H&K Named Agency of the Year; Smaller Firms Also Honored
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Holmes Report

H&K Named Agency of the Year; Smaller Firms Also Honored

H&K may not be an obvious choice, but consider for a moment what you might have said three or four years ago if someone told you that Hill & Knowlton would outperform the market in such a tough year.

Paul Holmes

In recent years, selecting an Agency of the Year has been incredibly difficult. With almost every agency growing at 20 percent per annum, almost every agency was in contention.
Picking an Agency of the Year for 2001 turned out to be not much easier. We were quickly able to eliminate several good agencies that suffered bad years—Burson-Marsteller, Ogilvy Public Relations Worldwide, and Porter Novelli come quickly to mind—as well as a couple of others that saw their decline less dramatically, such as Edelman Public Relations, but that still left more than a handful of top tier agencies in contention.
Both GCI Group and Golin/Harris held their own in a very difficult year, with revenues up slightly without major acquisitions. But neither had a breakout year, although they did enough to earn a solid B+ in our Agency Report Card.
Ruder Finn was worth a look, too. After spinning off about a third of its business—forming the new RF Binder—at the beginning of the year, the firm managed to grow its remaining business by about 5 percent, increasing its margins too. It was a particularly impressive performance for an independent firm without a deep-pocketed parent, and provided at least a partial answer to critics who question whether Ruder Finn can hang with its larger, public quoted rivals. But momentum involves both mass and speed, and Ruder Finn clearly doesn’t have the mass of some of the other firms in our survey.
APCO Worldwide was another candidate, having grown by about 10 percent over the course of the year. But despite the fact that the firm has expanded its portfolio of services beyond the public affairs arena—and its geographic reach beyond Washington, D.C.—APCO is still not a full service agency. That doesn’t preclude it winning Agency of the Year honors, but it raises the bar, and at the end of the day APCO’s performance, like Ruder Finn’s, was worth a healthy A-.
That left us with four full-service firms that experienced appreciable growth in 2001, a quartet that includes two perennial leaders in our Agency Report Card analysis—Fleishman-Hillard and Ketchum—and two dark horses that outperformed the market in 2001: Hill & Knowlton and Manning Selvage & Lee. There were no A+ agencies among the market leaders in 2001, but all four of these firms should be very proud of their As.
Ketchum grew by close to 10 percent in 2001, and while much of that came from two significant acquisitions—Chicago high-tech firm Corporate Technology Communications and lobbying shop Washington Group—it was enough to maintain momentum. Ketchum also had a good new business year: it was one of the winners in the IBM shoot out and added work from blue-chip clients such as DuPont, Hyundai, Kodak, and Novartis. The firm also deserves kudos for the seamless leadership transition from Dave Drobis to Ray Kotcher and for its continuing leadership role in the industry.
The other Omnicom agency, Fleishman-Hillard, has been the benchmark standard for top tier agencies for almost a decade, and 2001 was yet another strong year, with revenues rising to around $350 million—pretty impressive considering that 25 percent of F-H business is in the troubled tech arena. It too made acquisitions, incorporating the operations of Greer Margolis Mitchell & Burns and GPC International into its public affairs practice and adding Herald Communications in the U.K., but it won some major new clients, including JD Edwards, Monsanto, Mitsubishi, Office Deport, Abbott Labs, and Intel.
Then there’s Manning Selvage & Lee, which doesn’t have the benefit of Omnicom oversight to draw on and sometimes appears to be succeeding despite, rather than because of, its parent company. Nevertheless, under the leadership of Lou Capozzi MS&L has done a remarkable job of sticking with the top tier agencies. It’s only about a third the size of Fleishman, but it still gets invited to its share of big pitches, and wins more than it share. It handles high-profile assignments for Nike, Procter & Gamble, Celebrex and the U.S Army and despite the departure of some veteran managers has a young, dynamic leadership team and a culture that is among the healthiest in the industry.
But after careful consideration, our Agency of the Year for 2001 is Hill & Knowlton.
H&K may not be an obvious choice, but consider for a moment what you might have said three or four years ago if someone told you that Hill & Knowlton, after all its troubles in the first half of the 90s, would outperform its WPP sister agencies—including Burson-Marsteller and Ogilvy—and would be one of only a handful of firms to record positive growth in a tough year.
This is an award that recognizes H&K’s turnaround, led by chairman Howard Paster and U.S. chief executive Tom Hoog, over a period of several years. Less than a decade ago, H&K was in deep disarray. It had lost its ethical compass, dozens of top professionals, and an alarming number of clients. Paster and Hoog first steadied the ship, then brought on board a new crew, and ultimately got it turned around and headed in the right direction.
The firm’s performance in 2001 was confirmation of how far H&K has come. Revenues were up, thanks in part to the acquisition of Washington’s ProMarc Agency and in larger part to more than $100 million in new business, from the Environmental Protection Agency, Ford, Sony Playstation, Blue Shield of California, the government of Botswana, and existing clients such as Compaq and Motorola. The firm also continues to restore its reputation for industry leadership, with strong practices in areas as diverse as corporate philanthropy, labor relations and gay and lesbian marketing.
The Agency of the Year designation also looks to the future, as a new generation of management, carefully groomed, prepares to take the agency to the next level. Paul Taaffe and MaryLee Sachs are stepping into key roles—as worldwide president and U.S. chief executive respectively—and face some daunting challenges. But their challenges will be very different from the ones Paster and Hoog faced when they assumed their roles in 1996.
Other Agencies of the Year for 2001 include:
Midsize Agency of the Year: Dix & Eaton
Early in 2001, Dix & Eaton signaled its intention to expand into a new practice area, one that had historically been dominated by specialist firms in New York. The Cleveland firm created a new group to focus on mergers and acquisitions and other “special situations.” The move was indicative of the firm’s strategy, which is to handle the issues that keep client CEOs awake nights, and its confidence. Strong in investor relations and business-to-business marketing communications, the firm is unusually top heavy, with a cadre of senior counselors from traditional and non-traditional backgrounds, and an uncommonly loyal staff. Exceptionally well managed and employee owned, Dix & Eaton demonstrates why it’s better to grow consistently and strategically than to ride the latest fad.
Small Agency of the Year: Greenough Communications Group
Unlike other agencies that sought business in adjacent markets, Greenough Communications remained laser-focused on the high technology industry, a decision that paid off in terms of a growth rate—close to miraculous given market conditions—of around 100 percent. Granted, Greenough is still a new company, in just its third year, but there’s no doubt the firm has more momentum than any other firm in the tech category. The main impetus behind that momentum is the firm’s culture: GCG has been named one of The Best Agencies to Work For each of the past two years, and is lauded by employees for a highly entrepreneurial culture.
Boutique Agency of the Year: Warschawski Public Relations
On January 18, just 10 days before the hometown Ravens were due to play in the Super Bowl, the Office of the Mayor of the City of Baltimore approached Warschawski Public Relations and asked whether the firm could leverage the game and the national attention it would draw to secure coverage for the city’s recent economic turnaround. That was the start of a terrific 12 months for Warschawski, which was able to grow by about 15 percent and to increase headcount in 2001, despite the tough economy.
Strategic Agency of the Year: Matha MacDonald
Matha MacDonald, founded by Ogilvy Public Relations veteran Bob Matha and former Navistar communications chief Maril MacDonald and populated by senior counselors (most of whom have experience on the corporate side, working in operations, marketing, organizational development, HR and research as well as public relations), has established itself as a valuable partner for companies seeking assistance with vital communications issues. Best known for its work in employee communications—a major growth area for PR firms—Matha MacDonald has expanded beyond that niche into other key categories.
Creative Agency of the Year: Dome Communications
Dome Communications didn’t let a little thing like a recession stand in the way of its forward momentum. Founded in 1997, Dome has experienced average annual growth of close than 100 percent since then, and its forward momentum continued unabated in 2001, with revenues up 50 percent to around $6 million. The quality of new business is another indication that Dome’s positioning as a creative shop with national capabilities is resonating with clients. New accounts include assignments from Alberto Culver, ConAgra Foods, Kraft Foods, Sears Roebuck, and ServiceMaster (for which Dome beat out Burson-Marsteller, Edelman, and Golin/Harris—three of the top firms in the Chicago market).
Consumer Agency of the Year: DeVries Public Relations
Most firms that get acquired by giant advertising agency holding companies are quickly assimilated into one of the public relations “master brands.” It’s a testimony to the cachet DeVries Public Relations has built into its name that when it was bought by Interpublic early in 2001, it was allowed to keep its own identity, to continue operating as a stand-alone unit with the Interpublic Group of Companies, keeping its focus on creative, brand-building public relations for consumer-focused clients. The firm’s $12 million in revenues—up about 20 percent on the year—comes from just a dozen or so clients, including Procter & Gamble, Pfizer, 3M, and other blue-chip companies for whom DeVries has become a trusted marketing partner.
Healthcare Agency of the Year: Chandler Chicco Agency
Whether it’s raising awareness of a disease category, as it did through its Minds in Motion depression campaign on behalf of Pfizer; promoting new treatments, as it did through its prostate cancer care campaign for Amgen; or building alliances between companies and patient communities as it did with the PTSD Alliance, also for Pfizer; or explaining a public health issue, as it did through its Operation Clean Hands effort for the American Society of Microbiology, Chandler Chicco Agency continues to demonstrate leadership in the healthcare arena, developing more award-winning programs than any other firm and delivering real, measurable results for clients.
Investor Relations Agency of the Year: Kekst & Company
Working with German pharmaceutical giant Bayer as its anti-anthrax drug Cipro took center stage in the wake of bioterrorist attacks; counseling the management of Enron Corporation as the once mighty energy company began its disastrous collapse; assisting Polaroid as it filed for Chapter 11 bankruptcy protection; helping Pacific Gas & Electric explain its role in the California energy crisis. In other words, a pretty typical year for Kekst & Company, still the pre-eminent strategic communications firm in the country and a leader in financial communications, mergers and acquisitions and other transactions, and high-profile crisis management.
Public Affairs Agency of the Year: [email protected]
In Washington, [email protected] has a staff that includes Jeffrey Conley, an expert in environmental and energy issues; Ron DeFore, a veteran of the U.S. Department of Transportation and the National Highway Traffic Safety Administration; and Diane Steed, who was the longest-tenured Administrator of the National Highway Traffic Safety Administration. In Detroit, the team includes Bruce MacDonald, a 31-year veteran of General Motors who also headed PR at its Saturn subsidiary; Bud Liebler, who led the marketing and corporate communications functions at Chrysler; and Jason Vines, who led the communications group at General Motors through the Bridgestone-Firestone crisis. It’s a powerhouse team that has established [email protected] as the undisputed leader in automotive public affairs, although it has grown beyond that niche in recent years.
Technology Agency of the Year: Text 100
When IBM began an extensive review of its $40 million public relations account early in 2001, most observers expected the business to be consolidated with two or three major multinational agencies. When international technology public relations specialist Text 100 emerged as one of the big winners in that review—it picked up the product communications piece of the pier—many experts were surprised. They shouldn’t have been; from its headquarters in London, the firm had built an impressive global network, and while it had kept a low profile in the U.S. market it had demonstrated the ability to handle large and complex assignments for top-tier clients.
All of our Agencies of the Year will be recognized at our 2002 Awards Dinner, to be held at the New York Sheraton Hotel on May 15. Tickets for the dinner will go on sale this week. For additional information, or to reserve tickets and tables now, call Celeste Picco at (212) 333-2300.
The Agency Report Card issue of The Holmes Report will be published to the Internet in April and will be available in print form early in May.
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