Public relations firms take a second look at federal clients

With the economic slowdown hurting prospects for recruiting new high-tech and corporate clients, Washington's high-flying public relations firms have begun taking a second look at a line of business many of them once shunned: contracts from the federal government. "Government work has its own challenges--the contracting process is complicated, and it has lower margins than private sector work," said Paul Johnson, the mid-Atlantic regional president of Fleishman-Hillard Inc., the third-largest PR firm in the Washington market. "But it's stable work, because it usually involves multi-year contracts. And a lot of the work in that sector is 'feel-good' work, which is great for staff morale and is fabulous as a recruitment tool." Four years ago, the Washington office of Fleishman-Hillard had no contracts with the federal government. Now, it works with 10 federal departments, agencies and offices, with contracts that worth a total of $7 million this year, or roughly one-fifth of the Washington office's income. Most of the firm's federal contracts fall into the category of "social marketing," or attempts to use advertising and other types of public outreach to sway behavior. Perhaps Fleishman-Hillard's best-known client is the Office of National Drug Control Policy, which hired the firm to lead an advertising and outreach effort that targets drug use by young Americans. Fleishman-Hillard has also worked on the rollout of the U.S. Mint's golden dollar coin, an Interior Department program that encourages the adoption of wild horses and burros, and an Education Department project to increase the use of the Internet by teachers. The federal government has been using public-relations techniques for generations (just think of Smokey the Bear), and its use of outside PR firms is not especially new. But the practice appears to be growing, specialists say, spurred by a combination of federal downsizing and efforts to reinvent government. "The really good managers in government say, 'What are the tools corporations are using to get out their message? We should have the same skills and quality of support,' " Johnson said. Another reason for growth is a lengthening track record of good results. Last year, the PR firm Cohn & Wolfe handled a $2 million contract with the Census Bureau, along with its corporate sibling, the advertising firm Young & Rubicam. The purpose of the contract was to increase the number of Americans who returned their census forms to the government. "We did road tours in 12 regions, handing out literature and encouraging people to fill in their forms," said Kathryn Murray St. John, the CEO of Cohn & Wolfe Washington. "Last year, for the first time in three decades, there was a reversal in the downward trend of responses--the numbers went up significantly. The Census Bureau attributed quite a bit of that to the energy of the PR campaign around it." Now, with corporate work slackening, firms are warming to the idea of diversification. At Widmeyer Communications, the 13th largest PR firm in Washington, founder Scott Widmeyer said that his client base is one-third corporate, one-third nonprofit organizations and one-third government. "You don't want to go overboard in any one area," said Widmeyer, who estimates that his firm will grow 12 percent to 16 percent this year. Widmeyer has been doing government work in a serious way for about seven years, longer than many Washington PR firms. Currently, Widmeyer is helping spread the word about the Agriculture Department's Conservation Reserve Enhancement Program, which encourages farmers to set aside a portion of their land to curb wastewater runoff. It is also doing work for the National Science Foundation to encourage minority youths to think about careers in math, science and engineering. For the past few years, Widmeyer has helped the Selective Service System remind young men of their obligation to register for the draft. It does this by leveraging the assistance of media organizations and groups that represent teachers, principals and guidance counselors. Widmeyer said that registration numbers have been increasing as a result. Other clients on the Widmeyer roster are the National Institutes of Health, the Labor Department, the Education Department, the Agency for International Development and the National Science Foundation. The PR firm Porter Novelli International has long been involved in government campaigns, most prominently disease-awareness projects for the Centers for Disease Control and Prevention and the National Institutes of Health. A few years ago, government work accounted for 45 percent of the firm's revenues, said Chuck Greener, who heads Porter Novelli's Washington office. Now it's smaller--about 15 percent--but that's because the firm's private sector portfolio has grown at a much faster clip. While not every major PR firm in Washington is gunning for new government projects, most executives interviewed agree that the economic slowdown has increased their receptiveness to the idea. Coming off a record-setting year in which the public relations business as a whole grew by 34 percent, PR executives now expect growth rates in 2001 to reach only about 5 percent, said Jack Bergen, president of the New York-based Council of Public Relations Firms. "I think a lot of people are saying, 'Government work may not be all that bad, even if the profit margins are not as good and the application process really puts you through the mill,' " said Mark Schannon, the head of the Washington office for Ketchum, a big PR firm. The upside, Schannon said, is that "once you win the account, it's usually great fun." Schannon--whose firm already represents the Federal Emergency Management Agency in an effort to make communities prepare themselves better for disasters--said he expects to increase his firm's efforts to win government contracts. But he and other PR executives add that there's a limit to how much any one firm can do for government clients. "You have to balance it off," he said. "For every account that comes in below the average in revenue, you have to pick up the slack with a better-paying client somewhere else."