Edelman Eyes $1bn Threshold, Led By Integrated Offerings
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Holmes Report
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Edelman Eyes $1bn Threshold, Led By Integrated Offerings

The world’s largest PR agency is poised to break the $1 billion mark by 2017.

Aarti Shah

NEW YORK  — The world’s largest PR agency is poised to break the $1 billion mark by 2017, provided it sustains continued momentum that is fueled, in part, by integrated work across digital, PR and research.    

For its 2014 fiscal year ending June 30, Edelman took in revenues of $776.5 million, with organic growth up 10.3% from $707.2 million in 2013. Mature markets had steady growth with the  US up almost 8% to $463.5 million, Europe grew 9% to $148.2 million, while Canada dipped slightly to $31.1 million. 

Unsurprisingly, emerging markets had the fastest growth with Asia-Pac, the Middle East and Africa rising 21.4% to $111.3 million, meanwhile Latin America went up 27.7% to $22.4 million. These percentages take in account currency fluctuations. 

“In emerging markets, we’re seeing business coming outward — like Tata being in India and coming to the UK,” global CEO Richard Edelman told the Holmes Report.

As Edelman plows forward on its ambition towards being the world’s first billion dollar PR agency, digital features prominently. Digital makes up 20% of Edelman’s overall revenues — a figure that’s on track to rise to 25%. Meanwhile, its research arm Edelman Berland is up to $25 million with projections to double in the next few years.

“We’re seeing real growth in the combined offering of PR that includes brand and corporate reputation with research and digital,” Edelman said, adding that an integrated offering between these three practices will not result in any immediate organizational changes.

Edelman is also looking to challenge the publicly-traded holding companies wager that clients are being driven by procurement to consolidate their marketing services with a holding company to achieve economies of scale. Even so, in the past year, Edelman lost business from SAP and Pfizer to holding companies able to deliver on this all-in-one model.

“That’s the exception,” Edelman pointed out. “We make the case that you should hire a brain surgeon for brain surgery. Should this coordination be happening on the agency side or with the clients?” 

Among Edelman’s digital milestones in 2013 was a Kellogg’s Fruit Loops video that originated within Edelman’s scope and ultimately became a mass media ad.

“We’re stewarding more than 700 social communities on Facebook, Twitter, Instagram and the like,” said Edelman. While consumer brands dominate the digital practice, Edelman expects an uptick in B2B assignments, like the work the firm is doing with PwC on LinkedIn.

Beyond community management, Edelman says there’s a renewed interest in app development — especially around the sharing economy — as well as relatively modest paid media placements to amplify earned efforts. Other areas of digital investment include after-action analytics, in particular building a tighter pathway between social communities and demand generation. Edelman has also invested in 70 creatives, including 30 in the US.

Even so, consumer continues to lead as Edelman’s primary revenue driver with 30% of its business — including heavyweight clients like Unilever, Tupperware and Starbucks — residing in this practice. Edelman forecasts increasing collaboration between its consumer and corporate practice (which makes up 17% of its business).

He expects to name a new head of its global consumer practice — likely an internal promotion — in coming weeks. The post has been vacant since Jennifer Cohan took a new role as president of Edelman New York. Former head of Edelman's New York office Russell Dubner now leads the US.

Edelman’s tech practice, however, has suffered since the departure of global tech lead Pete Pedersen in early 2013. While former Better Place communications head Joe Paluska stepped into the role, he left Edelman in June after slightly more than a year. A new global head of tech — likely an internal promotion — is expected to be named in coming weeks.

“Arguably, our tech practice went backwards,” Edelman said, pointing to losses like HP shifting it brand work to Porter Novelli and corporate work to Ketchum; also Hootsuite moving to Blanc & Otus. “But we still have a good array of clients — HP, Adobe, AMD, Symantec. And Samsung is one of our biggest clients that stretches across tech and digital. We’ve had some big wins like Rackspace. But do we have a social network? No. A big play digital publisher? No.” 

Meanwhile, healthcare — about 17% of the agency’s business — is growing at a pace slightly faster than the agency average, in part, because of demand in health services like the work Edelman did with CVS around its decision to abandon tobacco sales. Other healthcare clients include Humana and MD Anderson.

Public affairs has lagged as a major powerhouse for Edelman, making up only 10% of overall revenues. But Edelman says the firm is “ambitious” on this front and will name a new head of this practice — an external hire — in coming weeks. The position has been vacant since Katie Burke left last year to become EVP of  marketing and communications at Nielsen.

Matter, Edelman’s sports and entertainment arm, holds steady at $18 million with most of its growth coming from experiential marketing and sports. Earlier this year, Matter co-founder Andy Marks stepped down and Gail Becker has been running the division in the interim.

Edelman says the firm is considering partnerships with talent agencies to bolster its offering in this area. Also this year, Edelman became the first PR agency to win the Grand Prix prize at Cannes for its collaboration with talent powerhouse CAA for Chipotle’s Scarecrow campaign.

 

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