FleishmanHillard: Agency Business Report 2007

"We are on the cusp of achieving the position of being the most complete international communications agency globally," Dave Senay, president and CEO of Fleishman-Hillard boasts. "We are hugely optimistic about 2007 and we will have a record year if this current trend continues. In every region of the world and every industry segment we are just on fire."

"We are on the cusp of achieving the position of being the most complete international communications agency globally," Dave Senay, president and CEO of Fleishman-Hillard boasts. "We are hugely optimistic about 2007 and we will have a record year if this current trend continues. In every region of the world and every industry segment we are just on fire."

After a busy 2006, the agency continued that momentum in early 2007 when it was named global AOR for Motorola. On top of its global accounts, Fleishman is finding, more often than not, that its clients are working across its network of offices in the US and globally. Senay says this growing trend plays right into the agency's strengths.

"More than 85% of our clients work with more than one Fleishman office," he says.

Senay says the agency is also becoming less siloed and working in areas and practices that are not considered PR by many. "The ability to integrate formerly heavily siloed functions has become a big part of what we do," he says.

To that end, the agency is working extensively with sister firms across other disciplines within Omnicom.

Under Verrengia, the CCW unit is counseling an increasing number of Fleishman clients, and the firm is similarly broadening its reach in the digital arena.

And while a lot of noise is made by its wins on big-name clients like Target and Motorola, Senay says it's the work for smaller clients that drives a lot of the agency's success and makes the agency more attractive to prospective business partners.

"Ninety percent of our clients are not all giants," Senay says. "They're spending $250,000 or less with us. So being able to play across a very broad spectrum of client needs will remain a key component of our value proposition."

Senay says the firm will continue to invest more in audience segmentation in 2007. "Next to digital, [audience segmentation] is the number-one challenge we face today," he says.

Senay says the plan going forward is to work towards becoming the number-one agency in the world.

Key facts

Principal: Dave Senay, president and CEO

Ownership: Omnicom Group, as part of Diversified Agency Services

Subsidiary Agencies: Allyn & Company, Avant, CPR Worldwide, GMMB, Lois Paul & Partners, and Stratacomm. Other business units managed by Fleishman-Hillard include BlueCurrent, FH Government Relations, High Road Communications, iStudio, Mercury Public Affairs, The Remedy, and Resolve Communications

Offices: 51 wholly owned (plus four majority-owned) offices in North America; an additional 21 wholly owned locations in Europe, Latin America, Asia-Pacific, and the Middle East, plus nine majority owned firms in Asia Pacific and Africa

Staff
Staff changes in 2006 began at the very top with Dave Senay succeeding John Graham as president and CEO. Graham, who headed Fleishman globally for more than 30 years, remains chairman of the agency. The firm hired more than 100 VP and higher individuals in 2006. Among those were a number of SVP hires, including former House of Representatives member Max Sandlin as co-chairman, FH Government Relations; Lynn Brinton, SVP and partner, b-to-c, San Francisco; John Quick, SVP, healthcare, New York; and Stephen Naru, SVP and partner, corporate reputation, New York. The firm suffered a sad loss when Ed Presberg, SVP and senior partner, passed away in late December. Frank Kaufann, SVP and senior partner; Faith Brewitt, GM; Melissa Robinson, SVP; Scott Evans, SVP; and Katy Lauler, VP, all left the firm. Significant restructuring by Senay led to a number of internal moves and promotions. These include Paul Johnson becoming vice chairman for strategic growth and president of global public affairs; Rissig Licha to regional president, Latin America; Peter Verrengia to president of new division Communications Consulting Worldwide (CCW); and Curt Kundred to regional president, East, West and Canada.

Regional performance
Senay says Asia is an area of great promise for the firm and it is investing a lot of time and talent in the region. "We view this as a very long-term proposition," he says. "It's going to be a slow build, there's no overnight success here."

Over the past four years, the firm's business has grown 30% on an annual basis, Senay says. The firm will be making more formal announcements in 2007 about its plans for India. Senay says Fleishman is bringing "a lot" of business into India from Western companies. It opened a Moscow office last year, and Senay says it's a "very active" market.

Latin America and a number of US regions performed very strongly, adds Senay. "St. Louis and Kansas City had breakthrough years," he says.

Practice areas
Fleishman has 24 practice areas including corporate reputation, b-to-c and b-to-b marketing, retail, multicultural, FH Hispania, healthcare, internal communications, public affairs, FH Out Front, and financial communications.

Three new practices launched in 2006: youth marketing, sports business, and FH Boom. The latter is intended to help clients target the country's baby boomer generation.

The public affairs, healthcare, corporate reputation, and tech practices showed the most growth in 2006. Fleishman says its newest practices - such as digital, FH Boom, FH Hispania, FH Out Front, homeland security, travel and tourism, and youth marketing - are also growing apace.

Senay says the FH Hispania practice is "really surging, and the only obstacle to our growth is the availability of talent." He says a variety of specialty areas such as public
affairs and digital are "equally hot."

Its busiest practices - those that work in the largest number of accounts throughout the firm - are public affairs, healthcare, marketing, corporate reputation, and tech.

Accounts
Fleishman became Target's lead African-American and Hispanic agency in 2006. It also became Newell Rubbermaid's first-ever global AOR. Other key wins include ConocoPhillips, Dow Chemical (Canada, US), Egyptian Tourism (Asia, Canada, Europe, US), Etihad Airways (Asia, Canada, Europe, US), Rawlings, and UCB Pharmaceuticals (Europe, US). Twenty of its 2006 wins were across three or more countries. Fleishman now works with 30% of its top 100 clients on two or more continents. Key losses in 2006 were Kos Pharmaceuticals, Maxtor, and USAA.

Financial performance
Fleishman says it experienced top- and bottom-line growth and that its 2006 performance exceeded expectations. The firm says the majority (60%) of that growth was generated organically, while the rest (40%) came from new clients.

Agency's full questionnaire follows below:

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

Name of subsidiary companies
Allyn & Company, Avant, CPR Worldwide, GMMB, Lois Paul & Partners, and Strat@comm. Other business units managed by Fleishman-Hillard include BlueCurrent, FH Government Relations, High Road Communications, iStudio, Mercury Public Affairs, The Remedy, and Resolve Communications.

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)
Dave Senay
, President and CEO

What is your current headcount?
Agency declined to give information.

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

What was the percentage of staff turnover in 2006?
Fleishman-Hillard, Inc. voluntary turnover for 2006 was 20%.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company.
We hired more than 100 VP and higher individuals in 2006. Our top five hires in our top five practice areas were:

B-to-C Marketing
David Jones
, SVP, Toronto (Thornley Fallis Group)
David Stamper, VP, Los Angeles (Mattel; GolinHarris)
Susan Bean, SVP, New York (CBS News)
Lynn Brinton, SVP and Partner, San Francisco (Shopping.com)
David Mackay, SVP, Washington, D.C. (Hill & Knowlton)

Healthcare
John Quick
, SVP, NY (Ogilvy)
Dan McIntyre, SVP and Partner, New York (MeadeWestvaco)
Daniel Kent, Director, London (Hill & Knowlton)
Caroline Marchetti, VP, Paris (Edelman)
Masato Nagata, VP, Tokyo (Takeda Pharmaceuticals)

Corporate Reputation
Stephen Naru
, SVP and Partner, New York (Reuters Ltd.)
Christopher Tennyson, SVP, New York (Seyferth Spalding Tennyson, Inc.)
Peter Hillan, SVP, San Francisco (Zeno Group)
Melissa Oakley, SVP, Chicago (Baxter Healthcare)
Kenneth Willis, SVP, Atlanta (Self Employed/GCI)

Technology/Interactive
Linda Kozlowski, SVP, San Francisco (Text 100)
Robert Winslow, SVP and Partner, Global Technology (Text 100)
David Gardner, SVP, Washington, D.C. (Match.com)
Mark Story, SVP, Washington, D.C. (APCO Worldwide)
Steven Schmidt, Partner, Sacramento (Mercury)

Public Affairs/Government Relations
Robert Hoopes
, President VOX Global Mandate (Hoopes Strategies)
Max Sandlin, Co-Chairman, Fleishman-Hillard Government Relations, Washington, D.C. (Member U.S. House of Representatives)
Kimberly Weber Norris, SVP, Cleveland, Ohio (Attorney General)
Diana Mao, VP, Beijing (Philip Morris)
Armin Huttenlocher, Managing Director, Berlin (Burson-Marsteller)

Others
Cyrille Arcamone
, MD, Paris (Groupe Doux/Burson)
Diane Wu, MD, Beijing (Weber Shandwick and GolinHarris)
Franz Paasche, MD, Communications Consulting Worldwide, New York (Clark and Weinstock)
Carlos Lareau, SVP & Sr. Partner, Europe (Burson-Marsteller)
George Doigami, COO, Admin, Tokyo (Volkswagen)
Ruth Kim, SVP and Partner, General Counsel (Spectrum Health Services)

What senior staff have departed the firm? Please state name and previous title.
Ed Presberg
- SVP and Sr. Partner; passed away in late December
Frank Kaufann - SVP and Sr. Partner
Faith Brewitt - GM
Melissa Robinson - SVP
Katy Lauler - VP
Scott Evans - SVP

Please list any other senior management changes, including restructures and significant, senior-level promotions.
Dave Senay
, President and CEO
Paul Johnson, Vice Chairman for Strategic Growth and President of Global Public Affairs
Peter Verrengia, President of CCW
Curt Kundred, Regional President - East, West and Canada
Lynne Anne Davis, Regional President - Asia Pacific and India
Kevin Bell, Regional President - UK, Africa and Middle East
John Saunders, Regional President - Ireland, Continental Europe, Moscow and Eurasia
Rissig Licha, Regional President - Latin America
Martha Boudreau, Regional Director - FH Washington, D.C., and VOX
Nancy Seliger, Regional Director - FH NYC, and Boston
Susan Veidt, Regional Director - FH St. Louis, Chicago, Kansas City and Minneapolis/St. Paul
Guillaume Herbette, Managing Director of Global Standards
David Wickenden, Managing Director, Digital Integration
Jonella Donius, CIO
Peter Ng, Regional COO and Partner, Asia Pacific
Janet Greenlee, SVP and Sr. Partner, GM, Austin
Steve Astle, SVP and GM, San Francisco

Have you made any acquisitions in the past year, or merged with another agency?
Moscow

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.
North America - We have fifty-one wholly-owned (plus four majority-owned) offices in the following cities: Albany, Atlanta, Austin, Boston, Calgary, Charlotte, Chicago, Cleveland, Dallas, Detroit, Houston, Kansas City, Los Angeles, Miami, Minneapolis/St. Paul, Montreal, New York, Ottawa, Phoenix, Portland, Raleigh-Durham, Sacramento, San Antonio, San Diego, San Francisco, Seattle, St. Louis, Toronto, Vancouver, Washington, DC.

Latin America - Two: Mexico City, San Juan

Europe - Fourteen: Amsterdam, Berlin, Brussels, Dublin, Edinburgh, Frankfurt, London, Madrid, Milan, Moscow, Munich, Paris, Prague, Warsaw

Africa - (Two majority-owned: Cape Town, Johannesburg)

Middle East - One: Cairo

Asia Pacific - Four: Hong Kong, Kuala Lumpur, Manila, Singapore (plus seven majority-owned: Beijing, Guangzhou, Melbourne, Seoul, Shanghai, Sydney, Tokyo)

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.
Partly-owned offices are listed above. We do not publicize our list of affiliates, which is an extensive network of leading independents located around the world.

What offices opened in 2006 or early 2007? (State when)
Moscow, September

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

Which regions, US and globally, are growing, and why?
All regions grew.

Which regions, US and globally, are decreasing, and why?
None.

How many practice areas do you have? Please list.
Twenty-four:
B-to-B Marketing
Innovation
B-to-C Marketing
Internal Communications
Corporate Reputation
Litigation Support
Digital
Multicultural
Energy
Public Affairs
FH Boom
Retail
FH Hispania
Social Impact Marketing
FH Out Front
Sports Business
Financial Communications
Technology
Food and Agribusiness
Transportation
Healthcare
Travel and Tourism
Homeland Security
Youth Marketing

Which ones are new?
FH Boom, Sports Business and Youth Marketing

Of those, which ones are part of the core strategy of the agency?
Each of our 24 practice groups are integral to the firm's core strategy. We are able to succeed for our clients by providing expertise segmented by industry and by audience. Clients can access counsel from the most experienced practitioners in various subject areas. Our communications teams are selected from different practice groups to match agency strengths with client needs.

Our clients find that there are also times when local understanding and experience is critical. Most of the offices throughout our global network employ experts from each practice group. Whether our clients' business requires subject-matter expertise, or regional or residential knowledge, our practice groups can accommodate both demands.

Which practice areas have been phased out in the past year?
None

What practice areas showed the most growth? Please elucidate.
Fleishman-Hillard's Public Affairs, Healthcare, Corporate Reputation, and Technology practices remain the largest growth drivers within the agency. Our newest practices, Digital, FH Boom, FH Hispania, FH Out Front, Homeland Security, Travel and Tourism, and Youth Marketing are the fastest growing.

Which practice areas showed the least growth? Please elucidate.
Each of our 24 practices continue to grow and are integral to the firm's success.

What is the distribution of accounts across practice areas?
It is typical for more than one practice group to engage in client service either as ongoing members of the client service team, or as a resource to provide strategic counsel, creative concepts and/or implementation for a special project. The practice groups that participate in the largest number of accounts throughout the firm are Public Affairs, Healthcare, all forms of marketing, Corporate Reputation, and Technology.

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
ConocoPhillips
Dow Chemical (Canada, U.S.)
Egyptian Tourism (Asia, Canada, Europe, U.S.)
Etihad Airways (Asia, Canada, Europe, U.S.)
Rawlings
Save Darfur
UCB Pharmaceuticals (Europe, U.S.)

Of your 2006 wins, how many were across three or more countries?
Twenty

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
Kos Pharmaceuticals
Maxtor
USAA

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
Yes. Thirty percent of our Top 100 clients work with us on two or more continents; 44% work with us in three or more countries

What proportion of your clients are on a retainer? Has this changed over the past year?
Less than one-third
No

What was your 2006 global (including US) revenue?
Agency declined to give information.

What was the % change over 2005 global revenue
Europe was our strongest growth area in 2006; growth was well into double digits.

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
We experienced double-digit growth in the US in 2006.

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.

How much of your growth was organic, and how much was due to new business won?
An estimated 60% of our growth was organic and roughly 40% of growth came from new clients.

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

2007 Agency Business Report

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