Even Economic Cooling Isn’t Expected to Stall Momentum

Los Angeles P.R. firms raked in the dough this year, thanks to booming business from dot-coms, tech firms and a slew of other new clients. But what may be even more surprising are their predictions of similar gains next year, despite signs of an economic slowdown.

Among the major L.A. players, the local office of Hill & Knowlton Inc. boosted billings to about $21 million in 2000, a 50 percent increase over 1999, according to Executive Vice President Ron Hartwig.

Ketchum, meanwhile, boasted 2000 L.A. billings of $48 million, three times greater than its 1999 total of $16 million.

The rising tide also lifted smaller firms, like The Bohle Co., which saw its 2000 billings jump by 50 percent to $6 million.

Maureen Crow, chief executive of Carl Byoir & Associates, said the 2000 boom is easy to explain.

“Two things happened: The dot-com explosion was great to everyone,” she said. “And public relations became quite elevated, so for the first time people were hiring public relations agencies before they hired advertising agencies.”

But that wild success has come with warnings about the economy and a growing shortage of labor.

“A major concern I have for the industry is that we not get so greedy that we take business we can’t serve in a professional way and cause a negative reaction from the very clients that are our existence,” said Sue Bohle, president of The Bohle Co. “Greed is a tremendous threat to the public relations industry. Any company that’s growing faster than 50 percent should be taking a real hard look at itself. They’ve got to be stretching their people very thin.”

Sean Fitzgerald, a senior vice president at Ketchum, said he’s mindful of the perennial chicken-or-egg challenge of having enough qualified staff to handle all accounts. He said it helps to think ahead.

“We’re making investment hires,” he said. “If we identify a good candidate, somebody we know will be valuable to the company at some point down the road, we’ll hire them on the spot.”

Bohle said she’s doing that, too. That way, she has people trained and ready to jump in, rather than getting caught scrambling to service accounts while getting new hires up to speed. Bohle offers all employees a minimum of two training courses each week.

Bohle, Ketchum and Hill & Knowlton had plenty of company in their profitable 2000. The abundance of business coincided with what many said is the profession’s coming of age.

Jerry Swerling, coordinator of USC’s public relations program and an industry consultant, said an increasingly diverse society is keeping the P.R. business hopping. He said companies need trained communicators to reach out to more and more complex demographics.

Prospects in a downturn

If Swerling is right, it could be good news for an industry that has traditionally been among the first to see cutbacks from clients when economic boom times begin to cool.

To Swerling, all a slowdown would mean is that the industry would return to normal.

“P.R. is now a must-have. It’s not a thing you do away with when the economy turns down,” Swerling said. “I don’t see the profession falling on its face, but I don’t see the growth rate continuing at its current level.”

Fitzgerald is convinced that the public relations field will continue to prosper in Los Angeles.

“I don’t predict that, should there be a downturn, it will have as large an impact on public relations as in the early ’90s, when that downturn occurred,” Fitzgerald said.

“There has been a trend over the last several (generations of) CEOs to view public relations as far more critical.”

Hartwig of Hill & Knowlton said public relations companies are riding the wave of business from new and small businesses as Fortune 500 companies leave the L.A. area.

“There’s a growth of smaller businesses that recognize the importance of public relations as a way to communicate rather than relying on advertising to communicate,” Hartwig said. “It’s not growth in just one sector. It’s in technology; in corporate communication; it’s across all the core disciplines.”

Controlled growth

Bohle said she could have tripled billings this year. Instead, she increased billings from $4 million to $6 million by intentionally taking a conservative tack and acquiring solid clients.

“We grew by 50 percent, and we were happy with that,” she said. “We could have grown by 100 percent or more, but we chose instead to take clients selectively to try to ensure we took clients who were going to be there in the long haul.”

Now that the dot-com revolution has settled into something far less promising, Bohle has beefed up her client screening proces.s

When a dot-com comes calling, she carefully considers the company’s capitalization and strength of its investor base and then only takes on companies that have succeeded in raising their second round of venture funding.

Fitzgerald said business is so good these days that he plans to open a satellite office next year in Irvine.

However, he does expect a cooling-off period after this year’s explosive gains.

“The hope is continued growth,” he said. “We’re looking at at least 15 percent growth (in 2000).”