Charting the future of public relations


Having demonstrated its ability to outperform its publicly-traded rivals in good times, in 2009 Edelman showed that independence was no hindrance in a more difficult environment.

Holmes Report

Holmes Report


While the major holding companies were reporting declines in public relations revenues of between 6.5 and 11 percent, Edelman saw its North American fee income virtually unchanged—down 0.3 percent, to be precise—so the firm was able to claim once again that it significantly outperformed its peer group in 2009. New business in 2009 came from a broad range of clients including Bausch & Lomb, Chevrolet, ConAgra, Jim Beam, Kraft, Northwestern Mutual, Novartis, PNC, Qualcomm, Sara Lee, Symantec, and Zogenix. There was double digital growth from some of the firm’s largest and longest-standing clients, including Unilever, Walmart and SC Johnson. Just as impressive, the firm held on to all of its top clients, a group that includes Johnson & Johnson, Samsung, Walmart, Microsoft, Starbucks, AstraZeneca, Unilever, GE, HP, Novartis, Pfizer and Shell: 12 global clients that contribute more than 30 percent of the firm’s revenues.
Edelman has close to 1,750 people in the U.S., with more than 500 in each of its two powerhouse offices—New York and Chicago—and more than 200 in Washington, D.C. The firm is also among the market leaders in Silicon Valley, Atlanta, and Seattle. The biggest U.S. success story of 2009 was the turnaround of the firm’s San Francisco office under the leadership of Jay Porter, who has doubled the size of the operation to around 60 people. Other U.S. offices include Austin, Dallas, Los Angeles, Miami, Orlando, Portland (Ore.) and Sacramento. The firm’s Canadian operations, meanwhile, have grown by better than 20 percent per annum since 2006 and now contribute $17 million in revenues. And Edelman’s Latin American network saw 7 percent growth in 2010, with Brazil leading the way.
After a four-year period during which it almost doubled in size in Europe, Edelman experienced slower growth in its 2009 financial year, although there was new regional business from HP, AstraZeneca and Starbucks and it continued to outperform the majority of its peers. And with fees of close to ?70 million it can match most of them in terms of its regional strength. The flagship U.K. operation continues to account for about half of regional revenues, and ranks it among the market leaders, particularly in consumer and healthcare categories. The second largest market is Germany, and the firm is a top five player in Italy and a significant force in Paris, despite some recent turnover at the senior level. Edelman has 16 offices in eight Asia-Pacific markets, providing coverage of all the major markets while handling emerging countries through affiliates. In China, there are more than 160 people divided between the Edelman and Pegasus brands, supplemented by substantial operations in both Hong Kong and Taipei. The firm has solid operations in Tokyo and in Australia, having made significant new hires in each market in recent months. There was new business from some major global clients, including Microsoft, Starbucks and Wal-Mart.
With close to 220 people in Washington, D.C., Edelman has established itself as one of the leaders in the U.S. public affairs business, and strengthened its offer last year with the acquisition of Grassroots Enterprise, which provides enhanced digital capabilities in the policy arena. The firm’s consumer practice, a leader since the earliest days of the firm, grew by 14 percent last year and is now worth close to $100 million in fees, with new business from Chevy, Second Life, Red Lobster/Olive Garden and the ASPCA, among others), with the goodpurpose cause marketing operation doing good work for Brita, the American Egg Board, Starbucks, Ben & Jerry’s and others). On the corporate front, the company continues to provide counsel to clients such as Shell, Walmart, GE and Motorola, with expertise in corporate reputation, crisis and issues, financial communications, employee engagement, CSR and business-to-business marketing. The healthcare group continues to thrive, up by about 2.3 percent, and the technology sector benefited from a new focus on clean tech and growth among big clients such as Microsoft, HP, Adobe and Samsung. Finally, the firm’s digital practice grew 22 percent and now accounts for $30 million in fees.
Dan Edelman continues as chairman, Richard Edelman and chief executive and Matt Harrington as president and CEO of North America, supported by a stable and veteran leadership team that includes Nancy Ruschienski, Nancy Turett, Janice Rotchstein, Gail Becker, Rob Rehg and Mitch Markson. There were some interesting new additions in 2009, including Owen Rankin, who joined from Johnson & Johnson to lead the firm’s PepsiCo and Bank of America work; digital experts including Michael Brito (formerly with Intel), Dave Armano (Critical Mass), Kevin Roe (Razorfish), and Bruce Anderson (Dell); crisis and litigation expert Harlan Loeb, formerly of FD; Kristian Darigan of Cone, who joins the firm’s goodpurpose cause marketing group; and Waggener Edstrom veterans Doug Almacy in D.C. and Tim Smith, who will run public affairs in the Pacific Northwest.
A 48-hour “public engagement” jam in October focused on the firm’s new intellectual approach (see below), encouraging employees to adapt seven “core behaviors,” including “listen with new intelligence,” “participate in the conversation,” “create and co-create content” and “embrace complexity.” More conventional professional development activity includes a best-in-class social media training program, which includes a reverse mentoring effort (a smart idea that became the subject of some silly criticism during the year) and a “belt” system that saw close to 700 people gain accreditation during the year. Such efforts continue to contribute to the firm’s growing reputation as one of the industry’s best workplaces: it was our Best Large Agency to Work For last year.
Edelman owns the most valuable piece of intellectual property in the public relations industry over the past decade—its comprehensive, global Trust Barometer research—and has been out in front of most of the big trends and issues shaping the future of the business: it was a pioneer in digital and social media, and took the arrows in the back to prove it. Now the firm is rallying around a new banner: public engagement. Inside the firm, Edelman describes this new approach as “an imperative, a way of thinking and a set of core behaviors” based on changes in “how people and organizations connect, organize, share, and advance mutual interests.” The bottom line, if clients buy in, will be counsel that focuses on how organizations behave, not just communicate.
Much of Edelman’s most interesting work continues to involve its impressive digital capabilities. For eBay, for example, the firm created a pop-up store in Manhattan; launched theinsidesource, the company’s own media outlet; and led a foray into high-fashion in partnership with designer Narciso Rodriguez. For the American Heart Association, the firm provided digital communications support for the Go Red for Women campaign. For Ben & Jerry’s, it created a fun “flip your text” site to promote the launch of Flipped Out sundaes. The firm picked up five SABRE Awards, for its work with Starbucks (the launch of its Via ready-brew product), Microsoft (support for the Xbox at E3), eBay (the “Let’s make a daily deal” campaign), Schering-Plough (a nasal allergy campaign), and the Business Roundtable (healthcare reform leadership)—a testament to the diversity of the firm’s capabilities.
Edelman has the strongest brand of any major public relations firm: it is clearly differentiated by its status as the only independent among the top 10; it has a clear point of view, articulated fearlessly by Richard Edelman and his leadership team; and it promotes itself via a wide range of research, all designed to underscore its key strengths. The long-running and oft-quoted Trust Barometer is the most prominent marketing platform, creating the foundation for media interviews, conferences and seminars, but the firm has been conducting more targeted research on cause-marketing (its goodpurpose study), healthcare (the Health Engagement Barometer), and technology (a multinational clean tech survey).
Having demonstrated its ability to outperform its publicly-traded rivals in good times, in 2009 Edelman showed that independence was no hindrance in a more difficult environment. In addition to beating the industry in terms of income, Edelman continues to be one of a handful of firms setting the agenda for the public relations industry. Having pioneered much of the industry’s digital best practice, the firm is now preparing for a future in which PR firms are content providers in a broader sense, making eye-catching hires on both sides of the Atlantic to ensure continued leadership. And the firm continues to take advantage of its independent status to attract both talent and acquisitions.
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