Burson-Marsteller's growth in the U.S. will be about 16 percent in 2000, the highest level in nearly a decade, and most of it organic. That will give the firm revenues of $175 million in the U.S., and about $300 million globally-putting it in a virtual three-way tie for the number one spot with Weber Shandwick and Fleishman-Hillard. New business in the U.S. included merger communications for American Home Products and Warner Lambert, the launch of Astra Zeneca's migraine drug Zomig and Glaxo-Wellcome's asthma treatment Serevent, and the introduction of sports website mvp.com. The firm continues to pick up high-profile, high-stakes international assignments, too: developing a global positioning for the new government of Hong Kong; handling the merger of Singapore Telecom and Cable & Wireless; handling pan-European public affairs for the European solvent industry trade association.
Burson-Marsteller remains a market leader in most of the key U.S. geographies-New York, Chicago, Washington, Los Angeles, and San Francisco-despite its move to a practice area structure that de-emphasizes geography. In most markets, the firm can offer both corporate and consumer expertise, and it has the ability to deliver almost any program on a national basis.
Burson-Marsteller has the most impressive list of international offices among all the major agencies-which is both a boon (the firm is still the first choice for clients looking for genuine global reach) and a curse, since many of those smaller dots on the map would probably not be placed if the agency was building from scratch today. The fact that it draws so much revenue from overseas makes B-M vulnerable to economic downturns or under-performing offices-two years ago it was Asia, now it's Europe, which was flat last year-as well as currency fluctuations. But B-M Europe has now moved back to a geographic structure-a reversal of the practice area commitment the agency made five years ago-more suited to local conditions, and that should spur growth. Meanwhile, the firm is picking up high-profile wins in Asia, like the Hong Kong government's economic development program, and expanding in Latin America, where it has a strong e-commerce practice.
When you think of Burson-Marsteller you think of blue-chip clients like Andersen Consulting, Ford, Johnson & Johnson, Philip Morris, and Unilever, and big corporate assignments, but consider this: B-M has more than 150 Internet-related clients, ranging from the e-commerce group at Andersen to major players such as HotJobs and MSN.com to websites such as Gamers.com, More.com, Tickets.com, and Yupi.com. Those clients have fueled in growth in almost every practice area, with the consumer group and the public affairs practice showing particular strength-the latter boosted by the acquisition of grassroots organizing specialist Direct Impact added yet another dimension to one of the industry's most comprehensive public affairs offerings. The healthcare group, meanwhile, appears to be emerging from a two-year funk just as the technology group is running into problems, with two major accounts--Sun and Sprint--in jeopardy. The agency is also developing specialty groups in areas ranging from social responsibility to mergers and acquisitions to Internet marketing.
B-M continues to attract plenty of top talent, including more "non-traditional" hires than most of its competitors, and has plenty of depth at the senior level-although turnover has been higher in recent years than it was in the agency's heyday. Key hires in 2000 include Roy Clason, former head of worldwide communications for Dell and now head of the New York brand marketing group; Heidi Sinclair, returning to head the technology practice; Cairns & Associates veteran Lisa Kovitz; Clinton deputy press secretary Barry Toiv; James Harkness, former head of the change management practice at Banner McBride; and media veterans Steve Cox (ex-ABC) and Jack Smith in San Francisco. But B-M has had almost as many key departures, including U.S. president Joe Fisher (replaced by Chet Burchett); crisis expert Ray O'Rourke, who joined Morgan Stanley; Gus Weill, who is heading up PR21; and Bill Fasig, who took the top corporate position at Compaq Computer.
Chris Komisarjevsky acknowledges that there is a perception of Burson-Marsteller as a bureaucratic, hierarchical organization, but insists the reality is quite difference. A culture that once required people to get the approval of a dozen different superiors before making a decision is trying to encourage more risk-taking, and to provide more opportunities for younger staff members to advance quickly. B-M supplemented its already impressive professional development program with a new commitment online learning, developing a sophisticated career center as part of its intranet and making sure employees are aware of all the opportunities a 2,500-person firm has to work for. The agency also has one of the best alumni relations programs of any major agency-an attempt to leverage its heritage while changing to stay abreast of the times.
Over the past two or three years, Burson-Marsteller's chief knowledge officer Leslie Gaines-Ross-once the driving force behind Fortune's Most Admired Corporations initiative-has developed a series of studies designed to shed light on the CEO's role in corporate reputation. The resulting products have quantified the link between CEO reputation and corporate image, plotted the "life-stages" through which CEOs progress, and helped to position B-M as the authority on communicating from the corner office. The agency even operates a website, CEOgo.com, providing news and information on the CEO's role in reputation management. On another front, the firm has conducted research into the critical role a handful of "e-fluentials" play in shaping opinion on the Internet.
If you want an indication that Burson-Marsteller is still the number one choice for companies in life threatening situations, consider that the firm was PR agency of record for both Ford and Firestone-the two companies at the center of the biggest public relations maelstrom in recent years. B-M resigned Firestone quickly, and while there were other factors that led to the tire maker taking the brunt of the bad news barrage. The firm also showed its strength and depth providing strategic counsel to Andersen Consulting on its divorce from Arthur Andersen and its subsequent name change to Accenture. Other high-profile programs included a major branding initiative for Unilever, the launch of Hewlett-Packard spin-off Agilent Technologies, the repositioning of Champion International, and issues management counsel for Coca-Cola.
After years as the blue-chip public relations agency brand, B-M saw its leadership position erode throughout the 90s, thanks to internal problems and the fact that several other agencies improved dramatically over the same period. But in the past 24 months the firm has been moving to reestablish its leadership position, with a marketing campaign that underscores its "perception management" approach and its commitment to helping companies build "communications capital." With additional research into CEO reputation and Internet opinion leadership, the firm is establishing itself as a thought leader again-in a way that benefits the entire industry.
The acquisition of Young & Rubicam by WPP Group has to be a boost to Burson-Marsteller, which has languished for the past couple of years while rivals have done the kind of deals that have helped them play catch up. WPP will provide the support that has been missing, which means that if B-M wants to grow by acquisition it now can. At the same time, the firm will continue to focus on building strong, multidimensional relationships with global clients-about 10 "key client relationships," served by multiple practices and across multiple geographies, account for about 25 percent of B-M's revenues, and the firm would like to build on those relationships while developing more such partnerships.