Public Relations Firms Expand Abroad as Clients Seek Worldwide Service

By Deutsch, Claudia H. | Communication World, May-June 1990 | Go to article overview

Public Relations Firms Expand Abroad as Clients Seek Worldwide Service


Deutsch, Claudia H., Communication World


Multinational. Global. Pan-European. They are the buzzwords of the 1980s, words that have joined "leading, largest, oldest and best" on the list of adjectives that public relations executives labor mightily to get attached to their clients' names in the public's mind.

Now the agencies, following the lead of their colleagues in advertising, are working the same magic on themselves. All but the tiniest and most specialized are trying to persuade clients-and the press- that they need not go beyond their "local" agency to get their worldwide communications needs served.

"It is turning into a global shootout," said james E. Arnold, president of the Chester Burger Company, a New York public relations consulting firm. "Even when the profits aren't there, no one wants to be seen as pulling back. Instead, everyone is advancing the flag, and growth is the name of the game."

Indeed, large American agencies like Hill and Knowlton Inc. and Burson-Marsteller Inc. are marching across the globe, opening offices in places that once seemed barely worth a business trip. Britain's Shandwick, plc., is buying smaller agencies throughout the continents. Medium-sized firms that used to be perfectly happy being the "best" agency in, say, Minneapolis, are banding together in worldwide networks like the Pinnacle Group, PR Exchange and the Worldcom Group. And even more formal networks are emerging, in which members buy equity in each other's firms as well as service each other's clients.

Each agency is certain its strategy is correct-and readily criticizes the others. But on one thing they agree: The global path is necessary for survival.

"Everyone realizes now that they have to be part of an international structure, because the big agencies are getting bigger and the small ones are disappearing," said Edward M. Stanton, chief executive of MSL Worldwide, D'Arcy Benton & Bowles's public relations arm, which does about $27 million annually in net fee income-the term the industry uses to describe billings less out-of-pocket reimbursements.

It is a high-risk, high-stakes game. On the upside is the huge potential for profits. Corporate clients, once content with a listing on the New York Stock Exchange, are increasingly trading on London, Tokyo and other exchanges, requiring simultaneous release of information, often with different rules governing what the information must be. Those same clients are opening plants and sales offices overseas, and using public relations agencies as an advance guard for product publicity and government and employee relations work.

Moreover, the advent of a commercially unified Europe in 1992 has created a feeding frenzy among American multinationals eager to be viewed as pan-European players. And European and Asian companies have grown far more attuned to public relations, opening a tasty market for agencies hungering to expand. Claudio Belli, the head of Hill and Knowlton international, predicts that by 1991, European companies will be spending $3 billion a year on public relations, triple their level now. While that still does not approach the $9.5 billion that American companies currently spend on public relations, it is nothing to sneeze at.

Corporate mergers and joint ventures also are crossing national borders-witness the takeover of Pillsbury, Inc. by Britain's Grand Metropolitan plc., or the appliance joint venture between the Whirlpool Corporation and the Netherlands' Philips N.V. Such marriages also require press, government and investor relations work in several countries.

Technology, meanwhile, has made international communications easier to handle. Satellites and computer networks have enabled the media to aggressively cover international news-and those same technologies, combined with facsimile machines and electronic mail, have helped agencies feed information simultaneously around the globe.

The Bad News

But the downside is considerable. …

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Public Relations Firms Expand Abroad as Clients Seek Worldwide Service
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