MSLGroup: Agency Business Report 2007

As the cornerstone of Publicis Groupe's PR operation, MS&L is shouldering a lot of responsibility, and indications are that it didn't quite meet its goals. But the firm says it did make strides this year, whether it was in the implementation of new practices, senior-level hires, or key account wins.

As the cornerstone of Publicis Groupe's PR operation, MS&L is shouldering a lot of responsibility, and indications are that it didn't quite meet its goals. But the firm says it did make strides this year, whether it was in the implementation of new practices, senior-level hires, or key account wins.

While MS&L added key global accounts like Heineken USA to its client roster, Mark Hass, CEO of MS&L, notes that an equal part of its success has been due to the ability to grow organically with its largest clients. "Half of our business is based on [our] 10 largest clients and those clients are growing," he says.

Hass points to the agency's research and digital teams as two that will be especially important in the next year. "[Research is] part of our core direction to redefine what we're doing to make our offering broader and deeper," he says. "The way you do it is with research and taking advantage of the digital practice. Digital never stands still - you have to constantly evolve it. You put those two things together and get a unique point of view."

Not surprisingly, the agency's Ann Arbor, MI-based digital practice delivered agency-leading profitability and growth. That digital expertise is bound to prove valuable as MS&L looks to take on more work from its existing clients. Hass notes that having a "preferred position" inside the Publicis Groupe gives it advantages such as being able to work with newly acquired agency Digitas. Such collaborations will undoubtedly prove valuable to clients looking to take advantage of opportunities in the evolving digital space. "We're in a very good place to grow quickly and be more important to our most important clients," Hass says.

As always, another priority for the agency, Hass says, is increasing its global presence. MS&L continued to expand internationally in 2006, opening five overseas offices and taking over Publicis Dialog operations in Japan and rebranding it as MS&L. For the coming year, Hass cites China and India as two noted areas of interest. The agency hired a new MD in the China office in 2006 and is looking for other potential acquisition targets there. "This year, it would be reasonable to expect us to close a deal in India," he adds.

KEY FACTS

Principal: Mark Hass, CEO

Ownership: Publicis Groupe, as part of SAMS (Specialized Agencies and Marketing Services)

Offices: 9 in the US; 23 rest of the world. An additional three partly owned offices, 13 network partners, and 70 affiliates worldwide.

Revenue: No US information; global revenue is in the $100m-$200m bracket.*

*Agencies were requested to check a revenue bracket

Staff
MS&L's global headcount increased by just 6% in 2006, bringing the total number of employees to 775. (US figures not supplied.) The agency made a number of senior hires in 2006, including Paul Gallagher, SVP, director of media strategy; Peter Harris, SVP and corporate practice leader; and Peter Steere, head of public affairs, Europe. MS&L also made a significant investment in its growing research practice with the hiring of Holly Jarrell, SVP and director of insight and reputation management.

In the consumer arena, the agency hired Liz van Lenten as SVP, consumer practice leader for Chicago; Susan Tyndall as SVP consumer practice leader in Toronto; and Bronwen Andrews, head of food, drink, and nutrition, in London.

The healthcare practice also enjoyed some senior-level additions: Lori Vadala joined as an SVP in New York; Anita Bose also joined as an SVP.

The agency did have a few senior-level departures in 2006, including Nicholas Walters, London CEO, Brenda Lynch, MD in Los Angeles, and Daniel Schutt, SVP in Boston.

Structural changes
MS&L opened offices in Sweden, Oslo, the Ukraine, Japan, Paris, and Brussels in 2006. Also, the JKL Group, a Nordic communications agency, was fully integrated into the MS&L network.

Regional performance
While New York, Atlanta, London, and Stockholm are the firm's largest offices and center of its largest global clients, delivering strong profit performance, the Ann Arbor, MI-based digital practice delivered agency-leading profitability and growth. In Europe, organic revenue growth exceeded 15% as a result of significant investments.

Practice areas
MS&L has four main practices: consumer, healthcare, corporate, and technology. Within these groups, the agency has specialties in such areas as influencer and word-of-mouth marketing, entertainment marketing, consumer wellness, consumer technology, IR, social marketing, and crisis and issues management.

In 2006, the agency's New York office created IM MS&L, a research-driven influencer marketing specialty for the agency, which combines the firm's expertise in word-of-mouth marketing, digital communications, entertainment, research, and media. The firm also added a global healthcare issues management and litigation communications specialty to address the changing business environment for healthcare and pharmaceutical companies. The group comprises five senior MS&L executives who have expertise in media, healthcare, and issues management.

Accounts
MS&L added several new clients to its roster in 2006: Heineken USA named the agency its global AOR, which includes work for its portfolio of brands including Heineken, Heineken Premium Light, and Amstel Light. Other account wins include an AOR assignment for Rogers Wireless and work for Allergen, Cartier, Coldwell Banker, and Bayer. Hass said the agency has increasingly been seeing organic growth from existing clients, including Procter & Gamble and Philips. Key losses include the US Army account, and Hasbro in Boston.

Financial performance
MS&L reported global revenue in the $100 million to $200 million range - though declining to describe US revenue - and noted that it experienced both top- and bottom-line growth. Hass said the firm improved on 2005's financial performance and was close to its expectations for 2006.

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)
Publicis Groupe S.A.

Name of subsidiary companies
N/A

Has your ownership status changed in the past year? If yes, please explain
No, it has not.

Name of global CEO and US CEO (or most senior equivalent)
Mark Hass
is MS&L's global CEO.

Name of person, if any, the most senior person named above reports to
John Farrell,
president and CEO, SAMS worldwide.

What is your current headcount?
775 employees globally.

How has your headcount changed since FY 2005?
It has increased almost 6%, from 732 to 775. We also currently have several positions open in most offices around the globe that we are looking to fill.

What was the percentage of staff turnover in 2006?
Our net staffing change was 1.67% as of 12/31/06.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company
In 2006, we focused on growing not only our revenues and profitability, but also our capabilities in depth and scope. We continued to develop a world-class corporate practice, and bolstered our offering by making several senior hires including Paul Gallagher, SVP, director of media strategy (from CBS News' "60 Minutes"); Peter Harris, SVP and corporate practice leader (from Ketchum) and Peter Steere, head of public affairs, Europe (from APCO Worldwide). We also added Capital MS&L, a financial communications consultancy, and The JKL Group, the Nordic communications powerhouse, to our network.

MS&L has built a research capability, which is headed up by new hire Holly Jarrell, SVP and director of insight and reputation development (from Daniel Yankelovich Research and Roper). Holly and her team have spearheaded a variety of research studies for MS&L, including proprietary research about consumers' attitudes and influencer/WOM marketing.

Our best in class healthcare and consumer marketing practices continued to grow in 2006. In consumer, we formed a new influencer marketing practice called IM MS&L, bolstered our expertise in areas such as fashion/beauty, mom marketing and motion marketing and added top talent including Liz van Lenten as SVP, consumer practice leader, Chicago (from Burson-Marsteller); Susan Tyndall as SVP, consumer practice leader, in Toronto (from NATIONAL); and Bronwen Andrews, head of food, drink and nutrition, in London (from Hill & Knowlton).

MS&L also announced the formation of a global healthcare issues management and litigation communications practice to address the changing business environment for healthcare and pharmaceutical companies. The practice includes five senior MS&L executives who are experts in media, healthcare and issues management, and focuses on helping clients effectively navigate and contain potential damage that comes from issues emerging from an increasingly litigious environment.

MS&L restructured a number of its offices with leadership from outside the agency. We hired Philippe Cherel as MD of MS&L France (from Edelman); Stuart Wilson as London chief executive officer (from Hill & Knowlton); John Hong as MD of China (from Microsoft); and Ed Cafasso, MD of Boston (from Morrissey & Company).

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

  • Kenneth Hong, MD, Hong Kong
  • Nicholas Walters, London chief executive officer
  • Jon Kasle, SVP, Boston
  • Brenda Lynch, MD, Los Angeles
  • Daniel Schutt, SVP, Boston
  • Rich Williams, SVP, Chicago

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

  • Anders Kempe, CEO of JKL Group, appointed MS&L European President
  • Monique da Silva appointed director, business development, NA healthcare
  • Ed Cafasso appointed MD of Boston office
  • Renee Wilson promoted to SVP, director of strategic services and innovation
  • Kim Friedman and Caryn Carmer appointed co-practice directors of NY consumer
  • Andy Tannen named SVP, director of strategy and development, NY corporate
  • Krista Webster named creative director in Toronto
  • Vickie Fite named MD of Los Angeles
  • Kelly McKenna and Jennie Kim named co-practice directors of the West Coast Global Health practice

Have you made any acquisitions in the past year, or merged with another agency?
In 2005, we acquired a majority stake in financial communications firm Capital MS&L and The JKL Group, the Nordic communications powerhouse, was fully integrated into the MS&L network.

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.
MS&L has 32 owned offices:

North America
MS&L Atlanta
MS&L Boston
MS&L Chicago
Hass MS&L Ann Arbor
Hass MS&L Detroit
MS&L Los Angeles
MS&L New York
MS&L San Francisco
MS&L Toronto
MS&L Washington, DC

Europe
MS&L Brussels
MS&L Frankfurt
MS&L London
MS&L Italia
MS&L France
MS&L Norway
MS&L Sweden
MS&L Ukraine
JKL Brussels
JKL Copenhagen
JKL Gothenburg
JKL Helsinki
JKL Oslo
JKL Stockholm
Capital MS&L - London

Middle East
MS&L Dubai
Capital MS&L - Dubai

Asia Pacific
MS&L Beijing
MS&L Hong Kong
MS&L Shanghai
MS&L Singapore
MS&L Tokyo

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.

MS&L has 3 partially-owned offices (less than 51%); 13 network partners (firms within the Publicis Groupe that report through other Groupe structures); and 70 affiliates.

Partially-owned
Andreoli/MS&L - Sao Paulo
Muchnik, Alurralde, Jasper & Assoc./MS&L - Buenos Aires
Hollander van der Mey/MS&L - The Hague

Network Partners
MS&L Athens
Synergy Leo Burnett - Belgrade
Leo Burnett Budapest KFT
MS&L Cairo
Leo Burnett Istanbul
180 Degrees - Warsaw
MS&L South Africa - Johannesburg
Edison Ross MS&L - Nigeria
Leo Burnett & MS&L Cairo
Leo Burnett Kreasindo Indonesia
Hemisphere Leo Burnett - Malaysia
Dentsu Public Relations - Tokyo
180 Degrees - Warsaw

Affiliates
Pierce Communications, Ltd. - Albany
Matlock & Associates, Inc. - Atlanta & New York
Pierpont Communications, Inc. - Austin & Houston
Imre Communications, LLC - Baltimore
Carolina Public Relations Inc. - Charlotte & Columbia
Roop & Co. - Cleveland
Paul Werth Associates, Inc - Columbus
Sunwest Communications, Inc. - Dallas
LeGrand Hart - Denver
Shank Public Relations - Indianapolis
Morningstar Communications Company - Kansas City
The Firm Public Relations and Marketing - Las Vegas
HLD/Blankman Public Relations - Long Island
Everett Clay Associates, Inc. - Miami
Strother Communications Group - Minneapolis
McNeely Pigott & Fox - Nashville
Keating Magee - New Orleans
The Weiser Group - New York
Curley & Pynn Public Relations Management - Orlando
Devine & Powers Communications Group, LLC - Philadelphia
B.J. Communications, Inc. - Phoenix
Maddigan Communications, Inc. - Pittsburgh
Maxwell PR - Portland
McClenahan Bruer Communications - Portland
John Lambert Associates, Inc. - Roanoke
Bouchard-McElroy Communications Group, Inc. - Sacramento
Wilson-Miller Communications - Sacramento

Strategic Communication, Inc - Salt Lake City
Marston & Marston, Inc. - San Diego
Firmani & Associates Inc. - Seattle
O'Connor & Partners, Inc. - St. Louis
Sam Waltz & Associates - Wilmington
Dickins & Asociados - Mexico City
Image Value Management - Costa Rica, El Salvador, Guatemala, Honduras, Panama
Arteaga & Arteaga - San Juan, Puerto Rico
ene/btl - Asunción, Paraguay
Comunicación Estratégica - Bogota, Columbia
Ortega Landa y Asociados - Calacoto, Bolivia
Chucky Reyna & Asociados - Caracas, Venezuela
Lobby PR - Montevido, Uruguay
Genera - Santiago, Chile
De Maruri Publicidad DMP S.A - Ecuador
Esicos - San Borja Lima, Peru
Jarvis Communications - Sydney
Kitching Sims Communications Ltd. - Wellington, New Zealand
Schroder+Schombs Public Relations GmbH - Berlin
Interel Public Relations and Public Affairs - Brussels
C&C-Consultores de Comunicacao, LDA. - Lisbon, Portugal
ACH & Asociados - Madrid & Barcelona
Asesores de Relaciones Publicas y Comunicación - Madrid
Natkin Presse - Paris
MediaTrust Communications - Prague
United Partners Limited - Sofia, Bulgaria
Noack & Partner Communication & Lobbying/MS&L Austria
Pembroke Communication- Athens
Mmd - Central & Eastern Europe (Austria, Bosnia Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Kazakhstan, Poland, Romania, Russia, Serbia, Slovak Republic, Slovenia, Turkey and Ukraine.)
KPMS & Partner - Estonia, Lativia & Lithuania
Jenni Newman Public Relations - Johannesburg
Koteret - Tel Aviv, Israel
Spark Communications Co. Ltd - Bangkok, Thailand
Mai Ab Ltd - Ho Chi Minh City - Vietnam
Corporate and Marketing Communications, Ltd. - Karachi, Pakistan
Hamner & Partners Communications PVT LTD - Mumbai, India
KPR & Associates, Inc. - Seoul, Korea
Communique Public Relations - Seoul, Korea
Huntington Communications - Singapore, Malaysia

What offices opened in 2006 or early 2007? (State when)
MS&L Sweden - January 2006
MS&L Oslo - April 2006
MS&L Ukraine - September 2006
MS&L Japan - October 2006
MS&L Paris - November 2006
MS&L Brussels - November 2006
Capital MS&L in Dubai - January 2007
JKL Brussels

What offices closed in 2006 or early 2007? (State when)
We did not close any offices in 2006/early 2007.

Which regions, US and globally, are growing, and why?
In 2006, our largest offices and the center of our largest global clients - New York, Stockholm, London and Atlanta - delivered very strong profit performance. Our Ann Arbor-based digital practice delivered agency-leading profitability and growth. In Europe, our organic revenue growth exceeded 15% as a result of significant investments.

Practice areas

How many practice areas do you have? Please list.
MS&L is Publicis Groupe's global public relations and corporate communications agency offering a full range of services, including various specialties in four main practices: consumer, healthcare, corporate and technology.

Within these groups, we have specialties such as influencer and WOM marketing; entertainment marketing; consumer wellness; consumer technology; investor relations; MS&L BlogWorks; social marketing; public affairs; corporate affairs; multicultural communications; workplace and employee communications; crisis and issues management; litigation communications; corporate and product branding; financial communications.

Which ones are new?
In 2006, MS&L's New York consumer group created IM MS&L, a research-driven influencer marketing specialty for the agency, which brings together our substantial expertise in word of mouth marketing, digital communications, entertainment, research and media. In November, the team partnered with the Keller Fay Group, a top market research firm, to develop proprietary research about consumers' attitudes and influencer/WOM marketing.

In July 2006, MS&L announced the formation of a global healthcare issues management and litigation communications specialty to address the changing business environment for healthcare and pharmaceutical companies. The group includes five senior MS&L executives who are experts in media, healthcare and issues management, and focuses on helping clients effectively navigate and contain potential damage that comes from issues emerging in an increasingly litigious environment.

As previously mentioned, we also have a new research team dedicated to generating industry and consumer insights.

Of those, which ones are part of the core strategy of the agency?
Inherent in our 5 in 5 growth strategy is that we strive to offer deeper resources and insights, and that we do this in a broader way. The expansion of our digital practice, the launch of our new research capabilities, the formation of a new pharmaceutical crisis specialty and development of a research-based influencer marketing specialty are all fundamental components of this core strategy.

Which practice areas have been phased out in the past year?
We have not phased out any practice areas in the past year.

What practice areas showed the most growth? Please elucidate.
Consumer, digital and corporate (particularly corporate and financial communications in Europe) showed the most growth. We expanded our digital work across all practices, offices and clients. We continued to develop a world-class corporate practice, and bolstered our offering by making several senior hires including Paul Gallagher, SVP, director of media strategy (from CBS News' 60 Minutes); Peter Harris, SVP and corporate practice leader (from Ketchum) and Peter Steere, head of public affairs, Europe (from APCO Worldwide). We also added Capital MS&L, a financial communications consultancy, and The JKL Group, the Nordic communications powerhouse, to our network.

Our best in class consumer marketing practice continued to grow. We formed a new influencer marketing practice called IM MS&L, bolstered our expertise in areas such as fashion/beauty, mom marketing and motion marketing and added top talent including Liz van Lenten as SVP, consumer practice leader, Chicago (from Burson-Marsteller); Susan Tyndall as SVP, consumer practice leader, in Toronto (from NATIONAL); and Bronwen Andrews, head of food drink and nutrition, in London (from Hill & Knowlton). 
Our healthcare practice, one of the leading practices in the industry, also grew around various therapeutic areas of strength in several offices including New York, Boston, DC, Toronto and San Francisco. We hired Peter Carr as head of healthcare in London (from Solaris Healthcare Networks); Lori Vadala as SVP in healthcare in NY (from Burson-Marsteller) and Anita Bose, SVP of healthcare.

 

Which practice areas showed the least growth? Please elucidate.
Technology showed the least growth.

What is the distribution of accounts across practice areas?
Consumer represents 40% of MS&L's global business. Half of MS&L's top clients are in the consumer practice; our biggest consumer accounts include Procter & Gamble; Philips; General Motors; Nestle; Best Buy and Heineken.

With 250 staff worldwide, healthcare represents 30% of MS&L's global business. It is a top five healthcare communications practice globally and has clients such as sanofi aventis, Roche, Novartis and Allergan.

Corporate represents 25% of MS&L's global business. We work on major blue chip clients including The Home Depot, JP Morgan Chase, Guardian, Chubb and Coldwell Banker.

The remaining 5% of MS&L's global business is technology.

Accounts

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
In the past year, MS&L has added several new companies to its client roster. We were named global AOR for Heineken USA and its portfolio of brands including: Heineken, Heineken Premium Light and Amstel Light; were named AOR for Rogers Wireless, Canada's largest wireless and cable provider; and won Allergan, Cartier, Coldwell Banker and Bayer, among many others.

 

Of your 2006 wins, how many were across three or more countries?
Agency declined to give information.

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
US Army and Hasbro in Boston.

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
MS&L saw significant growth from existing clients. We expanded our relationship with Procter & Gamble to include work in China and Italy, as well as femcare and entertainment work in the US. The Home Depot expanded its work with MS&L to include Canada, Mexico and China, and also named MS&L its AOR in these regions.

What proportion of your clients are on a retainer?
In North America, about 10% of our clients are on a retainer; internationally, the figure is about 30-40%, depending on the office.

Has this changed over the past year?
No, this has remained fairly consistent.

Performance

What was your 2006 global (including US) revenue?
Because of Sarbanes-Oxley, we unfortunately cannot reveal this information.

What was the % change over 2005 global revenue
Agency declined to give information.

What was your global profit margin in 2006?
Agency declined to give information.

What was your 2006 US revenue?
Because of Sarbanes-Oxley, we unfortunately cannot reveal this information.

What was the % change over 2005 US revenue
Agency declined to give information.

What was your US profit margin in 2006?
Agency declined to give information

Did you experience top-line or bottom-line growth in the past year, or both? Please elucidate.
We experienced both top-line and bottom-line growth in the past year.

How much of your growth was organic, and how much was due to new business won?
Agency declined to give information.

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.
Globally, our performance for 2006 was close to our expectations. We delivered excellent growth in revenue compared to 2005 as well as another year of improvement in margin and profitability.

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.
New Volunteer Program: In early 2006, Mark Hass was invited by The Home Depot CEO to join the Hands on Network (HON) Corporate Service Council. HON is made up of 58 volunteer organizations working together to create and manage volunteer programs around the world. In conjunction with this, MS&L created the "Change minds, Change lives" program to increase volunteerism at the agency; in September 2006 alone, MS&L staff logged a total of 1,000 hours of volunteer work. We expect this number to at least double by year's end.

Also, MS&L completed its two-year, $100,000 grant providing PR support to Atlanta's Center for Puppetry Arts, and issued an RFP for next year's grant (in February 2007, the office chose the Samaritan House of Atlanta to be the 2007-8 recipient of the grant).

Training and Staff Development: In fall 2004, MS&L launched the Change minds Academy, a week-long training program for 85 senior professionals from our global network. During the week, our students attended sessions on a range of topics, including creativity, negotiation, message storming, measurement, media, ethics and client relationships. In 2005/2006, we rolled out these training modules to all MS&L offices for every employee to experience. MS&L also offers regular training sessions for its staff on topics ranging from client service to media strategy.

Summer Internship Program: MS&L's summer internship program, which was featured in The New York Times, was modeled after The Apprentice: from 200 applicants, 20 were chosen to participate in a full day at MS&L that included a brainstorm, group projects, a writing test and an interview. The program was designed to hire the most intelligent and creative interns possible, emphasize the agency's approach to innovative solutions, and raise internal awareness about the importance of making smart decisions about talent.

New Blog: MS&L's global healthcare team recently created a new healthcare communications blog (healthspeak.net). Its mission is to provide MS&L clients with the most important news and analysis from the world of health policy. The blog also provides an opportunity to share our senior leaders' perspective on DTC, reputation, drug safety and other key topics.

New Publications: In the past year, MS&L has developed many regular publications for its clients, including: Vision - fashion and beauty newsletter from the P&G Beauty team; Behind The Headlines - the National Healthcare Media Relations Department newsletter on reporter moves and media insights; Entertainment Flash - provides partnership, gifting and spokesperson opportunities; In The News - Consumer Media Department's monthly newsletter about the latest media trends, new publications and broadcasts; and Insights on Diversity - issues relating to diversity communications.

2007 Agency Business Report

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