Independent PR Firms Expect Slight Bump After Slow Year
By NICOLE TAYLOR
Independent public relations firms saw revenues decline by 7 percent last year, as the recession and ongoing uncertainty in the aftermath of the 2001 terrorist attacks led to a pullback in corporate spending.
Eight of the 15 largest independents surveyed by the Business Journal reported lower revenue. Aggregate revenues for the 15 largest were $54.7 million in 2002, compared to $58.8 the year earlier.
In general, independents are cautiously optimistic for 2003. Despite continued economic uncertainties, there are signs of a pickup in business, with several companies noticing increased activity in the first quarter. “There’s been healthy growth in the last couple months even with the war,” said Gail Becker, general manager of Edelman’s L.A. office. “People may alter their concepts to be sensitive to the times but they are going forward.”
The two largest independents in L.A. County headed in opposite directions last year, with Edelman posting a slight revenue gain and Rogers & Associates off more than 15 percent from its 2001 levels.
Edelman, the largest independent agency worldwide, booked $10.5 million L.A. County revenues in 2002. The local operation fared better than the company overall, reporting a 2.9 percent gain over 2001, compared with a 5.8 percent loss companywide.
Becker said work from existing clients, rather than new business, accounted for the modest increase, with an uptick in corporate image building and crisis management.
Rogers & Associates also got a boost from existing clients, gaining additional corporate image business from long-standing client Honda.
But that was not enough to offset what Chief Executive Ron Rogers characterized as a “slowdown across the board in almost every industry.” The firm’s revenues in 2002 were $9.5 million, down $1.9 million from the year earlier.
Imada Wong Communications Group Inc. reported the largest percentage decline among independents, slipping 41.7 percent in 2002. The decline was due to a combination of factors, according to Nita Song, president and chief operating officer, including shifting resources to the company’s advertising arm at the expense of PR and the loss of a major contract with the American Legacy Foundation.
Bohle Co., which specializes in high technology, was also hit hard, with fee income off by a third in 2002.
“We’re looking into other industries, but we’re not giving up on technology,” said Sue Bohle, the firm’s president. “We’re seeing a bit of an uptick in companies that are associated with the Internet and provide services for it.”
She said she was interested in developing the firm’s biotechnology practice in order to meet a goal of “modest increases” in 2003 revenues.
Among gainers, Long Beach-based S. Groner Associates Inc. more than doubled revenues in 2002, to $2.2 million. The firm specializes in public engineering and infrastructure work projects.
Its president, Stephen Groner, said he expected municipal budget crises to cause business to slow after projects already earmarked for funding were completed.
Ruder Finn Public Relations, second to Edelman among the largest independent firms nationally, also reported healthy growth in 2002, reaching $1.5 million in L.A. County revenues, a 26.7 percent increase over the year earlier.
Publicly held advertising and PR firms have declined to release information on their subsidiary units this year, which prompted the Business Journal not to publish its normal listing of top-ranked agencies.
Officials at these firms have cited the potential legal ramifications related to compliance with the Sarbanes-Oxley Act as the reason for not releasing the information. Under the act, chief executives and chief financial officers are required to certify the accuracy of corporate financial data or face steep fines or jail time.