Arun Sudhaman 14 Feb 2017 // 6:30PM GMT
NEW YORK — Edelman has reported 2016 revenue of $875m, with growth slowing to 1.7% on a like-for-like basis at the world's largest PR firm.
In reported terms, growth reached 2.4%, or 4.4% on a constant currency basis, compared to revenue of $854m in 2015. It marks Edelman's slowest rate of growth since the global financial crisis in 2009.
Unlike in previous years, the firm declined to provide a geographic breakdown of numbers, noting only that growth numbers did not differ much between the US and non-US regions.
Edelman CEO Richard Edelman blamed economic uncertainty for the slowdown, which comes after several years of high single-digit or double-digit growth, helping Edelman become the largest PR firm in the world from 2011 onwards. Margins remained the same.
"We worked really hard," he said. "It’s more of a macroeconomic and political kind of context. I think clients just got cautious. It's a pause."
In particular, Edelman pointed to a slowdown in the UK and Europe after Brexit, along with "very cautious" clients in the US from July onwards. "Star performers" included Japan, Korea, India and France, while China and the Middle East — where Edelman recently announced layoffs — slowed.
Growth was also hit, said Edelman, by a slowdown in healthcare spending and drug approvals, along with a "substantial transition" in the firm's digital business. With community management budgets moving in-house, Edelman noted that the firm's digital operations — which account for 20% of revenue — are reorienting themselves towards such areas as influencer engagement, search, video content and paid media.
"We over-index on digital and pharma, so the transition in digital and pharma was significant," said Edelman.
Also, Edelman believes that CCO budgets have declined, partly due to economic uncertainty, leading to a slower pipeline of business. "MNCs are spending money in fewer markets."
However, the Edelman CEO remains bullish about this firm's business, noting that revenues are likely to grow 5% in the first quarter of this year. Last year's key wins, furthermore, included HP, Stanley Black and Decker, Wells Fargo, Bacardi, KFC and Rockwell.
"We are half way across the river in our transition to being a true communications marketing firm," said Edelman, noting that the firm has hired 500 paid, creative and planning employees in the last two and a half years.
"It will pay off, I’m convinced," said Edelman. "We’re still learning how to win in bigger, integrated pitches. If we’re going to make this transition, we have to make this transition in creative and planning talent."
Edelman's nearest PR competitor, Weber Shandwick, last week reported mid-single-digit organic growth in 2016.