FleishmanHillard: Agency Business Report 2006

The machine

The machine

Fleishman has focused intensively on growing its international business, with 20% of its clients originating from outside the US. "Our growth rates in our international business have exceeded the growth in our US business for the past three years," says CEO John Graham.

In 2005, the Los Angeles overbilling issue was still unfolding, while the agency worked hard to keep the issue contained and carry on growing the business. In April of last year, Fleishman settled the multimillion-dollar overbilling lawsuit brought against it by the city of Los Angeles with a $5.7 million settlement, though a wrongful termination suit brought by former GM Doug Dowie has only begun to play out in the courtroom.

All the while, the firm had a busy year with a number of major account wins and its work on the mammoth AT&T rebranding effort following its acquisition of Fleishman client SBC Communications. With 79 senior hires and the launch of new services such as a measurement unit called Communications Consulting Worldwide (CCW), Innovation, and the Next Great Thing in 2005, the agency continues to expand its offerings to current and potential clients. For 2006, Fleishman will emphasize its Hispanic focus through FH Hispania.

The firm says its financial services practice, which was not very active in 2005, has been very productive in the first quarter of 2006. Some early 2006 account wins include the World Travel & Tourism Council and the Egyptian Tourist Authority, for which the agency will be handling US PR. "We've had the best organic growth we've had in five years," Graham says, attributing the agency's ongoing focus on its client relationship managers program, which was unveiled two years ago.

The hallmarks of Fleishman's reputation remain its consistent approach to work across disciplines and levels, and the depth and smarts of its long-serving leadership team. The firm is now keen to also show its nimbleness in attacking the opportunities of the new-media environment.

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, Resolve Medical Communications and Strat@comm. Other business units managed by Fleishman-Hillard include BlueCurrent, FH Government Relations, Fitzgerald Communications, High Road Communications, iStudio, Mercury Public Affairs and The Remedy.

Name of global CEO and US CEO (or most senior equivalent)
John D. Graham, Chairman and CEO

Name of person, if any, the most senior person named above reports to
John D. Wren, President and CEO, Omnicom Group Inc.

What is your current headcount, and how has it changed from this time last year?
Due to SEC Regulation G, as part of a public company, we are prohibited from providing operating unit revenue and related data.

Did you make any senior hires in 2005 (VP and higher)?
Yes, globally, FH has hired 79 senior professionals in the past year including: Cynthia Renee Church, SVP Washington Public Relations, Washington, DC, formerly with the Department of Veteran's Affairs; Peter Collins, SVP Consumer Marketing, New York, formerly of Rowland Communications; William Fay, SVP Washington Public Relations, Washington, DC, formerly of NATSO; Miriam Gerrard, SVP Internal Communications, St. Louis, formerly of ZLB Behring; Robert Hanvik, SVP, Partner and General Manager, Minneapolis, formerly with Medtronic; Jerome Hauer, SVP Government Relations, Washington, DC, formerly with George Washington University; Sara Jones, SVP Corporate, Los Angeles, formerly with APCO Worldwide; Carol Marinovich, SVP Corporate & Public Affairs, Kansas City, former Mayor of Kansas City, KS; Forrest Matrix, SVP Marketing Communications, Kansas City, formerly of Covad Communications; Melissa Robinson, SVP Consumer, Los Angeles, formerly of GolinHarris Communications; Jim Woodcock, SVP Sports Marketing, St. Louis, formerly with The Saint Louis Blues; and Anne Woodbury, SVP & Managing Director, Washington, DC, formerly with The Center for Health Transformation.

What senior staff have departed the firm?
Two general managers: John Segale, Sacramento, and Michael Busselen, San Diego

Other senior management changes
Bill Anderson and Kurt Wehrsten, co-chairs of Fleishman-Hillard's Operating Committee and the Senior Management Committee for the past five years, were appointed vice chairmen of operations.
Paul Johnson and Dave Senay, both Regional Presidents, were appointed co chairs of Fleishman-Hillard's Senior Management Committee.
Senior management appointments include Cyrille Arcamone, General Manager, Paris; Dan Barber, General Manager, Sacramento; Britt Carter, General Manager, The Carolina's; Ariel Mafai Giorgi, General Manager, Milan; Rich Jernstedt, Chief Marketing Officer; Matt LaRocco, General Manager, FH Government Relations; Morten Paulsen, General Manager, Calgary; Melissa Schoeb, General Manager, San Diego; and Fiona Tigar, General Manager, Sydney.

Fleishman-Hillard announced a new strategic marketing initiative called Next Great Thing. Under the leadership of Alan Rambam, this resource develops inroads into current and future shifts in culture, communications and demographics, helping clients better understand and embrace new media that cut across the online, offline and wireless worlds of today's consumers.

We also developed a unit called Innovation, headed by Kathie Thomas. Innovation is designed to help clients and work teams inject a new level of creativity and strategy into their processes.

Have you made any acquisitions in the past year, or merged with another agency?
Mercury Public Affairs merged with Fleishman-Hillard and is expanding its presence in Washington, DC, by assuming management responsibility for Fleishman-Hillard Government Relations, our Washington lobbying business.

How many offices do you have globally?
Eighty
North America
Fifty-one (plus two majority-owned)
Central America/Caribbean
One
Europe
Fourteen
Africa
(One majority-owned)
Asia Pacific
Seven (plus four majority-owned)
Fleishman-Hillard has teams on the ground in other markets including Cairo and Mumbai.

What offices closed in 2005 or early 2006?
In January '06 we merged the public affairs brand GPC into the Fleishman-Hillard brand to create a nationwide footprint across Canada and a full range of capabilities.

Is there a particular region, US and globally, that is growing right now?
All regions are experiencing growth. We've been particularly pleased with the growth of international operations.

How many practice areas do you have?
Twenty-one
B-to-B Marketing, Interactive, B-to-C Marketing, Internal Communications, Corporate Reputation Management, Litigation Support, Energy, Multicultural, FH Hispania, Public Affairs, FH Out Front, Retail, Financial Communications, Social Impact Marketing, Food and Agribusiness, Technology, Healthcare, Transportation, Homeland Security, Travel and Tourism, and Innovation

Which ones are new?
Retail. FH Hispania is a new, independent practice area; the Hispanic practice had been a part of the firm's Multicultural Practice Group.

Of those, which ones are part of the core strategy of the agency?
All of our practice groups play an integral role in serving our clients, extending the FH brand and supporting our new client acquisition activities. The Public Affairs, Healthcare, Corporate Reputation Management, Technology, B-to-B and B-to-C Marketing practice groups account for the largest percentage of our firm's revenues.

In addition to practice groups, we have a series of specialty capabilities that have been developed to address client needs or opportunities. They include Clinical Trial Recruitment, Communications Consulting Worldwide (CCW), CPR, FH Hispania, Homeland and Global Security, Health Solutions Navigator, Interactive, Medical Education, Next Great Thing, Sports Business Marketing and VOX Global Mandate.

What practice areas showed the most growth?
We experienced significant and measurable growth across virtually all of our practice groups. Of our large practice groups, Technology registered the biggest year-over-year gain. Some of our smaller practice groups, including Homeland Security, FH Out Front, Food and Agribusiness, and Interactive had terrific years. FH Hispania and Travel and Tourism experienced the highest revenue and client gains in 2005.

Which practice areas showed the least growth? Litigation Support and Financial Services were not as active in 2005. However, Financial Services has been especially hot in the first quarter of 2006.

What is the distribution of accounts across practice areas?
Most of our clients are served by at least one of our practice groups. It is not uncommon for our largest accounts to be serviced by three or more of our practice groups.

What key account wins did you have in 2005?
US Army, Amgen, World Travel & Tourism Council, Cathay Pacific, GAFI (Egypt's General Authority for Investment and Free Zones)

What key accounts did you lose in 2005? Comexindo Trading, Hormel, Big Lots

Did you expand any existing accounts into new domestic or international markets?
Autodesk, PepsiCo, Sara Lee, McCain Foods, Roche, Bayer, AT&T, US Department of Homeland Security
Did any dormant clients start to spend with you again? Merck, Novo Nordisk

What proportion of your clients are on a retainer?
Due to SEC Regulation G, as part of a public company, we are prohibited from providing operating unit revenue and related data.

Did you experience top-line or bottom-line growth in the past year?
We experienced both top-line and bottom-line growth.

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

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