Porter Novelli: Agency Business Report 2007

For the past two years, Porter Novelli has seen a large number of former employees return to the agency - evidence, the management hopes, of a strong culture that continues to challenge team members and allow freedom for creativity.

For the past two years, Porter Novelli has seen a large number of former employees return to the agency - evidence, the management hopes, of a strong culture that continues to challenge team members and allow freedom for creativity.

Nineteen former employees returned to the fold in 2006, not to mention another decline in voluntary turnover, which all bodes well for 2007.

Gary Stockman, president, says the agency is well poised for the coming year, with geographic expansion aiding its organic growth, as well as possible acquisitions in the pipeline. With the industry on the verge of a golden age, he thinks PN is the agency poised to take advantage.

"There's a lot of talk that this is PR's time, and the question is: What are we going to do about it?" Stockman says. "The challenge is: How do we offer more insightful, more creative solutions to our clients?"

Principals: Helen Ostrowski, CEO; Gary Stockman, president
Ownership: Omnicom, as part of Diversified Agency Services
Offices: 17 in the US, 12 rest of the world; plus seven network partners worldwide

Staff
No headcount supplied. Senior hires included Sheila Corriveau, partner and global network director; Steven Casey, SVP for technology in Boston; Susan Kushnir, SVP and global director of knowledge development and learning; Joseph Russo, EVP and global director of research; and Paul Vogelzang, SVP and director of persuasive technology. The agency saw 16 senior staffers leave, including SVPs Dan Beeson, Thomas Donahue, David Frank, and Erica Jacobs.

Regional performance
In the US, PN is showing solid growth in the Bay Area in the technology sector and an increase in environmentally friendly/ green programs. Globally, in addition to the expansion in Eastern Europe, the agency saw opportunities for expansion in India and China. In 2006, the agency added network members in Poland, the Czech Republic, and Romania.

Practice areas
PN has a tripartite structure: disciplines, industry groups, and specialties. Disciplines include marketing, corporate, and public affairs, while industry groups include healthcare, tech, consumer, financial services, resources, and government and advocacy institutions. Specialty areas include strategic planning and research, media and influencer relations, multicultural, interactive, sponsorships/sports marketing, and crisis and issues.
The agency saw strong growth in healthcare, technology, and consumer packaged goods, with new growth in financial services. PN reported clients across disciplines asking for digital marketing. The agency's offering was also strengthened in the entertainment arena through an alliance with The Rose Group of Los Angeles, creating Porter Novelli Entertainment.

Accounts
New business includes work from Yahoo, Easynet, 3Com, Fiserv, Parrot, Wizards of the Coast, Witness Systems, BMS HIV portfolio, Boehringer Ingelheim, the Centers for Medicare and Medicaid Services, Biotechnology Industry Organization, and the Public Policy Institute. The agency lost BMC Software.

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)
Omnicom

Name of subsidiary companies
FischerHealth
Porter Novelli Life Sciences

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)
Helen Ostrowski, CEO
Gary Stockman, President

What is your current headcount? How has your headcount changed since FY 2005?
Agency declined to give information.

What was the percentage of staff turnover in 2006?
Agency declined to give information.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company

Sheila Corriveau, partner and global network director. Sheila rejoined the agency after a brief sabbatical to oversee Porter Novelli's global network. In this role, she will ensure consistent agency service standards and growth of the global network to meet ever-changing client needs. Sheila previously served as president, CEO and partner of Porter Novelli in Canada. During her 10-year tenure, she helped grow the agency's Canadian operations into one of the top public relations firms in the country, with offices in Toronto, Montreal and Vancouver.

Other senior hires include more than a dozen VPs and the following SVPs and above:

Steven Casey, SVP, technology (Boston). Steve strengthens Boston's senior leadership team and directly supports Porter Novelli clients Analog Devices and Tele Atlas. Previously, Steve ran the Boston office of FitzGerald Communications and before that he oversaw marketing, communications and investor relations for several Massachusetts technology leaders, including IONA Technologies and RSA Security.

Susan Kushnir, SVP, global director, knowledge development and learning (New York). Susan is responsible for all leadership and professional development, training and knowledge management for the agency. Previously, Susan worked for JPMorgan Chase, the Port Authority of New York and New Jersey, Simon & Schuster Publishing, Fleet Bank, and most recently, served as dean of management and leadership development for Commerce Bancorp of New Jersey.

Joseph Russo, EVP, global director of research (New York). Joe is responsible for developing new strategic research capabilities, leveraging the agency's talent and expertise across the global agency network to enhance client communication programs. Previously, Joe worked at Unilever and was most recently vice president and knowledge management center of excellence leader at Cadbury Schweppes Americas Beverages.

Paul Vogelzang, SVP, director of persuasive technology (Washington DC). Paul is responsible for strategic counsel and program development in the constantly evolving area of consumer-generated media, including podcasting and blogging. Previously, Paul was a special assistant in the office of the CIO at the U.S. Department of Treasury and the chief marketing officer at Tenet Healthcare. Paul has produced several top-rated podcasts, including the first U.S. Treasury podcast, and most notably, MommyCast.

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

Dan Beeson, (Atlanta), SVP
Thomas Donahue, (Atlanta), SVP
Fernando Figueredo, (Florida), Managing Director. Fernando will continue to work with the agency as a senior consultant.
David Frank, (Washington, DC), SVP
Erica Jacobs, (Bay Area), SVP
Mary Kay Larson, (Bay Area), SVP
Richard Lukstat, (Washington, DC), SVP
Amy Martini, (FischerHealth New York), SVP
Kelly McFalls, (Boston), SVP
Robert Montoya, (Bay Area), SVP
Laura Nobles, (FischerHealth Los Angeles), SVP
Peter Paris, (New York), SVP
Mark Plungy, (Bay Area), SVP
Maureen Ranney, (FischerHealth Los Angeles), SVP
Lisa Rodriguez, (Bay Area), SVP
Benjamin Singer, (FischerHealth Los Angeles), SVP

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

Porter Novelli has made leadership assignments and new hires in order to ensure consistently high-level performance in areas that are critical to the agency's future success.

Invention: Jean Wyllie was named chief invention officer to drive culture change and lead the agency's efforts in strategic creative and digital marketing. In this role, she facilitates growth by driving the agency's culture of invention.
Clients: Julie Winskie was appointed chief client officer. In this role, Julie ensures our overall client-centric approach results in the highest quality work from the agency. Julie works closely with the client service team and the senior staff to optimize our ROI, creativity, strategy and overall Porter Novelli promise.

In addition, David Zucker was appointed director of client service, focused on values and behaviors in evolving our standards of client service. He is responsible for ongoing assessments of service delivery and ensuring that our client service ethic is embedded in our culture and the execution of our work. David defines and drives all client service-related training needs.

People: Susan Kushnir joined the agency as SVP, global director, knowledge development and learning. Susan is responsible for all leadership and professional development, training and knowledge management for the agency.
Strategy: As mentioned above, Joseph Russo joined the agency as EVP, global director of research. Joe is responsible for developing new strategic research capabilities, leveraging the agency's talent and expertise across the global agency network to enhance client communication programs.

To more effectively manage our global network of owned offices and affiliates, these leaders have taken on new responsibilities:

Sheila Corriveau was appointed global network director, ensuring consistent agency service standards and growth of the global network to meet ever-changing client needs. She succeeds Ada Parr, who retired.
Inge Kauer was appointed regional director Europe, Middle East and Africa (EMEA), overseeing network affiliates in the region. She continues her role as managing director of Porter Novelli's office in the Neatherlands.
Karen Ovseyevitz was appointed regional director for Latin America.

Porter Novelli also made the following senior promotions in 2006:

Deborah Proud Abell, (Washington D.C.), partner
Natalie Adler, (Washington D.C.), SVP
Mark Amone, (New York), SVP, director of finance, N. America
Wayne Barringer, (Seattle), managing director
Bob Elloyan, (Boston), partner
Elizabeth Fitzgerald, (Washington D.C.), partner
Michael Gallagher, (Washington D.C.), SVP
Pia Garcia, (New York), EVP
Patrice Geraghty, (Washington D.C.), SVP
Christine Gerstle, (New York), SVP
Leah Gerstner, (New York), SVP
Michael Kehs, (Washington DC), partner
Stephen McCauley, (Washington D.C.), EVP
Lori Rosen, (New York), SVP
Brian Rowley, (New York), SVP, controller
Sandra Skees, (Bay Area), partner
Wendy Watson, (Los Angeles), EVP

Have you made any acquisitions in the past year, or merged with another agency?
No. However, Porter Novelli has continued to expand our global network, an extensive group of owned and network members in some 60 countries around the world. All members, regardless of ownership, carry the Porter Novelli brand and work closely with our owned offices. In 2006 we added new network members in Poland, the Czech Republic and Romania, giving the agency one of the strongest Central and Eastern European networks.

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.
Porter Novelli is represented in all major markets, comprised of both wholly-owned locations and network member locations.

North America
Atlanta; Austin; Boston; Chicago; Fort Lauderdale; Los Angeles -- 2 locations: Porter Novelli and FischerHealth; New York; Irvine; Sacramento; San Diego; San Francisco; Seattle; Silicon Valley; Washington D.C.; Toronto; Montreal; Vancouver; Canada; Mexico.

Latin America
Argentina

Europe
Belgium; U.K.; France; Netherlands; Portugal; Spain; (Greece)*

Middle East
(Israel)*; (United Arab Emirates)*, (Saudi Arabia)*, (Lebanon)*

Asia Pacific
China; Singapore, (Australia)*, (New Zealand)*

* Majority owned through Omnicom.

How many partly owned offices or affiliates do you operate globally?
Porter Novelli has an extensive group of almost 40 network members around the world. These agencies carry the Porter Novelli brand and work closely with our owned offices.

North America
As detailed in question 14, Porter Novelli only operates owned offices in North America.

Latin America
Porter Novelli has network members in:
Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Uruguay.

Europe
Porter Novelli has network members in:
Austria, Bulgaria, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Latvia, Norway, Poland, Romania, Russia, Slovak Republic, Sweden, Switzerland, Scotland.

Africa
Porter Novelli has network members in:
South Africa.

Asia Pacific
Porter Novelli has network members in:
India, Japan, Korea, Taiwan.

What offices opened in 2006 or early 2007? (State when)
In 2006, Porter Novelli opened offices in Shanghai and Beijing to increase our presence in China as a direct response to client needs. We also strengthened our presence in Central and Eastern Europe, adding new network members in Poland, the Czech Republic and Romania.

What offices closed in 2006 or early 2007? (State when)
None.

Which regions, US and globally, are growing, and why?
Specific areas of the United States are growing, particularly the Bay Area and Silicon Valley with growth in the technology sector and an increase in environmentally friendly/"green" programs. We also see increasing market stabilization in Africa and several new opportunities in the region. Europe continues to grow, particularly Central and Eastern Europe and we are working closely with our network partners in the area. In the Far East, China and India are increasingly important to our clients, as many see opportunities for expansion in the region. Overall, client budgets and RFPs continue to increase in scope and number, indicating growth in the public relations industry.

Which regions, US and globally, are shrinking, and why?
All regions showed strength in 2006.

How many practice areas do you have? Please list.
Rather than practice areas, Porter Novelli focuses on clients by pooling expertise into three inter-related areas to serve stakeholder needs:

  1. Disciplines: marketing, corporate and public affairs.
  2. Specialties: strategic planning and research; media and influencer relations; multicultural; alliance building; advertising/corporate identity; interactive; sponsorships/sports marketing; event management; internal communications; and crisis and issues.
  3. Business sectors: Including pharmaceuticals, medical devices, health services, health and information technology, life sciences, social marketing, packaged goods, travel and tourism, luxury goods, food, consumer health, automotive, security, consumer technology, telecom/wireless, enterprise hardware/software, emerging technology markets, semi-conductors, energy/oil, lumber and forestry, chemicals and plastics, environmental products and services, financial services, insurance, professional services, legal services, transportation and logistics, construction and land use, government, non-governmental organizations, coalitions and trade associations.

Which ones are new?
Porter Novelli continues to develop our expertise to ensure that we offer clients the best possible counsel on emerging communications strategies and channels. In today's rapidly changing communications environment, Porter Novelli recognizes the need for experts across the agency to come together across geographic, discipline and sector boundaries to meet the current and future needs of the market in flexible and entrepreneurial ways. Growing out of the disciplines, specialties and sectors detailed above are new mechanisms to drive hyper-collaboration across expertise areas to better service our client needs. We are currently implementing new ways to work hyper-collaboratively, employing some of the same tools - such as social networking - that are driving today's market changes themselves. We will have more to say about these new initiatives throughout 2007.

Of those, which ones are part of the core strategy of the agency?
The offerings described above are all core to the agency's strategy. All of our specialties are integral pieces of a holistic approach to communications programs that helps the agency meet client business objectives.

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

What practice areas showed the most growth? Please elucidate.
Consistent with the trend of the past few years, our clients, including those in the marketing arena, are increasingly tapping our corporate and public affairs disciplines. Across disciplines, more and more clients are asking for digital marketing, whether it's strategy and execution around digital forms of communications or even a digital ‘mindset' in considering how to reach their stakeholders. Increasingly, we're seeing that a digital point-of-view as a focal point from which a core strategy and concept evolve can be executed in an integrated way by a variety of disciplines.

Overall, the agency's offering was strengthened last year in the entertainment arena, through a strategic alliance with The Rose Group of Los Angeles, creating Porter Novelli Entertainment.

In terms of business sectors, we have seen the same continued strong growth in health care, technology and consumer packaged goods, with good new growth in financial services.

Which practice areas showed the least growth? Please elucidate.
While advertising, as a component of integrated programs is key, it did not show as much growth on its own as in previous years, consistent with industry trends. Traditional media relations, while still very important, is starting to change in complexion, as new media channels grow.

What is the distribution of accounts across practice areas?
The distribution of accounts across our disciplines is Marketing (60%), Corporate (20%) and Public Affairs (20%).

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
Porter Novelli experienced strong new business performance in 2006. Owing to client confidentiality clauses in our contracts, we are unable to share details on all major wins in 2006, but some of our new business includes work from Yahoo! (US, Europe, Asia Pacific), Easynet (Europe), 3Com (US, Europe, Asia Pacific), Fiserv, Parrot (US, Europe), Wizards of the Coast, Witness Systems, BMS HIV portfolio (North American, Europe), Boehringer Ingelheim (Us, Europe), the U.S. Centers for Medicare and Medicaid Services, Biotechnology Industry Organization, Public Policy Institute and many more. As we discuss in question 30, Porter Novelli also experienced substantial organic growth in 2006, with expanded work assignments from many existing clients.

Of your 2006 wins, how many were across three or more countries?
Many of our assignments this year involved multidiscipline teams across marketing platforms that were serviced by multiple geographies. More than 15 percent of our new business wins in 2006 were across three or more countries.

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
In the U.S. Porter Novelli no longer works with BMC Software.

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
Porter Novelli's top six clients were serviced by more than 20 different geographical locations and 70 percent of our larger clients were worked on by more than one office. Porter Novelli is truly a global public relations firm serving clients all over the world.

We are pleased that our top 25 accounts grew in 2006 with expanded work assignments from existing clients such as HP (global growth), Dow (global growth), Wyeth (global growth), ADT (expansion in Europe), Amgen (global growth), McDonald's (global growth), Penske (global growth), P&G (global growth), Mercedes-Benz USA, and more. Owing to client confidentiality clauses in our contracts, we are unable to share more specific details.

What proportion of your clients are on a retainer? Has this changed over the past year?
Agency declined to give information.

What was your 2006 global (including US) revenue?
Agency declined to give 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?
Agency declined to give 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.
Due to Omnicom policy, we are unable to share specific details. However, we can say that we experienced both top-line and bottom-line growth globally in 2006.

How much of your growth was organic, and how much was due to new business won?
Due to Omnicom policy, we are unable to share specific details. However, we can say that our 2006 growth performance saw healthy growth from both existing clients and new business.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
Met expectations.

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