US ad agencies are increasingly offering public relations services, even where they have sister PR companies vying for the work. PR not only gives agencies another piece of armour in the quest for an integrated service, it can also be very profitable.
The American Association of Advertising Agencies recently published a survey of its members, which shows that 77 per cent of the agencies that responded now offer in-house PR services to clients.
On the whole, it's the smaller and mid-sized agencies that are choosing to create PR practices, but there is a trend towards larger shops seeing the PR light and opening a dedicated arm.
According to Patricia Courtois, the chairwoman of the AAAA client public relations committee and the vice-president of public relations at the Florida-based agency Clarke Advertising: "Agencies are seeing the opportunity - starting to realise that PR can have a place at the table."
At her own agency, Courtois oversees a PR staff of seven, which generates 30 per cent of the agency's revenue. Clients taking up the PR service include the national advertiser Rubbermaid and the multinational Cargill.
As clients come to view PR as a more credible discipline - one that sits within the marketing and advertising canon - so budgets are beginning to rise. And there's another advantage to PR as a money earner. Sixty-eight per cent of the survey's respondents said, on average, PR has higher profit margins than advertising.
"The survey results show that PR is very profitable for agencies and offers non-advertising solutions," Courtois says. "In addition, PR practices within agencies help to ensure brand consistency, offer agencies the ability to grow revenue from existing clients and help fight off competitive challenges."
Larger ad agencies are more likely to remain purist. At J.Walter Thompson in New York, the director of communications and senior partner, Samantha Di Gennaro, explains that the agency sometimes handles PR relating to an ad campaign for clients, but for consumer work will frequently refer clients to its sister PR agency, Hill & Knowlton. "It would be nice to have incremental revenue," she concedes. "But if we've got sister companies which are experts, why not just partner with them?"
The top-ten US agency Deutsch hasn't let Interpublic Group sister agencies cramp its style. Despite having the resource of the PR giant Weber Shandwick within the group, it has had an in-house PR capability since 1999. So when would Deutsch handle the PR and when would it suggest that a client use the likes of Weber Shandwick? "We don't have a cookie-cutter approach towards PR strategy," the managing partner and chief operating officer at Deutsch, Linda Sawyer, says. "It depends on the client's goals and objectives."
But, Sawyer argues, there are cost and time efficiencies to an integrated approach, plus a valuable single-mindedness. "It allows us to be the brand steward for a client and to execute a single strategy, via multiple channels," she says. Deutsch has also partnered IPG PR agencies for projects such as Novartis' launch of the drug Zelnorm, when it worked alongside Weber Shandwick.
At the Wisconsin-based agency Lindsay, Stone & Briggs, the vice- president and director of public relations, Judi Wax, is a fan of adding PR to the mix. Wax has built up the agency's PR practice over the past two years and does integrated work for clients such as the Wisconsin Milk Marketing Board.
Wax points out the difficulties of having separate agencies working on the same piece of business.
"As much as the client would want an integrated approach, it's harder to integrate if agencies are not housed in the same place," she says.
"If a standalone PR company works with an ad agency under another roof, or even in another state: first, it's difficult to get together; second, if you do, it's difficult to determine whose strategy is the lead strategy; and third, it's human nature to want to get the most budget for your company."
Both Wax and Courtois are emphatic about the need to recruit PR professionals who can offer the same nous as those in an experienced specialist PR company.
Of course, the PR specialists aren't going to roll over. Gerry Olszewski, a senior partner at the Omnicom agency Ketchum, says that efforts by agencies to bolt on PR are often seen as opportunistic land-grabs. He holds that the best PR people want to gain experience at specialist companies.
For many clients, however, integration will be best under one roof. Of course, it may be enough for them to view the roof as being the holding company, but it does seem that adding PR to their offering is giving some agencies an advantage. As Courtois says: "It gives the term 'boutique agency' a whole new spin."