A growing breed of PR executives are giving large PR houses a run for the money because clients are hiring smaller firms for their experience, not for their prestigious brand names.
The idea of a small firm's ability to more seamlessly treat a client as a partner - versus a profit pool - isn't anything we haven't heard before, but it is something we're hearing more and more. Municipalities like New York and corporations like Motorola and Toyota are spending millions on PR counsel from independent consultants and small and mid-sized PR firms where they have direct access to senior-level strategists.
Last week in New York, Michael G. Paul was meeting one-on-one with reporters at high-profile media outlets like Bloomberg and the New York Daily News to introduce himself as the new executive VP of corporate communications for the New York City Economic Development Corp. The EDC is negotiating deals such as the new home for Yankee Stadium and The New York Stock Exchange. But it needs strategic communications to help it promote its new-business retention and recruitment projects.
"At large firms, senior people are pulling in the clients and then looking to the junior people and saying, 'Get the job done,'" says Paul, who is taking a leave of absence from his PR agency to work for the city.
The trend toward using small PR boutiques or independent consultants extends beyond the small-versus-big-firm fight. Running a successful business today requires that you don't overextend what you can deliver and that you:
- Manage your overhead;
- Invest in technology;
- Provide clients big-picture strategies;
- Don't undermine an account relationship by putting too many neophytes on the job; and
- Match senior-level executives' expertise to clients' needs.
For example, 34-year-old Paul cut his teeth in the style of feisty communications while working for U.S. Sen. Alfonse D'Amato (R-N.Y.) to troubleshoot integration of the Big Apple's 911 system. His resume includes a stint at MCI, Burson-Marsteller and Hill & Knowlton.
But in a kind of strange PR sabbatical, Paul agreed last month to step down as president of MGP & Associates, the New York-based company he opened several years ago, to help the EDC work on business recruitment and other strategic PR projects. His firm will not work for the city while he's working for EDC, according to terms of the deal announced May 25. MGP is now being headed by Robin Davis, formerly VP of corporate and government relations at MGP, who has been named GM, a new slot.
What the Big Guys Pay For
Motorola Semiconductor Products Sector, Austin, forks out about $1 million a year for PR guidance from high-tech PR firm Capital Relations, Inc., Westlake Village, Calif., to help it promote its design work on 32-bit semiconductor architecture (its embedded processors are used in cellular phones). Capital Relations has 27 employees, including one director who is based full-time at MCPS and sits in on company meetings.
"Capital Relations is small enough that I have access to people like Bonnie [Quintanilla, executive VP]," says David Rogers, a Motorola marcom manager. "We need to tap into the people with expertise."
At Capital Relations, five people are typically assigned to an account, which isn't unusual for large firms which generally average more than several people on a project, including junior-level staffers who regularly act as point people. But at CP, four of those team positions are senior level: two are directors and two are senior account managers; the fifth slot is filled by an account coordinator.
Toyota Tells It Like It Is
Toyota's affiliates in the U.S. use several small agencies to help drive its PR, including Dallas-based Hopkins & Associates, a firm it has used for nearly a decade.
"Every single one of my [12] clients works directly with me," says Clyde Hopkins, president of Hopkins & Associates, an eight-person firm that boasts about $600,000 in yearly fees.
Hopkins & Associates is 22 years old and came together with the broad range of experiences of its founder. Hopkins, ironically, is equipped with undergraduate degrees in both medicine and journalism (before working at trade publications, he was a virus researcher). And he worked at BM for four years and later with Harshe, Rotman and Druck which was merged into Ruder-Finn.
But Hopkins believes the power of smaller agencies is one-on-one, an element that sometimes gets lost in the shuffle within major PR networks where winning, not necessarily retaining, accounts has become key to meeting budgets.
Which Fish are Getting Fried?
It's a trend that larger agencies, however, aren't ignoring, says John Graham, CEO of Fleishman-Hillard, St. Louis, whose high-dollar clients include Caterpillar, Monsanto and UPS. F-H has 1,400 employees in 34 offices worldwide and has estimated $160 million in global sales this year.
Graham contends that about one-third of Fleishman-Hillard's work this year will be one-on-one counseling with boards of directors and CEOs and that over 50 percent of his workforce is comprised of senior-level communicators.
He adds the trend of smaller agencies winning lucrative and high-profile accounts began to take root about five years ago. He adds that it's a phenomenon to which large conglomerates, many of them owned by holding companies enticed by revenue streams, will have to pay attention to manage their reputations.
His best advice?
Make sure your business expenses don't grow at a rate that's faster than your revenue. Those expenses should include technology, people and real estate. (Mike Paul, 212/312-3525; Motorola, 512/342-6974; Honda, Jim Olson, 310/618-4701; Hopkins & Associates, 214/754-0990; Fleishman-Hillard, 314/982-1700)