CKPR: Agency Business Report 2007

GSK loss and Orlando-office closure hurt, but CKPR still recorded double-digit growth thanks to growth elsewhere.

GSK loss and Orlando-office closure hurt, but CKPR still recorded double-digit growth thanks to growth elsewhere.

Tightly integrated with its parent ad agency, which has grown 40% over the past two years, the relationship is seemingly a mutually beneficial one. "We clearly established that we were a 360-degree agency," says Joel Curran, SVP/MD, explaining that the work bears this out, as does the agency's increased interaction with CMOs.

While some see CKPR as just an arm of CK, Curran sees it more as "two portals into the same company," adding it only shares about 40% of clients with CK.

Principal: Joel Curran, SVP/MD
Ownership: Cramer-Krasselt
Offices: Four wholly owned in US: Chicago, Milwaukee, Phoenix, New York; Minority stake in Smees PR in the UK.

Staff
CKPR has 84 employees - flat compared to last year, due to eight posts eliminated when the Orlando office was shuttered- and 16% turnover. Jeff Johnson from West Wayne was hired as an EVP/ GM, and five other VP posts were filled. Directors Dan Pooley and Arthur Yann left.

Regional performance
The agency's integrated (with CK) office in Orlando closed in April 2006 after the tourism accounts it serviced dwindled. The most growth has been in the Midwest, as packaged goods and consumer healthcare brands have been increasing spend.

Practice areas
Clients split between consumer (48.7%); professional services (16.9%); healthcare (13.4%); tech (10.4%); financial (6.1%); industrial (2.3%); and government/nonprofit (2.2%). CKPR says areas revolve around demographics, not sectors or disciplines, and says its nontraditional programs were the biggest growth drivers.

Accounts
Wins include Brookstone, Cox Communications, General Mills (various brands), Kohl's (corporate), Rockwell Automation, and Rotozip. Losses included GlaxoSmithKline Consumer Healthcare, Florida Power & Light, and TotalVid.

Financial performance
2006 revenue was $15,976,000, up 12% from 2005. Profit margin was 15.1%. Saw top-line growth and remained steady on the bottom line, due to investment in back-end training, processes, and tech.

Agency's full questionnaire follows below:

Name of parent division/company
Cramer-Krasselt

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)
Peter Krivkovich, president and CEO, Cramer-Krasselt Joel Curran, SVP/Managing Director of CKPR

What is your current headcount? How has your headcount changed since FY 2005?
We currently have 84 employees. We're essentially flat on headcount, since we eliminated eight positions with the closing of our Orlando office, but currently we are in the market to replace those positions in other offices.

What was the percentage of staff turnover in 2006?
We experienced approximately a 16% turnover margin.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company
Jeff Green, VP (United Airlines)
Mary Shaughnessy, VP (Cube PR, Weber Shandwick)
Deborah Livingstone, VP (Edelman)
Dean Hacohen, Creative Director/C-K Chicago (works closely with CKPR) (from Lowe)
Jeff Johnson, EVP-GM/New York (oversees the integrated operation) (CEO, West Wayne)
Susanna Homan, VP/C-K and CKPR Corporate Communications (Zeno)
Julianne Vukovich, VP/Director of Human Resources (DDB)

What senior staff have departed the firm? Please state name and previous title
Dan Pooley
, director of strategic planning Arthur Yann, director, New York office

Please list any other senior management changes, including restructures and significant, senior-level promotions
Wanda McDonald
, promoted to CFO from controller

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.
· North America Chicago, New York, Milwaukee, Phoenix

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.
· Europe Smees Public Relations, UK manages our ICOM Europe partnership of 29 integrated agencies

What offices opened in 2006 or early 2007?
None

What offices closed in 2006 or early 2007?
We closed our integrated Orlando office in April 2006. We had opened the location in 1989 to service tourism accounts. The post-9/11 economy mitigated the office's strategic fit with in the agency. The total PR revenue was less than $1 million.

Which regions, US and globally, are growing, and why?
We have experienced considerable growth around the country. However, the most noticeable increase for us has been in the Midwest as packaged goods and consumer healthcare brands have been flexing their marketing muscle in response to new nutrition offerings. With increased pressure for food companies to improve nutrition, it has been equally important for them to get the word out to key influencers and to the news media.) We've also seen growth in the durable goods industry, particularly home improvement. Perhaps it's a response to the slowing housing market - people are opting to stay in their homes longer and renovate/remodel, vs. selling.

How many practice areas do you have? Please list.
Most of our growth is attributed to clients' interest in 360-degree thinking as it relates to their target audiences. As a branding agency, we've migrated from the old practice group structure to a structure that focuses on target demographic segments, including consumers, influencers and stakeholders and how each interacts with the brand. We apply this target audience structure to both our consumer and business-to-business clients. Today, we're selling target expertise first followed by functional knowledge.

Which ones are new?
N/A

Of those, which ones are part of the core strategy of the agency?
The integrated, 360-degree approach to communications is the core strategy of C-K and CKPR.

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

What practice areas showed the most growth?
Non-traditional "public relations" programs were a major driver of our growth. The pop-up retail program we developed for GlaxoSmithKline Consumer Healthcare's Nicorette Fruit Chill launch (a PR Week Award finalist in two categories) is but one example of how we put our 360 approach to use for our clients.

Which practice areas showed the least growth?
N/A

What is the distribution of accounts across practice areas?
Consumer - 48.7%Professional Services - 16.9%Healthcare - 13.4%Technology - 10.4%Financial Products - 6.1%Industrial - 2.3%Government/Non Profit - 2.2%

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
Basha's Family of Stores
Brookstone
Cellular South
Classic Residence by Hyatt
Cook's Family Foods
Cox Communications
Evinrude Outboard Engines
General Mills (various brands)
International Capital Partners
Key Bank
Kohl's (corporate)
Massage Envy
MeadWestvaco (Consumer Solutions Group)
Phoenix Children's Hospital
Revolution Tea
R.H. Donnelley Yellow Pages
Rockwell Automation
Rotozip
TotalVid

Of your 2006 wins, how many were across three or more countries?
None

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
GlaxoSmithKline Consumer Healthcare Florida Power & Light (with closure of Orlando office) TotalVid (project ended)

Did you expand any existing accounts into new domestic or international markets or sectors?
N/A

What proportion of your clients are on a retainer? Has this changed over the past year?
Approximately 70% (Some are a combination of retainer and project work that is folded into a retainer) We have seen an increase in "hybrid" retainers. These are accounts that have a base retainer with project fees either folded into the retainer or packaged in a revenue suite, by client.

What was your 2006 global (including US) revenue?
No information given.

What was the % change over 2005 global revenue
No information given.

What was your global profit margin in 2006?
No information given.

What was your 2006 US revenue?
$15,976,000

What was the % change over 2005 US revenue
12%

What was your US profit margin in 2006?
15.1%

Did you experience top-line or bottom-line growth in the past year, or both?
We experienced top-line growth and remained steady on the bottom-line. We're continuing to invest in back-end training, processes and technology to maintain an advanced, integrated operation.

How much of your growth was organic, and how much was due to new business won?
It was really a combination. Many of our existing clients brought us new projects that were competitive and considered "new business," but may count as organic. New clients drove approximately 45% of the balance.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
Despite closing our Orlando C-K and CKPR office, we were pleased that CKPR was still able to record double-digit growth in 2006. Our Chicago, Milwaukee and Phoenix offices set revenue records; our New York office finished just under their previous best. Moreover, CKPR continued to play a key role in the record growth of parent company Cramer-Krasselt, which enjoyed 40% overall growth over the past 24 months.

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