MOMENTUM
WPP’s public relations revenues declined by about 6.5 percent in 2009, and Burson-Marsteller took a revenue hit like all of its sister agencies, but was able to maintain and even improve profit margins—which it says were the strongest in its history—and saw things improve somewhat in the fourth quarter, and even more strikingly in the first few months of 2010. The firm picked up important new assignments from Discover, the Federal Communications Commission, Sony, sanofi-aventis, Novartis, Microsoft, Reliant Energy, Taco Bell, Lincoln Financial Group, and the San Diego Zoo, without any significant losses. The firm’s top 18 “key client relationships”—including new additions Danone, Huawei, and Transitions—now contribute 35 percent of revenue.
REGIONAL REACH
North American chief executive Pat Ford celebrated 20 years with Burson-Marsteller in 2009 and has spent three years heading the firm’s North American operations, during which time the firm has done a good job of re-establishing itself as one of the market leaders. The New York, Washington, and San Francisco offices are the strongest in the 13-office U.S. network, all of the leaders in their respective cities, while the Texas operation (Austin, Dallas, Houston) has been growing at a healthy pace; and Boston, opened in 2006, has been making a solid contribution. Burson also has a network of 10 offices and three affiliates in Latin America—the largest reach of any of the multinationals—under the leadership of Santiago Hinojosa.
INTERNATIONAL REACH
There’s a case to be made that Burson has the most complete coverage of key European markets among all the firms in this report. It has impressive strength in Brussels, where BM is the firm almost all competitors identify as the one to beat; Germany, where it represents major local companies—Henkel, Lufthansa, SAP—as well as a host of overseas multinationals; and the U.K., which serves as the hub for 25 percent of the firm’s top 20 clients. Multi-market work surged by 50 percent in the first half of 2009, with new business from Huawei, Qatar’s 2022 World Cup bid, Sony and TNT and growth from Danone, de Beers, HP, Lufthansa, Shell and Sony Ericsson. Burson-Marsteller’s largest Asia-Pacific operations are in India and China. In the former, the acquisition of Genesis, which now operates as Genesis Burson-Marsteller, established B-M overnight as a market leader in both size and sophistication. In the latter, the firm has offices in four cities supplemented by a strong Hong Kong operation that serves as the hub for much of Burson’s regional public affairs business. The big news, though, was the departure of chief executive Simon Pangrazio, in the job just two years, who was replaced by Edelman veteran Bob Pickard.
EXPERTISE
Burson-Marsteller saw its strongest growth in 2009 in public affairs and crisis and issues management. The firm’s public affairs capabilities —led by Mike Lake—are among the most substantial of any major firm, with its own expertise supplemented by the research and polling capabilities of Penn Schoen Berland, the lobbying power of the new Prime Policy Group (formed by the merger of BKSH and Timmons & Company), and the grassroots experience of Direct Impact. The crisis and issues group, meanwhile, has seen an influx of talent from the worlds of PR, media and politics in recent years, and has been handling a growing list of high-profile assignments. Meanwhile, corporate and technology remained strong and healthcare and consumer continued their rebound after some lean years in the middle of the decade—although there are those who believe BM is neglecting the consumer arena and focusing more of its energies on corporate, crisis and public affairs work. The firm also launched its Proof Integrated Communications and Proof Digital Media operations, bringing together the advertising, digital and creative capabilities of Burson and Penn Schoen Berland.
TALENT
There were some high-profile departures during the year, most notably executive vice president Josh Gottheimer, who took up a new role as head of communications for the Federal Communications Commission. But there was plenty of new talent to take their place. New additions in the U.S. included Cheryl Heinonen, former senior vice president of global communications for Visa, as head of the San Francisco corporate practice; Helene Ellison, former CEO of HealthStar Public Relations, as chair of the global healthcare practice; Nate Ballard, a former aide to San Francisco mayor Gavin Newsom, as head of the Bay Area operation; former CNBC Silicon Valley bureau chief Jim Goldman as head of the global technology practice; prominent marketing and PR blogger B.L. Ochman as managing director, digital and social media; and Dallas Lawrence, who had led social media efforts for Levick Strategic Communications, as managing director of digital public affairs.
CULTURE
The arrival of Mark Penn four years ago caused considerable disruption: there were complaints about the appointment of an individual from outside the PR industry; about the controversy arising from his high-profile involvement in the Clinton campaign; and about his sometimes abrasive management style. But Burson-Marsteller made a commitment to frank and open communication with employees about the news coverage of its CEO, and any disquiet seems to have largely evaporated in recent months. Meanwhile, much of the new professional development activity in 2009 focused on the firm’s new “evidence-based communications” approach, with hands-on training supplemented by access to tools and webcasts on the firm’s intranet. Other recent webcasts have covered hot topics such as social media, CSR, and trends in mobile communications.
INTELlECTUAL LEADERSHIP
With the appointment of Penn Schoen Berland founder and research industry thought leader Mark Penn as chief executive, and the subsequent integration of PSB into the Burson-Marsteller family of companies, it was inevitable that BM would seek to turn its research capabilities into a source of unassailable competitive advantage. The launch in 2009 of the firm’s new “evidence-based” communications approach, therefore, came as no surprise, and was even greeted with a shrug by some competitors, who point out that the PR industry has been incorporating research into its planning process for long before Penn’s association with the industry. But the reality is that clients do not necessarily believe that PR brings the appropriate level of empirical understanding or research-driven insight to the table, and Burson’s new approach has more credibility than many of its rivals’ efforts. And it has already served as the platform for two major pieces of research. BM, PSB, and sister design agency Landor also partnered on a second annual corporate social responsibility survey, while the D.C. office conducted research into the way advocacy groups are using digital and social media.
PROGRAMS
Burson-Marsteller seems to be regaining its former status as the go-to agency for high-profile corporate reputation, issues and crisis and public affairs work. Last year saw the firm leading public affairs and corporate reputation work for Ford, the only major U.S. automaker to avoid bankruptcy, using a series of surveys to demonstrate positive perceptions of the company compared to its peers; counseling AIG, the largest recipient of government TARP funds, through one of the largest restructurings in American history; working for the Department of Engraving & Printing on the launch of the new $100 bill and the FCC on public education around the conversion to digital television; helping Microsoft handle a range of issues in Washington, D.C. The firm also managed health education efforts for sanofi-aventis (diabetes) and Novartis (arthritis) and put together an award-winning campaign to help the San Diego Zoo unveil new exhibits.
BRAND
Mark Penn is arguably the most visible of all the major agency chief executives, with a column in The Wall Street Journal based on his Micro-Trends research (and the book of the same name), regular contributions to Huffington Post, Politico and The New York Times, and frequent appearances on CNBC and CNN. While Penn can be a polarizing figure, given his political campaign background, there’s no question that he is seen to be involved in big issues the way few of his peers are and that his presence has helped re-establish Burson as one of the industry’s leading consulting firms.
THE FUTURE
It’s fair to say that the first three years of Mark Penn’s tenure at the helm of Burson-Marsteller raised as many questions as they answered, with high-profile defections from the firm and lots of grumbling about his management style. His DIGS (“digital, integrated, global, strategic”) strategy struck many as obvious and unambitious. But it is beginning to look as his emphasis on the four cornerstones laid a solid foundation for the firm’s future growth. He has brought in plenty of high-profile talent, and this year’s “evidence-based communication” initiative has the potential to differentiate the firm from its peers, at least in the minds of clients who still see PR as alarming ethereal.