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March 8, 2004
EDELMAN HEADS
LIST OF INDEPENDENTS
 

Edelman PR Worldwide, the largest independent PR firm by a wide margin, held steady at $206 million in fees in 2003. Its 2002 fees were $205.7 million, a decline of 6.8% from the previous year.

Richard Edelman, president and CEO, said he felt the firm had done well as business conditions continued to be difficult.

Ruder Finn, second largest independent, gained 7.3% to $79.1 million.

It subtracted from its billings RF Binder Partners, headed by CEO Amy Binder. That firm, now reporting separately, had $7.8M in fees, a gain of 7.8%.

About an equal number of firms in the top 50 reported either double-digit gains or double-digit decreases as PR and advertising continued their struggle to return to the pattern of growth that had marked the 1990's.

Again missing from the rankings are the nearly 50 PR operations owned by the ad conglomerates such as Omnicom, Interpublic, WPP Group, Havas and Publicis.
These include such PR marque names as Burson-Marsteller, Hill & Knowlton, Weber Shandwick, Ketchum, Golin/Harris, Manning, Selvage & Lee, and others.

Council to Publish Rankings in 'Categories'

The Council of PR Firms, which gave up its annual ranking of PR firms last year after the publicly held ad/PR conglomerates ordered their PR units not to release any figures, said it will publish a ranking of firms by broad categories of fee incomes.

There will be seven categories: $100 million+; $50-$99M; $25-$49.9M; $10-$24.9M; $4-$9.9M; $1M-$3.9M, and below $999,999.

Firms will be allowed to include up to 10% of their fees in commissions from corporate and issue ads. The entire income is counted if a firm owns more than 50% of another firm. Revenues of acquired firms are included as of the date of the acquisition.

The conglomerates had cited the Sarbanes-Oxley Act as the reason for stopping their PR units from releasing figures.

Under SOX, all released figures have to be in conformity with GAAP (generally accepted accounting principles). Such principles vary from country to country.

Lou Capozzi, chairman of the Council, said that "Ironically, the Act that was made to encourage openness and disclosure, has resulted in less disclosure."

Companies that disclose false figures face fines and their executives face jail terms.


Kathy Cripps

Besides the total revenue categories, Council members will report (by percent of revenue), their three biggest U.S. practice areas. The categories are business-to-business; community relations; consumer marketing; corporate; crisis communications; employee communications; public affairs, or other.

Similar reports will be given for the firm's three biggest U.S. sectors in technology, healthcare, consumer, financial services, professional services, industrial, government, non-profit or other.

Kathy Cripps, president of the Council, said the new rankings will be called "America's Leading PR Firms" and will be promoted via the media, direct mail and on-line. The Council is also creating more stringent eligibility standards for members, she added.

Waggener Edstrom up 17%

Among the big gainers were Waggener Edstrom, up 17.7% to $69.7M; Padilla Speer Beardsley, up 16% to $9.5M; Dittus Communications, up 26% to $8M; PainePR, up 13% to $7.9M; Cooney/Waters Group, up 16.8% to $7.8M; Peppercom, up 24% to $7M; M Booth & Assocs., up 10.9% to $6.4M; Sloane & Co., up 10.9% to $6.3M, and Spectrum Science PR, up 34% to $6.4M.

New to the list is Qorvis, Washington, D.C., with $12.2M in fees, whose clients include Saudi Arabia.

Last year, 14 firms in the top 25 had declines of 20% or more while only seven had gains of 20% or more.
The independent PR operations provided proofs of their fees and employees in the form of top pages of income tax returns, W-3 forms showing total payroll, account lists and other documents.

Among the firms with double-digit declines were Schwartz Communications, off 17.7% to $16M; The Hoffman Agency, off 30.9% to $8.2M; KCSA PR Worldwide, off 17% to $6.3M; Vollmer PR, off 9.6% to $5.7M; PAN Communications, off 14% to $5M, and Morgan & Myers, off 15% to $4.9M.

Rankings of ad agency-related PR operations not owned by the ad agency conglomerates will be published next week.

 
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(Responses should include your name and affiliation, which will be withheld at the writer's request. Personal attacks will not be tolerated and all responses are subject to editing.)

Responses:
 

Arnie Huberman, President, Arnold Huberman Assoc, Inc. (3/08):
The lack of one agreed-upon set of criteria and a single source to rank agencies makes comparisons very difficult. Many of the agencies have rankings "frozen in time" - a time when ALL agencies were listed together.

Sarbanes-Oxley is, in our opinion, a convenient way to duck the issue - but when a client asks us to
find them an agency, the days when we could start from one agreed-upon source no longer exists - in our opinion, everyone loses. Even the independents who are ranked, as comparisons are no longer possible.

Rankiings are a very small practical factor, but what client does not want to brag about his/her agency's ranking?

In our opinion, the PR agency world is very myopic on this issue.


 

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