THE PR PLAYERS: The enthusiastic acquisition of PR companies by ad agencies is a result of the race to offer clients a wider range of media services

If you take a close look at the top ten PR consultancies in the UK, you will notice that not one of them is privately owned by its management.

If you take a close look at the top ten PR consultancies in the UK, you will notice that not one of them is privately owned by its management.

Indeed, fewer than one in three out of the UK's top 30 fall into the owner-manager category. While among those agency networks that can seriously lay claim to having a strong global presence, only Edelman PR Worldwide of the US remains truly independent, by virtue of its status as a family company.

These days it seems that no marketing services conglomerate or major ad agency group is complete unless it includes a significant PR brand in its business. Omnicom has snapped up PR consultancies with the unbridled enthusiasm of children collecting Pokemon cards; the marriage of WPP and Young & Rubicam has brought under common ownership two of the world's heavyweight PR brands: Burson-Marsteller and Hill & Knowlton; while Lord Bell's Chime Communications, parent of HHCL & Partners, has more PR consultancies under its auspices than you can shake a stick at.

Those of a cynical disposition may view PR agencies as little more than this season's must-have accessory. But there are some very serious business issues driving holding companies into investing in PR.

Adrian Wheeler, the UK chief executive of the Grey Advertising-owned PR company GCI, says: 'The acquisition of PR companies by advertising agencies has been unquestionably a client-driven phenomenon, inspired by a growing recognition on the part of big advertisers that advertising is not enough.'

Trends such as media fragmentation and rising media costs have encouraged many leading clients to reassess how they carry out their marketing communications.

The world is not as straightforward as it once was. Audiences are harder to reach and TV and print advertising is no longer always the best way to spend the lion's share of the budget. Greater strategic thinking is required and the best PR agencies are well equipped to provide this service.

Graham Lancaster the chairman of Biss Lancaster, says: 'In a world where the globalisation of business and communications is growing, agencies need to be talking to the most senior people at client companies. Traditionally, ad agencies talk to the marketing directors or brand managers, while PR companies have access to the chief executives, chairmen and finance directors. And you need to be at the top table to access global business strategies early on.'

Lancaster, whose agency belongs to the Havas group, adds that although leading PR businesses have turnovers far lower than those of the big ad agencies, their profit margins tend to be 'stronger', making them an attractive proposition in financial terms. However, it is access to the top decision-makers on the client side that is probably their main virtue in the eyes of holding companies looking to boost the fortunes of their other businesses.

Martin Sorrell, the WPP group chief executive, agrees that PR businesses offer access to clients at the most senior level, arguing it is only corporate identity specialists who 'consistently' talk to those at the top of the client tree.

'I'd say PR was a more cyclical business five or ten years ago than it is today,' Sorrell says. 'Now it is a very important part of the marketing mix. But history is cluttered with examples where PR or research or I-D people were put under advertising agencies never to see the light of day again. So the trick is in how you integrate PR.'

The marketplace for PR services has grown strongly since the slump of the early 90s. In 1993, according to Campaign's sister title PR Week, the top 150 PR consultancies in the UK earned combined fees of pounds 221.5 million. By 1999, the total had more than doubled to more than pounds 496 million. And the market continues to be buoyant.

Given such a strong pattern of growth across the board, few holding companies have reason to regret including PR consultancies in their portfolio of businesses. Yet it is a moot point as to how well they have been able to integrate PR with other disciplines, particularly advertising.

'Few have made even the first successful steps in achieving an integrated advertising/PR service,' Wheeler says. 'To be fair, there are some clients who have made the internal adaptations that would allow this hybrid service to flourish. At the risk of stating the obvious, advertising is essentially a process-based service, while PR is a service pure and simple. It is possible to replace most of the components in an ad agency service without damaging the relationship or the quality of the delivery. With PR, there is almost always a key individual whose removal jeopardises the consultancy's connection with the client.

'Financial scale is another root-cause of misunderstanding between advertising people and PR practitioners. It is hard for an ad person to comprehend that a company handling single-digit percentages of their billings can nevertheless exert a strong influence on the client's decision-makers.'

The Chime Communications chairman, Lord Bell, says that one of the reasons his group was attracted to the PR consultancy QBO, which it bought at the end of 2000, was because it had worked very well with the group's advertising agency, HHCL, on a number of marketing programmes. The way forward, he feels, is through ensuring the business development teams and senior managers of the businesses within Chime share insights and work closely together. However, he does not think there should be a 'commando team' put in place with the purpose of cross-selling services. Rather the emphasis should be on developing relationships between the group agencies and key clients.

'It's a rarity for clients to put their advertising and PR out to pitch at the same time, but it does happen,' Bell says.

Chime is an unusual parent company in that it began with a strong PR capability and then added advertising to the mix. But Bell knows the advertising business intimately, having first come to prominence as managing director of Saatchi & Saatchi when the brothers Saatchi were calling the shots.

He takes the view that client needs have changed, with advertisers requiring more input on communications strategy. Input the leading PR consultancies are well placed to provide.

Last year, Fiona Couper moved from her job as the business development director for Y&R Europe, to a similar role at sister PR agency Burson-Marsteller, adding integrated communications director to her job title.

The reason she made the switch, Couper says, is because PR is where most of the exciting new leads are to be found.

'The reason I moved across is that increasingly briefs are coming in from clients asking 'what's the best for my brand?' Those leads tend to come in through the PR side - that's where the phones never stop ringing. The ad agencies have unfortunately been slow at embracing what clients are asking. It's a shame because I love advertising,' Couper says.

Of course, PR does not enjoy sole ownership of the strategic high ground. Though sometimes its influence is there, if not obvious. The Y&R group's media agency, The Media Edge, in the shape of its TME 360 division, has been working with client Kraft Foods International to extend its coffee brands - Kenco, Jacobs and Gevalia - into 'brand experience' formats in the shape of coffee shops on university campuses.

It is interesting to note that TME 360's managing director, Martin Thomas, used to run the UK arm of the PR agency Cohn & Wolfe (Y&R's second PR agency).

No-one is suggesting the big creative ad agencies have had their day, but where once clients might have automatically turned to them for strategic marketing advice, now they will often look elsewhere. This is why marketing services groups want to cover all the bases by having one, or sometimes more, PR offerings.

Fortunately, the way PR has become specialised in recent years makes it easier for holding companies to differentiate their PR businesses in the marketplace. An example is Omnicom and its PR assets grouped under Abbott Mead Vickers BBDO. First, there is the high-profile populist Freud Communications, with its canny manipulation of tabloid coverage; then there's Aurelia PR, with its stock in trade at the fine Champagne and haute couture end of the spectrum; and, finally, there is Fishburn Hedges, which is known for carrying out serious corporate reputation management assignments, for example helping to position Shell as a socially responsible company.

The difficulty for most holding companies is not in differentiating their PR brands, but in getting PR to work to best advantage with other disciplines.

'In the past there was fear of eating into each other's budgets,' Weber Shandwick, the worldwide UK chief executive of Philip Dewhurst, confesses.

Interpublic, Weber's parent, has addressed this by appointing someone - the McCann WorldGroup Development managing partner for UK & Ireland, Elizabeth Zea - whose sole responsibility is to ensure the group companies integrate well together.

So far, most of the holding companies have done well out of their PR investments. But as clients become more demanding they will have to ensure they not only work well in isolation, but in tandem with other group businesses. And, of course, not everybody has got it right.

Saatchi & Saatchi has one of the most dismal records for stewardship of a PR business. Back in 1993 the Rowland Company was the ninth-biggest PR company in the UK. Two years later it had fallen to 18th, with decline continuing through most of the decade. Last year, many of its human and fixed assets were sold to Edelman with only a handful of people remaining at the now slightly renamed Rowland Communications to work on clients such as Sunny Delight. PR has been good news for many holding companies, but it's by no means a sure thing.



Omnicom owns a trio of powerful names in advertising: BBDO Worldwide, DDB Worldwide and TBWA. But through its Diversified Agency Services (DAS) division, it also owns three international full-service PR brands, Fleishman-Hillard, Ketchum and Porter Novelli (branded Countrywide Porter Novelli in the UK), plus four specialist international networks, the financial agency Gavin Anderson, the technology specialist Brodeur Worldwide, the public affairs network GPC and the internal communications consultancy Smythe Dorward Lambert. Following its acquisition of Abbott Mead Vickers BBDO in 1999, Omnicom added a further three UK PR brands to its portfolio: Fishburn Hedges, Freud Communications and Aurelia PR. In January 2001, Fleishman-Hillard, which has 74 offices, acquired Herald Communications, which is strong in the technology field and has expanded into Continental Europe.


The union of WPP and Young & Rubicam has brought two of the world's top five PR agencies into the same group: Burson-Marsteller and Hill & Knowlton. Two other major PR agencies in the enlarged group, Cohn & Wolfe and Ogilvy PR Worldwide, are significant international players in their own right. Meanwhile, the healthcare PR specialist the Shire Hall Group is one of the leaders in its sector, as is the financial agency Buchanan Communications.


Interpublic recently merged Shandwick - the UK's number one PR agency - with the fast-growing technology specialist Weber to create Weber Shandwick Worldwide. It also owns the PR brand Golin/Harris, which has a UK presence but greater resonance in the US.

Chime Communications

Lord Bell's Chime, owner of the ad agency HHCL & Partners, acquired two UK top 40 PR businesses last year: the hi-tech and healthcare specialist Harvard Public Relations and the corporate and consumer shop QBO. These are just the latest in a long line of PR acquisitions that make the group one of the most formidable players in the sector. Its PR brands include the well-known names Bell Pottinger and Good Relations.


The French marketing services giant owns the PR brands Biss Lancaster and Grayling. The former is part of the Euro RSCG Worldwide division, while the latter belongs to Havas' Diversified Agencies Group. Both Biss and Grayling are top 20 UK PR agencies.

Other notable owners

FCB and Bozell's parent, True North, owns BSMG Worldwide, formerly Charles Barker; Grey Communications owns the full-service PR agency GCI and the public affairs specialist APCO; and DMB&B's parent, B-Com3, created through the merger of the holding companies MacManus and The Leo Group, has Manning Selvage & Lee.