2006 Agency Business Report: APCO Worldwide

"There’s an energy here. You can just feel it," says CEO Margery Kraus.

"There’s an energy here. You can just feel it," says CEO Margery Kraus.

Citing an upsurge in "entrepreneurial spirit" following the firm's MBO, Kraus called 2005 APCO's "best year in history."

All regions are experiencing growth, she says, from New York – which has tripled in revenue under the leadership of managing director Larry Snoddon – to branches throughout China, a "significant growth area."

Services including internal and crisis communications, reputation management, corporate responsibility, and business diplomacy, Kraus said, will continue to be among the firm's core strategies for 2006 and beyond.

"Our focus is really at the CEO level," she explained. High-level hires "are all people who have sat in the seats of the people that we need to reach... people who are capable of having peer-to-peer relationships."

Name of global CEO and US CEO (or most senior equivalent):

Global CEO: Margery Kraus, President & CEO
US CEO: Neal Cohen, CEO, Americas

What is your current headcount, and how has it changed from this time last year?
Headcount is 405, up from 380

What was the percentage of staff turnover?
Turnover in North America was 14 percent

Did you make any senior hires in 2005 (VP and higher)?
Barie Carmichael, senior counselor, former partner at the Brunswick Group, executive vice president corporate relations at VISA USA, and chief communications officer at Dow Corning

Denise Davis, vice president, former chief deputy communications director for Governor Arnold Schwarzenegger

Nelson Fernandez, senior vice president, former managing director at Burson-Marsteller

Eliot Hoff, senior vice president, former vice president at Ruder Finn

Julie Jack, vice president, former director in public affairs practice at Burson-Marsteller

Rich James, vice president, former senior vice president at Spotlight Health

Jim Jones, senior vice president, former executive vice president of The Vaccine Fund

Tilden Katz, managing director, former partner at New Vistas Consulting

Bill Pierce, vice president, former deputy assistant secretary for public affairs at the Department of Health & Human Services

Cassandra Pye, senior vice president, former deputy chief of staff for Governor Arnold Schwarzenegger

Pete Wentz, executive vice president, former partner at New Vistas Consulting

What senior staff have departed the firm?
Tim Warner, vice president

Other senior management changes
In 2005, we completed our first full year as an independent company. Being independent stimulated and fostered the entrepreneurship among the talented individuals at APCO and broadened the number of people responsible for the business. For example, Neal Cohen, who has been with APCO for 20 years, is now the regional CEO for North America. Robert Schooling, who has been with APCO for 11 years, is now the managing director for the Washington, D.C., office, and B. Jay Cooper, who has been with APCO for 10 years, is now the deputy managing director for the Washington, DC, office. A number of other senior vice presidents and vice presidents also assumed roles as service group leaders throughout the region.

Have you made any acquisitions in the past year, or merged with another agency?
No acquisitions or mergers in 2005

How many offices do you have globally?
North America
Washington, DC – global headquarters
Chicago
New York
Ottawa
Sacramento
Seattle

Europe
Berlin
Bonn
Brussels
Geneva
London
Moscow
Paris
Rome

Africa
(Johannesburg)

Middle East
Tel Aviv

North & South Asia
Beijing
Hanoi
Ho Chi Minh City
Hong Kong
Shanghai
Guangzhou

Asia Pacific
Jakarta

What offices opened in 2005 or early 2006?
Chicago – October 2005
Guangzhou – March 2006
Singapore – March 2006 (please hold for formal announcement)
Tel Aviv – August 2005

What offices closed in 2005 or early 2006?
Shenzhen – December 2005

Is there a particular region, US and globally, that is growing right now?
All regions at APCO are currently experiencing growth. Our offices throughout China are seeing considerable growth and drive the success of our client offering in the Asia region. We see this region as significant growth area for the company into the future.

Additionally, our office in New York, which opened a little over a year ago, has tripled in size and revenue. Our office in Chicago, which opened several months ago is also growing rapidly and we expect this growth to continue.

Is there a particular region, US and globally, that's shrinking?
We have remained on a strong upswing in all regions.

How many practice areas do you have?
APCO operates with a single bottom line, which allows us to achieve a truly integrated consulting business and one common goal. As a result, we align our services according to client needs. APCO currently offers 21 different services to our clients.

Which ones are new?
This past year, we introduced a business diplomacy service to our clients. This service helps corporations understand and manage the interplay between the political environment in countries and regions where they operate. This service helps our clients meet the challenges of conducting business in a complex global environment.

We also have continued to build and grow our capabilities critical to the most senior levels of corporate management, APCO C-Suite. These include enhancements to our corporate positioning and internal communications practices.

Of those, which ones are part of the core strategy of the agency?
The services targeted to assist the most senior levels of leadership at corporations are part of the core strategy of the firm. These include our corporate communication practice (litigation and crisis communication; corporate positioning; reputation management; corporate responsibility; and internal communication) and business diplomacy.

Which practice areas have been phased out in the past year?
No service areas have been phased out in the past year.

What practice areas showed the most growth?
The areas that have been growing with significant client assignments and addition of practitioners include: health care; opinion research; crisis and litigation communication; coalition building and grassroots advocacy; issue management; online communication; and corporate communication.

Which practice areas showed the least growth?
APCO operates with a single bottom line and our revenues are not calculated by practice area, this allows us to achieve a truly integrated consulting business and one common financial goal.
What is the distribution of accounts across practice areas?
APCO operates with a single bottom line and our revenues are not calculated by practice area, this allows us to achieve a truly integrated consulting business and one common financial goal.

What key account wins did you have in 2005?
Elsevier
Reed Elsevier
PhRMA
Northwest Coalition for Affordable Power
CGI
Johnson Controls
Salmon of the Americas

What key accounts did you lose in 2005?
We did not lose accounts in 2005. We did have some assignments that were project based that ended.

Did you expand any existing accounts into new domestic or international markets?
Dow Corning
Malaria Vaccine Initiative
PhRMA
Pfizer
UPS
Invest Hong Kong

What proportion of your clients are on a retainer?
40 percent of our clients are on retainer.

Has this changed over the past year?
This has remained stable over the past year.

What was your 2005 US revenue?
Net fee income for 2005 was: $41,835,351
Net fee income for 2004 was: $32,611,035

What was the % change over 2004 US revenue?
Percentage gain was: 22%

What was your 2005 global revenue?
$73,347,287

What was the % change over 2004 global revenue?
29%

2004 Revenue: $56,853,600

Did you experience top-line or bottom-line growth in the past year?
Both

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
Exceeded by 12%

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