Stuart E. Karu, an outspoken local advertising executive, has a good point about the explosion of Washington's information industry.
Many people--particularly business executives who don't live and work here--think of New York as the nucleus of the communications business in this country, he notes.
In terms of hard dollars for advertising and product publicity, Madison Avenue can't be beat. But the flood of new business in the D. C. area over the past decade has required "on-location" attention to complex regulations, edicts and legislation, says Karu, president of the advertising and public relations firm of Henry J. Kaufman & Associates.
New York also is the premiere center for magazine publishing, and the television networks are based there, but the networks are heading into an era of declining influence because of the growth of cable and pay television as well as many other business and home information sources, such as the Readers Digest subsidiary based in Northern Virginia, The Source.
Two recent business formations here add emphasis to what Karu is getting at--that Washington is becoming the place to be in terms of providing information.
As reported this week, National Journal publisher Anthony Stout is setting up a new intelligence-gathering service in Crystal City for business that is designed to rival the Central Intelligence Agency in scope of information about foreign countries and the range of investment climates.
A second new Washington company is gearing up to offer a somewhat similar but highly specialized service to business. Investment Intelligence Systems Corp., based in the District, was started by one of the nation's leading economists, Gary Fromm.
His company, which has an office in London and which plans to open branches next year in New York and Geneva, will concentrate on international financial and investment strategy through constantly updated, computerized assessments of such factors as currency exchange rates. Financial institutions and other corporate clients that invest in domestic and international markets will be provided an integrated set of economic, financial and political evaluations.
Fromm, former director for the Center of Economic Policy Research of SRI International, director of research for the National Bureau of Economic Research and a cofounder of Data Resources Inc., said IIS capabilities will include industry studies, asset and liability management, product analysis, decision and risk analysis, economic and financial forecasting, country-risk analysis and political-risk analysis.
"The increasing volatility of financial markets and advances in telecommunications and electronic funds transfer systems have created new risks and opportunities for financial institutions and corporate treasurers," Fromm said.
To meet these demands, many of these businesses are using decision-analysis tools to help "formulate strategies and to increase responsiveness to changing financial markets," he added. His minute-by-minute comparisons of foreign currency rates coupled with an instant risk analysis of a particular overseas money market will be geared at making possible immediate decisions on where to invest surplus funds on a short-term basis for the highest return, for example.
Principals of the new D. C. company include Meredith Homet, assistant to Fromm; Neil Schwartz, managing director of a financial decision system division; Jacques Pezier, director of a European consulting operation; Lance Riley, director of trading; and Steven Tani, director of financial and modeling services. Schwartz, Pezier, Riley and Tani all worked previously for SRI.
Clients already using the services of this D. C. information and analysis firm include American Telephone & Telegraph, Bank of America, Citibank, Exxon, the New York Stock Exchange, Xerox and PHH Group Inc., a Maryland business services and leasing company. Stout's company likely will attract the same and similar corporations, adding to the impact of Washington as an information center.
Add to this the following statistics gathered by Stu Karu's firm:
* In the decade of the 1970s, the number of trade associations jumped from 1,100 employing 26,400 persons to 2,500 employing 41,600. The number of law firms increased from 2,000 with 11,000 attorneys to 4,250 firms with 35,000 attorneys (more lawyers per square foot than anywhere else in the country).
* Growth of national corporations with Washington offices has been almost as dramatic: 350 firms in 1970 with 700 persons compared with 1,200 offices and 3,500 persons by 1979.
He says the big surprise is that although government is the main reason for all the business here, all the government offices lining Constitution Avenue and elsewhere represent a minority in terms of space. According to the real estate firm of Coldwell Banker, 72 percent of all office space in D. C. is occupied by private tenants. And the city houses the third-largest office market behind New York and Chicago.