Padilla Speer Beardsley: Agency Business Report 2007

The employee-owned agency posted double-digit growth across crisis management, healthcare, manufacturing, IR, and tech. PSB acquired $4.1 million in new business, or 31% of revenue, of which $1.1 million was organic and $3 million from new clients.

The employee-owned agency posted double-digit growth across crisis management, healthcare, manufacturing, IR, and tech. PSB acquired $4.1 million in new business, or 31% of revenue, of which $1.1 million was organic and $3 million from new clients.

"Our success is due to strategic moves, as well as to where the market trends," says SVP Marian Briggs, citing the hiring of Stacey to lead healthcare and leverage the proximity to a concentration of medical device makers in the Minneapolis area.

Principal: Lynn Casey, chair and CEO
Ownership: Independent
Offices: Two, Minneapolis and New York

Staff
Up 14% to 104 from 91, with 23% turnover. Hired Janet Stacey, who ran a small Austin, TX, healthcare marketing firm, to expand its healthcare and medical device expertise. Kevin McArdle, VP of sales and marketing strategy, left when his sales- training initiative failed to gain traction.

Regional performance
PSB cites strong performance in Minneapolis, but also 53% growth in New York. The firm teamed with Worldcom partner offices in Asia, Europe, Mexico, and Latin and South America on at least a dozen clients based in both its locations.

Practice areas
Six industry practices, including agribusiness, consumer products, healthcare/ medical technology, IT, manufacturing, and professional services; two functional practices, including corporate/IR and crisis/critical issues; and three specialized service practices: research, creative services, and media relations. Public affairs was folded into the agribusiness practice.

Accounts
New AOR relationships inked with Trans- America Retirement Management, Trane, Macy's North, ADC, Global Ethanol, National Marrow Donor Program, and Scholarship America. New national-project clients included Procter & Gamble, Hill-Rom, United Healthcare, Toro Company, H.B. Fuller, and Colder Products. Approximately 15% of clients are on a retainer basis, up from 10% in 2005.
 
Financial performance

Reported revenues of $13,526,845, up 15%.

Agency's full questionnaire follows below:

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

Name of subsidiary companies
N/A

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)
Lynn Casey, Chair & CEO

What is your current headcount? How has your headcount changed since FY 2005?
104 as of 12/31/06
Increased from 91 at 12/31/05

What was the percentage of staff turnover in 2006?
23 percent

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company   
A national search for the first industry-bred leader of our growing healthcare practice resulted in the hire of Janet Stacey, who joined us in December 2006 from Austin, TX, and brings extensive background in life sciences and medical technology. Minnesota is known for its healthcare/medical device companies (many Padilla clients), but Janet will help us expand faster both in and beyond our region.

What senior staff have departed the firm? Please state name and previous title
Kevin McArdle was vice president and director of Padilla Speer Beardsley's Sales & Marketing Strategy. Kevin had approached us about offering his sales training services to our client base. After a year or so, this initiative had not gained traction, and he amicably resigned.

Please list any other senior management changes, including restructures and significant, senior-level promotions
Mike Greece, managing director of Padilla Speer Beardsley's New York office, was promoted to senior vice president, effective January 1, 2007.

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

How many wholly owned offices do you have globally?
We chose to go the global network route vs. owning more offices or being acquired ourselves.

  • North America - Headquarters in Minneapolis, MN, with 90 employees, and office in New York City, with 14 employees at 12/31/06.

How many partly owned offices or affiliates do you operate globally?
N/A

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

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

Which regions, US and globally, are growing, and why?
N/A

How many practice areas do you have? Please list.
A total of 11:  Six industry practices, primarily focused on marketing/brand-building: Agribusiness, Consumer Products (focused on food/beverage and home products), Health Care/Medical Technology, Information Technology, Manufacturing, Professional Services; two functional practices, Corporate/Investor Relations and Crisis/Critical Issues; three specialized service practices: Research (public opinion and market research), Creative Services (graphic design/interactive design, development and production/print production) and Media Relations.

Which ones are new? 
None

Of those, which ones are part of the core strategy of the agency?
All are core

Which practice areas have been phased out in the past year?
Sales & Marketing Strategy, which we disbanded when Kevin McArdle amicably left the firm.

What practice areas showed the most growth? Please elucidate.
In 2006, Padilla Speer Beardsley grew 15 percent over 2005, with revenues of more than $13.5 million. Every practice area in our multiple-specialty firm was up: Our young creative services team tripled its growth. (We brought this in house in 2005 after relying for decades on outsiders for corporate ID, interactive and print-based execution.) Our crisis work grew by more than 100%. Healthcare, information technology, manufacturing and investor relations all had double-digit growth. Agribusiness, consumer products and research practices were in the high single digits.
  
Padilla Speer Beardsley New York had another record year, with 53% growth over last year's 22% growth. Word is out that this 14-person team of B2B/professional services specialists can deliver major-media results, as well as seasoned brand-building counsel. We just doubled our space on 57th and Third. 

Which practice areas showed the least growth? Please elucidate.
Our small public affairs specialty was folded into our agribusiness practice area; it is within agribusiness that we do the most public affairs work.

What is the distribution of accounts across practice areas?
We strive for a balanced portfolio, making sure that our functional and specialized service areas are used by as many clients as possible in all of our industry practices.  Using PRWeek's Agency Business Report breakdown (which was sent Feb. 26, 2007), we are heaviest in B2B marketing followed by consumer marketing and corporate communications.

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
Major client additions in 2006 included agency-of-record relationships with TransAmerica Retirement Management (a division of San Francisco-based TransAmerica, which is owned by German-based Aegon), N.J.-based Trane (commercial division); Macy's North (seven-state division, which recently took over the Marshall Fields nameplate); and Twin Cities-based components manufacturer ADC, Global Ethanol, National Marrow Donor Program and Scholarship America. Major new national-project clients included Cincinnati-based Procter & Gamble; North Carolina-based healthcare equipment supplier Hill-Rom; and Twin Cities-based UnitedHealthcare, home and garden equipment manufacturer Toro Company; global specialty chemical manufacturer H.B. Fuller; and international components manufacturer Colder Products.  

Of your 2006 wins, how many were across three or more countries?
We worked with several Worldcom partners in Europe and Asia-Pacific to execute localized programs or events held in these regions.

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
We lost no accounts in 2006.

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
We teamed with our Worldcom partner offices in Asia, Europe and Mexico, Latin and South America on at least a dozen clients based in our Minneapolis and New York offices. About five years ago, we committed to protocols and processes that made sure we were operating as one firm to the client. We increased the number of multi-office/multi-region clients each year since.

What proportion of your clients are on a retainer? Has this changed over the past year?
Approximately 15 percent
Up from 10 percent in 2005

What was your 2006 global (including US) revenue? (Figure should match the figure entered into the separate Rankings Form, if submitting.) 
N/A

What was the % change over 2005 global revenue 
N/A

What was your global profit margin in 2006?
N/A

What was your 2006 US revenue? (Figure should match the figure entered into the separate Rankings Form, if submitting.) 
$13,526,845

What was the % change over 2005 US revenue:  
15 percent increase

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.
Both

How much of your growth was organic, and how much was due to new business won?
We acquired $4.1 million in new business in 2006, or 31 percent of revenue, of which $1.1 million was organic and $3.0 million was business from new clients.

How did your performance, in terms of revenue and growth, meet expectations you had for the year? 
Our revenue growth was right in line with our projections and company growth plan of 12 to 15 percent per year. Profitability exceeded plan.

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