Domestic growth was a very healthy 37 percent in 2000, and GCI ended the year with close to $60 million in U.S. fees. Still, with high turnover among the senior ranks, it was difficult to resist the conclusion that the firm lost some of the momentum it gained in 1999, when Inside PR named GCI its Agency of the Year, and the gap between GCI and the very largest agencies continued to widen. But the disruptions haven't hindered GCI's new business performance, with major wins including Alta Vista, Glaxo Wellcome, Goldman Sachs, MP3.com, The New York Times, and Radio Shack, while the firm has also expanded its relationships with clients BellSouth, DuPont, Intel, Nike, Novartis, and Seagram. Losses included Sun Microsystems, which consolidated its PR efforts with rival Burson-Marsteller.
The New York office enjoyed another impressive year, up better than 30 percent, but the star performer in the GCI network was Atlanta, which grew by close to 50 percent to around $11.5 million under the leadership of Bill Marks, and is home to several key clients, including BellSouth. The agency's presence in Chicago is expanding following its acquisition two years ago of Dragonette, but acquisitions in San Francisco failed to produce similar returns. While GCI has fees of around $14 million in the Bay Area, growth has been comparatively slow, hindered by the problems of integrating the former Kamer-Singer into the firm's existing office, and by some key personnel departures. Further south, in Los Angeles, GCI is under new leadership but still struggling to establish itself. A new office in Boulder will focus on technology. Washington, meanwhile, presents a quandary. GCI's sister company, APCO, has a formidable presence there, but the two firms are not working as closely together as some had anticipated and at some point Feldman and his team will need to have a branded presence in the nation's capital.
Under the direction of Ralf Hering, the European operations are not only growing, they are growing the right way, with the addition of important strategic consulting assignments that involve GCI at the highest level of client organizations. Germany is particularly strong, as is the U.K., where the addition of a formidable financial relations capability supplements an already strong offering. While Asia and Latin America have some catching up to do, GCI is now winning multinational business that would have gone elsewhere two or three years ago. The agency now serves several Procter & Gamble brands in the U.S., Europe, Asia, and Latin America, for example, while British Airways, Deloitte Consulting and Novartis are clients in the U.S. and Europe.
Two years ago, GCI took over the operations of sister company GTFH, merging its heavy-duty health and medical capability into its own consumer-focused healthcare practice. Today, the healthcare group has fees of close to $20 million in the U.S. ($35 million worldwide) and is one of the agency's most dynamic practices, with expertise in pharmaceuticals, healthcare providers, medical technology and biotech. The agency's consumer technology expertise is equally impressive, with client wins such as Alta Vista and The New York Times digital business keeping the agency on track. GCI also continues as a leader in employee communications and organizational consulting, rebranding its BoxenbaumGrates unit as GCI Consulting and broadening its focus. The next step is creating business units that serve even finer market segments, breaking the healthcare practice into cardiovascular, oncology, and women's health units, for example. But senior staff departures in corporate (Jim Cox) and consumer (Carla Stanmyre) have held up progress in those practices, and the firm is still struggling to build a name in public affairs.
GCI has found new roles for several senior executives, naming Bob Pearson president of North America, Ilyssa Levins worldwide managing director of healthcare and Diane Gleason executive VP and director of global Internet strategies, and the firm has added several key executives, including Ellen Golden from Ruder Finn and Tom Reno from Makovsky & Company in New York and Bob Wynne from Bank America and Robert Berger from Edelman in San Francisco, but probably the most important personnel move of the past year was the addition of Lori Kafafian, formerly the highly-regarded head of HR at Ketchum, as worldwide managing director of human resources. More troubling are the losses, including Greg Spector (head of the San Francisco office and the tech practice) and his replacement as the leader of GCI's Bay Area operations, Sam Singer; corporate practice leader Jim Cox and his consumer counterpart Carla Stanmyre; and former New York general manager Aaron Kwittken, who at least became a client in his new position.
When Bob Feldman joined GCI from Ketchum four years ago, there was a feeling in the industry that he would create a culture at his new agency that was simply "Ketchum lite." The latter firm was, after all, regarded as one of the best workplaces in the industry. But what Feldman had in mind was obviously something more entrepreneurial, and over the past year or so a distinct culture-one more entrepreneurial than many of its peers-has begun to take shape. In an attempt to institutionalize growth, GCI has given every executive at VP level or above his or her own business unit, and thus a focus on profit or loss. In one case, the agency created a new "boutique," Principal Communications, that will handle conflicts. It's a bold experiment, and it has helped the agency attract several ambitious young execs-although there have been some departures too. With his former Ketchum colleague Lori Kafafian heading HR, Feldman is determined to position GCI as a progressive employer, what he calls a "global boutique." If it works, it will pay off big time in attracting not only people but also clients.
The acquisition two years ago of Boxenbaum Grates didn't add a great deal in terms of revenues, but it provided GCI with a goldmine of ideas, since Gary Grates is one of the industry's forward thinkers. The new GCI Consulting unit, an outgrowth of that deal, has worked on employee communications and labor relations issues with General Motors, counseled Pharmacia on merger integration, and conducted leadership workshops with Visa International, developing relationships with senior management at some key clients. The consulting group has also developed original products, including a tool for analyzing the cultural obstacles to successful mergers.
GCI's work for MP3.com demonstrates how its uniquely entrepreneurial culture is conducive to working with emerging growth companies and also how it can take a client with relatively straightforward marketing goals and develop a more multifaceted relationship. GCI initially worked with the company on its dime-a-download initiative, maximizing special events to increase visibility, but soon graduated to crisis management and litigation support as copyright issues came to the fore. The firm has also provided litigation support to clients such as Glaxo Wellcome and Sears.
There's no doubt that GCI has developed a stronger strategic offering for clients and a more distinctive work environment over the past two or three years, but the brand remains largely bland and undistinguished. More effort needs to into explaining what GCI stands for, and why it stands out.
GCI is among the smaller of the top tier agencies, which puts it in a precarious position as the industry continues its consolidation. While it has made some impressive acquisitions-including Dragonette, Kamer Singer and Boxenbaum Grates in the U.S.-parent company Grey doesn't have the deep pockets to fund the kind of growth necessary to catapult GCI into the top five. A more pressing concern has to be the lack of a Washington office and a public affairs capability-both prerequisites to being taken seriously as a first rate full service agency. A closer partnership with sister company APCO is the obvious solution, but barring that GCI needs to establish a branded presence in D.C., and soon.