Hill & Knowlton: Agency Business Report 2007

"We had a phenomenally successful year pretty well across the board," says Paul Taaffe, H&K CEO, adding that healthcare accounted for one-third of new-business revenue in 2006 and remains a priority.

"We had a phenomenally successful year pretty well across the board," says Paul Taaffe, H&K CEO, adding that healthcare accounted for one-third of new-business revenue in 2006 and remains a priority.

One goal is to build up the consumer practice. "We're pretty optimistic about the future," he says.

But the 15 senior departures were hard to ignore. Some caused yet-to-be-filled voids, namely the LA GM post. Taaffe and Sachs say they are not concerned, as many of the departures didn't go to work at other firms, but went in-house. "We're growing quite an impressive alumni list," Sachs says.

As far as global expansion, Taaffe notes that he would like to see the agency become more active in India.

Key facts

Principals: Taaffe, CEO; Mary Lee Sachs, chairman of US
Ownership: WPP Group
Subsidiary companies: Dome HK, Rockey Hill & Knowlton, Blanc & Otus, Carl Byoir
Offices: 16 in the US; 54 more around the globe

Staff
H&K made a number of senior hires in 2006, including AnnaMaria DeSalva, worldwide director of healthcare; and SVPs Daniel Montoya, Aron Ezra, and Monisa Patel. Former US transportation secretary Norman Mineta joined as vice chairman. However, there were many senior departures, including Doug Dome, president of Dome HK; Judith Frost Mackey, US director of the corporate and financial practice; Bonnie Goodman, EVP and GM of the LA office; and Ellen Shedlarz, chief talent officer.

Regional performance
H&K noted double-digit growth in Canada, Australia, the Mideast, China, Japan, Western Europe, Latin America, and in the US, San Francisco and New York.

Practice areas
The agency has practices in corporate and financial communications, marketing communications, public affairs, online (digital), and communications mapping, as well as two sector-specific areas of expertise: healthcare and pharmaceutical communications, and technology. The communications mapping service was new for 2006 and helps clients identify and visualize the influencers and commentators who drive coverage and generate traction with the media. The agency relaunched the digital practice in 2006 to transition from a largely interactive production entity to a practice dedicated to providing digital strategy. H&K reports that healthcare, technology, issues/crisis management, digital, and sports marketing stood out. But for an agency with strong DC ties, its lobbying practice saw a decline "as a direct result of the run-up to the US elections."

Accounts
H&K added several new accounts, including Johnson & Johnson, Beijing Olympics Organizing Committee, Government of Dubai, and BEA Systems. It expanded its work for HSBC into the US, particularly with the sports marketing group. VeriSign ended its relationship with H&K in 2006.

Financial performance
While H&K would not provide specifics on its financial performance, it says it experienced top- and bottom-line growth.

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)
WPP Group, PLC

Name of subsidiary companies
Dome HK, Rockey Hill & Knowlton, Blanc & Otus, Carl Byoir

Has your ownership status changed in the past year? If yes, please explain
No

Name of global CEO and US CEO (or most senior equivalent)
Paul Taaffe, global chairman and CEO, US CEO

Name of person, if any, the most senior person named above reports to
As above

What is your current headcount?
Our parent, WPP, is a public company listed on the NASDAQ in the US, as well as on the London Stock Exchange. Therefore, the Group is subject to the provisions of the Sarbanes-Oxley Act. Our US-based legal advisors have advised us that we could be in violation of the law if we supply revenue and other financial data to publications and professional bodies for the purposes of compiling league tables in their prescribed formats, which are not consistent with GAAP (Generally Accepted Accounting Principles.)

How has your headcount changed since FY 2005?
We are unable to share this information due to the Sarbanes-Oxley Act.

What was the percentage of staff turnover in 2006?
We are unable to share this information due to the Sarbanes-Oxley Act.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company
Listed below is a selection of our 2006 hires:

Name

Job Title

Previous Employment

Monisa Patel

SVP

Corporate Communications Consultant

Katherine Saunders

VP

Development Consulting International

Douglas R. Schneider

SVP

Ruder-Finn

Timothy J. O'Keeffe

VP

Fleishman Hillard

Michael Sherman

SVP

NYC Government

Denise N. Gordon

HR director

Deloitte & Touche

Melissa L. Robinson

SVP

Fleishman-Hillard

Rebecca L. Relic

SVP

US Depart. of the Treasury

Harald O. Stavenas

VP

US Government

Steven H. Becker

VP

King Broadcasting

Ryan J. Barr

SVP

Atari

Norman Y. Mineta

vice chairman

US Government

Christiaan G. Brown

VP

Porter Novelli

Malcolm C. Grace

director

Office of Rep. Linda T. Sanchez

Daniel D. Dent

VP

Citigate Cunningham

Nicola J. Taylor

SVP

Ketchum

Ana M. Andreescu

VP

Mercury Interactive

Robert D. Burns

VP

H&K London

Robert S. Tulipani

VP

JWT Specialized Communications

David L. Sharp

senior counselor

Sharp Consulting Group

AnnaMaria DeSalva

worldwide dir healthcare

GCI

David J. Kyne

SVP

Chamberlain Communications

Claudia J. Husemann

SVP

Intel

Jin Li Allen

SVP

GCI

Deborah L. Nelson

VP

CNN

Mitchell B. Derman

VP

 

Peter H. Imbres

VP

Affinitive

Aron Ezra

SVP

The Advisory Board Company

Daniel C. Montoya

SVP

US Dept of Health

What senior staff have departed the firm? Please state name and previous title

Name

Job Title

Steven Singerman

SVP

Peter Jeffries

SVP

Erica F. Keane

SVP

Paul Oestreicher

head, US healthcare practice

Judith Frost Mackey

US director - corp & fin

Thomas J. Reno

EVP

Quinn Daly

general manager

Vince P. Hulbert

SVP

Gregory Spector

CEO

Tina-Marie A. Adams

SVP

William D. Dome

president

Sally A. Barton

SVP

Bonnie M. Goodman

EVP

Ellen J. Shedlarz

chief talent officer

Krista M. Hildebrand

general manager

Please list any other senior management changes, including restructures and significant, senior-level promotions
N/A

Have you made any acquisitions in the past year, or merged with another agency?
No

How many wholly owned offices do you have globally? Please list with agency names and cities under the following headings. Add majority-owned offices in parentheses.
We have 70 offices in 40 countries
North America:US - 16, Canada - 6
Latin America - 8
Europe - 24
Africa/Middle East - 7
Asia Pacific - 9

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.
Europe - Feedback H&K, Warsaw, Poland
Asia Pacific - H&K Synergy Communications, Seoul, South Korea

What offices opened in 2006 or early 2007? (State when)
N/A

What offices closed in 2006 or early 2007? (State when)
N/A

Which regions, US and globally, are growing, and why?
All regions experienced growth however we experienced double digit growth in Canada, Australia, Middle East, China, Japan, Western Europe, all of LatAm and in the US, San Francisco and New York.

This growth can be attributed to strong GDP growth across the various regions plus local office, practice and new business initiatives. San Francisco had a strong 2006 on the back of the technology resurgence while Australia's performance was strong due to a new strengthened management team.

Practice areas

How many practice areas do you have? Please list.
Corporate & Financial Communications
Marketing Communications
Public Affairs
Online (Digital)
Communications Mapping

Plus, two sector specific areas of expertise:
Healthcare & Pharmaceutical Communications and Technology

Which ones are new?
H&K's online practice was re-launched in 2006 and we also introduced our new communications mapping offering.

Of those, which ones are part of the core strategy of the agency?
Both are a core part of H&K's ongoing strategy.

Which practice areas have been phased out in the past year?
N/A

What practice areas showed the most growth? Please elucidate.
All of our practices areas showed growth in 2006 however. The areas however, that particularly stood out were healthcare, technology, issues/crisis, digital and sports marketing.

Which practice areas showed the least growth? Please elucidate.
As a direct result of the run-up to the US elections, lobbying in the US saw the least growth.

What is the distribution of accounts across practice areas?
We are unable to share this information due to the Sarbanes-Oxley Act.

Accounts

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
Business Objects - EMEA and US, Organon - , Johnson & Johnson - EMEA and US , BEA Systems - US, Beijing Olympics Organizing Committee (BOCOG) - APAC and US, Government of Dubai - US, EMEA and APAC, DHL - EMEA and US, ING - EMEA, HSBC - US and EMEA, Nasscom - US, EMEA, Intel - EMEA.

Of your 2006 wins, how many were across three or more countries?
Various, see above list.

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
VeriSign was the only key account we lost in 2006 and it was predominately based out of the US

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
HSBC expanded into the US and started working with our sports marketing group, the HP account moved into Australia, China and the US region while Roche expanded its European H&K coverage.

What proportion of your clients are on a retainer?
N/A

Has this changed over the past year?
N/A

Performance

What was your 2006 global (including US) revenue?
We are unable to share this information due to the Sarbanes-Oxley Act.

What was the % change over 2005 global revenue
We are unable to share this information due to the Sarbanes-Oxley Act.

What was your global profit margin in 2006?
We are unable to share this information due to the Sarbanes-Oxley Act.

What was your 2006 US revenue?
We are unable to share this information due to the Sarbanes-Oxley Act.

What was the % change over 2005 US revenue
We are unable to share this information due to the Sarbanes-Oxley Act.

What was your US profit margin in 2006?
We are unable to share this information due to the Sarbanes-Oxley Act.

Did you experience top-line or bottom-line growth in the past year, or both? Please elucidate.
H&K has experienced both top-line and bottom-line growth during 2006.

How much of your growth was organic, and how much was due to new business won?
This varies according to the region however an estimate would be a 50/50 split.

How did your performance, in terms of revenue and growth, meet expectations you had for the year? Please answer this even if you have not submitted revenue figures, including any information that characterizes your 2006 performance.
Our performance in terms of revenue and growth exceeded our expectations and the category pre acquisition.

Please briefly outline any initiatives undertaken in 2006 that add to your agency's story, such as staff development/training, fundraising/charitable initiatives, community programs, business partnerships, etc.
Highlighted below are various initiatives undertaken in 2006:

Communications Mapping
H&K has launched a new client service called communications mapping. The service uses powerful software to identify and visualize the influencers and commentators who drive coverage and generate traction with media. The new unit will be headed by a new hire, Jim Beakey, and will report to chairman and CEO, Paul Taaffe.

The H&K communications mapping service will offer an exclusive range of tools developed by H&K spin-off company ComMetric group. These include the Influencer Network Analysis (INA) methodology that interprets the relationships, momentum, influence and "pass-through" of ideas in mainstream and social media to identify key influencers.

H&K Digital
H&K has redefined its digital group to meet the challenges of the rapidly-changing communications environment. We successfully transitioned from a largely interactive production entity to a valuable and high profile practice founded on providing sound digital strategy to our clients across all practice disciplines. In the space of one year we have built a practice offering based on three emergent digital trends - conversation, community and content - we provide insight and strategic counsel to a wide range of clients including HP, Deloitte, adidas, Sankyo, Forest Labs Kauffman, Business Objects and THX.

First Chair
First Chair is a training program specifically designed for H&K's mid-tier, rising talent to increase their
effectiveness in business problem-solving, client development, team leadership and self-management with client and internal teams. The intensive 3-day program allows the mid-tier to interact in an intensive simulated fashion with the senior talent of the firm who participate as faculty and role players.

New Hire
Former U.S. Secretary of Transportation Norman Y. Mineta joined H&K as vice chairman effective July 24. Secretary Mineta's diverse experience and his extensive knowledge of public policy and business enable him to provide valuable counsel to Hill & Knowlton clients on a broad range of domestic and international issues. Based in the Washington, D.C. office, he reports to Paul Taaffe, chairman and CEO.

Consumer Technology Survey
H&K's consumer technology practice in partnership with sister firm Penn Schoen & Berland launched its first Consumer Technology Survey. The survey investigated how consumers are driving technology uncovering so interesting facts that further support the Gartner "consumerization of IT" theory.

New Business Initiatives
In 2006 H&K began targeting alternative energy and emerging market multinationals and governments as clients.

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