a pinch that rolled into 2001.
“A lot of public relations companies were really scrambling. Now there’s a big focus on return on investment,” Jahr said.
The toughening of the market shows in the employment figures on the list, which ranks the area’s largest public relations firms by OC fee income. Fourteen of the 37 companies on this week’s Business Journal list have trimmed employee counts, including No. 3 Costa Mesa-based NeoBrands and No. 5 Electronic Media Communications, Irvine.
Lately, however, there are signs of a turnaround, according to company execs.
Laer Pearce, president of Laguna Hills-based Laer Pearce & Associates, said a couple of prospective clients have come sniffing, including an undisclosed law firm. He also recently hired a few employees after having to lay off some in 2000.
But he said “the period of discipline” is not over.
“We used to be able to manage a little carelessly. There isn’t that margin anymore,” Pearce said. “We have to be disciplined to protect our profits nowadays.”
Four firms dropped off the list. Newport Beach-based Greenlight, No. 19 on last year’s list, was down 90% in fee income, going from $1.5 million to $200,000. Others bumped: former No. 32 Nason-Lundberg & Associates Inc., and Schraff Group Inc. and Shafer Public Relations, last year’s No. 35 and 33, respectively. Shafer spun off a large part of its operation as NeoBrands. Greenlight and Schraff are heavily in the tech sector.
Meanwhile, Benjamin Group/BSMG Worldwide again leads the pack, reporting a 24% jump in fee income to $6.8 million.
Lisa Zwick, senior vice president and general manager, said the firm, which specializes in technology, held onto its key accounts such as Newport Beach-based Conexant Systems Inc., Santa Ana-based Ingram Micro Inc. and Kingston Technology Co., Fountain Valley, which all have been hit by the tech downturn.
“We are partners with companies and we ride through these storms with them,” Zwick said.
Plus, she said Benjamin Group won a few new clients in 2001 including San Diego-based Wireless Knowledge Inc.
No. 2 PainePR, which jumped ahead of NeoBrands, also reported a double-digit jump in fee income. It’s now at $5.7 million, a 62% increase from last year’s list.
President David Paine said the growth came from all three of the firm’s focuses, high tech, healthcare and auto. In 2000, the company won business from Suzuki automotive, Levis Strauss & Co. (the Dockers brand) and Procter & Gamble Co.
“We have seen a softening of the economy and to some degree in the work that PR agencies in general are getting which lead to a decline in business in the first few months of the year,” Paine said.
The second half of 2001 looks “very strong” so far, according to Paine. The firm recently landed work from XM Satellite Radio and Costa Mesa-based FileNET Corp., he said.
Meanwhile, NeoBrands, a spinoff from Shafer, showed a 5% jump in fee income, going to $4.4 million. The firm reported a staff of 36, down nine OC employees from last year’s figure.
No. 4 NCG Porter Novelli reported an 8% increase in fee income to $3.8 million. Scott Robertson, senior vice president, said the agency expanded its work with Hewlett-Packard Co.
“We’ve been fortunate,” Robertson said. “Some (clients) have cut back on budgets, but overall I feel real good about how successful we’ve been at this point. The firms that are going to succeed are going to have to work harder.”
In the meantime, there were several newcomers on this year’s list, including Electronic Media Communications, which specializes in broadcast and Internet video news releases and moves over this year from the multimedia companies list. Its $3.4 million in fee income is up from $2.8 million in the prior period, while the firm is a little leaner this year, going from 24 to 20 employees.
Other firms new to the list: No. 20 Single Source Marketing Inc., Costa Mesa; No. 25 Stanton Crenshaw Communications, Huntington Beach; No. 34 Costa Mesa-based Communication Advocates, which recently let at least one employee go; No. 34 Brower Miller & Cole, Newport Beach; and No. 34 Porter Creative Group, Santa Ana.
There were 16 companies that reported double-digit growth, including Maples Communications Inc., Irvine, which reported a 140% gain to $2.4 million in OC fee income.
Others movers: PainePR; Frank Wilson & Associates Inc., Laguna Hills, which tied Hill and Knowlton, Irvine, at No. 6; and No. 8 Magnet Communications, Irvine, which jumped 29%; and Irvine-based No. 16 Allen & Caron Inc., which reported $2.3 million in OC fee income, a 35% increase. The latter’s growth was fueled by a new medical technology clients, according to the firm.
Meanwhile, there were eight shops that had single-digit OC fee income increases, seven that reported no growth and four firms that showed declines.
For instance, No. 24 Gladstone International Inc., Laguna Beach, dropped 18%, going to $1.4 million in OC fee income. Chief Executive and President Joan Gladstone said the year was strong for the firm, just not quite as strong as the previous year.
Gladstone recently overhauled the format of her firm, which entailed a move from Irvine to Laguna Beach and eliminating full-time employees in favor of contracting with teams of consultants on a project basis.
No. 8 Freeman/McCue, Santa Ana, was down 7%, going from $2.9 million to $2.7 million. n
