PR Cos. Can’t Spin Tough Year
By SANDI CAIN
After a two-year feast, it was close to famine for Orange County’s public relations companies last year, with fee income at the top 26 firms falling 19%, according to this year’s Business Journal list.
The list ranks public relations firms by fee income for 12 months through March 31.
The companies together posted $48.6 million in fee income.
The decline is a far cry from the 16% increase reported by those on last year’s list and a 26% increase a year earlier.
In all, nine firms had higher fee income last year, but 15 had lower income and one had no change. One firm,No. 15 Dana Point-based Leone & Leone Ltd.,did not provide income figures and is a Business Journal estimate.
The slowdown reflects the sharp decline in the technology sector, lingering effects of Sept. 11 and a stubborn economy that is recovering at a slower pace than expected.
“This year is more challenging due to a lack of consumer confidence that ripples over into business,” said Judith Brower, president of No. 17 Newport Beach-based Brower, Miller & Cole Inc.
To be sure, the same public relations firms that feasted on the tech boom watched as that business slowed dramatically in the past year. Fourteen of the companies listed technology businesses as primary clients.
“We declined in fee income,everyone did in the tech sector,” said Lisa Zwick, senior vice president and general manager for No. 1 Benjamin/A Weber Shandwick Company.
Lower income was reflected on the jobs front. Overall employment fell 15% to 431 workers compared to staff levels at the 26 firms last year. Only four firms added staff,for a total of 12 new workers. Seventeen companies thinned their ranks and five had no change.
Since the end of the first quarter, however, some firms have begun to hire. No. 24 Irvine-based T & O; Public Relations recently hired an associate director of public relations after landing work from Mission Viejo-based Foundstone Inc., an Internet security company.
Vice president Jennifer McLean said the firm has made up some ground since March.
“It was a year of getting real again and going back to basics and teaching clients to go back to basics,” she said.
No. 4 Laguna Hills-based Frank Wilson & Associates Inc. was one of the firms that added staff last year, despite a 13% decline in fee income to $2.8 million. And though president Frank Wilson has yet to see an uptick since March, he thinks a turnaround will come next year.
That would be good news for those seeking new positions.
“For a long time, it was hard to find good people,” said Wilson. “That started to change last year.”
Some think that change is a good thing for public relations as a whole.
Curtis Chan, chief executive of No. 17 Fullerton-based Chan & Associates Inc., said he’s started to add people again since March.
“All the low-hanging fruit have dropped,” he said. “The people left standing are high-caliber people. That’s healthy for everyone.”
Eleven companies drop-ped from the list this year,four of them because of a change in fee income required to make the list. Of the other seven, Electronic Media Communications was acquired and is no longer based in Orange County, while three,Anderson Communications Co., Single Source Marketing Inc. and Stanton-Crenshaw Communications,closed. Three,Echo Media Group, Larson Group, and Gladstone International Inc.,restructured, making them ineligible for this year’s list.
This year’s list includes 26 firms with fee income of $900,000 or more. For the past several years, the Business Journal has included 35 companies on the public relations list, with the bottom companies posting $800,000 in fee income in 2000 and 2001. Had the list been the same size this year, the bottom companies would have had less than $200,000 in fee income.
Irvine-based Benjamin retained the No. 1 slot for the fourth year running, with $5.4 million in fee income, down 21% from the prior year, but still ahead of No. 2 Hill and Knowlton in Irvine with $4.6 million.
“I’m feeling cautiously optimistic this year. We’re starting to see tech come back,” Benjamin’s Zwick said. “Certain markets, like storage, security and broadband, are hot.”
Hill and Knowlton,one of the few companies to post gains in the past year,surpassed last year’s No. 2, Costa Mesa-based PainePR Inc., which was down 37% to $3.6 million.
PainePR President David Paine said the big drop was due to a change in the way the firm allocates revenue between its offices.
“Our real decline (in fee income) was 8%,” he said.
Recently, PainePR picked up the Duracell account, which will bolster this year’s figures.
No. 4 Lake Forest-based Waters & Faubel Inc., which kept busy with clients Southern California Edison Co. and the El Toro Reuse Planning Authority, broke into the top 10 this year, jumping from No. 11 on the strength of an 8% gain in fee income.
But No. 17 neoBrands Inc. fell from the No. 3 position after fee income dropped 75% to $1.1 million.
NeoBrands cut staff and pay last year.
“It hasn’t been a pleasant experience,” said Rick Sharga, neoBrands’ new chief executive. Sharga replaced co-founder Chip Shafer, who resigned to start a new business, but continues to consult for neoBrands.
Sharga said neoBrands was hit on two fronts because they had traditional technology firms as well as dot-com clients. Recently, Sharga said things looked a bit brighter.
“The falloff has slowed down,” he said. “It’s starting to look like (business) is picking up.”
That’s not likely to mean a hiring frenzy in the near future, however.
“Two years ago, the rule of thumb was to overhire,” Sharga said. “Now it’s to run lean.”
Meanwhile, No. 14 Porter Novelli in Irvine saw income fall 66% to $1.3 million and dropped from the No. 4 spot.
Senior vice president Linda Martin said the firm’s Irvine tech practice closed in January and moved to San Jose, accounting for most of the decline.
“We’re having a banner year this year,” she said. “We’re ahead of projections as of June 30.”
Moving up was No. 6 Irvine-based Amies Communications, up from No. 13; No. 9 Costa Mesa-based Bock Communications Inc., up from No. 13; and No. 10 Estey-Hoover Advertising and PR, which jumped from No. 20.
“If you’re balanced (in client industries), you’ll make it through,” said Dan Hoover, Estey-Hoover president.
No. 17 Newport Beach-based Brower, Miller & Cole leapfrogged the greatest number of companies, up from No. 34 last year on the strength of a 38% growth in fee income.
“We never had any tech clients, we kept overhead low and still market ourselves consistently,” Brower said.
No newcomers broke onto the list this year, though Aliso Viejo-based Thinkbig Public Relations barely missed out, as did last year’s No. 31 Rodheim Marketing Group and No. 34 Porter Creative Group.
Besides technology, the most common industries represented by this year’s group of public relations firms are government, healthcare and manufacturing.
