2006 Agency Business Report: Peppercom

Peppercom's year of expansion into new areas was marred somewhat by spending cutbacks from established clients, which caused an unexpected drop in revenue.

Peppercom's year of expansion into new areas was marred somewhat by spending cutbacks from established clients, which caused an unexpected drop in revenue.

Efforts launched last year include PepperDigital, which is focused on navigating clients through podcasting, blogging, and chat-spaces as part of a holistic approach with traditional media, aligned to corporate image and reputation.

"The cool stuff we do now is all about positioning, repositioning, and introducing brands that are either new, or new to this market," said CEO Steve Cody.

Plans for this year include a reality show Peppercom will help launch. Cody also jumped into the blogosphere with www.repman.com, and hosts a regular podcast there on media and culture.

Name of global CEO and US CEO?
Steven Cody and Edward Moed

What is your current headcount, and how has it changed from this time last year?
Our current headcount is 54 in the US, 10 in the UK. This is an increase of 7% over last year.

What was the percentage of staff turnover?
Turnover at Peppercom has been consistently low. In 2005 turnover was just under 18%

Did you make any senior hires in 2005 (VP and higher)? Please state name, title, and previous company No, we did not make any senior hires in 2005.

What senior staff have departed the firm? Please state name and previous title
None

Other senior management changes
None

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

How many offices do you have globally?
North America
We have two offices in North America, our headquarters in New York and a second office in San Francisco.

Europe
We have one office in London and a joint venture office in Birmingham, England.


What offices opened in 2005 or early 2006?
We opened a joint venture office in Birmingham, England in 2005.

Is there a particular region, US and globally, that is growing right now?
Yes, our London office continues to grow each year.

Is there a particular region, US and globally, that's shrinking?
No

How many practice areas do you have?
Corporate, Consumer, Financial, Corporate Social Responsibility, Technology and Business-to-Business.

Which ones are new?
None

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

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

What practice areas showed the most growth?
Corporate, Consumer, Financial and Business to Business were all strong in 2005.

Which practice areas showed the least growth?
Technology

What is the distribution of accounts across practice areas? Corporate 16%, Consumer 17%, Financial 24%, Corporate Social Responsibility 6%, Technology 9% and Business-to-Business 28%.

What key account wins did you have in 2005?
Siemens, .MD, Diageo, Mercer Delta, Society of Women Engineers, Atari, Nautilus, The Bank of New York

What key accounts did you lose in 2005?
Active, Medifast, TIAA CREF

Did you expand any existing accounts into new domestic or international markets?
Yes. Existing multinational clients such as Steelcase, ITT Industries and others have expanded relationships

Did any dormant clients start to spend with you again?
No

What proportion of your clients are on a retainer? Approximately 80% of our clients are on a retainer.

Has this changed over the past year?
No.

What was your 2005 US revenue?
Our US revenues for 2005 totaled $7,556,086.

What was the % change over 2004 US revenue?
After larger than expected growth in 2003 and 2004, our US revenues dropped 7.1% in 2005. This was due to two of our largest clients significantly cutting their budgets due to their financial difficulties.

What was your 2005 global revenue?
Our global revenues for 2005 totaled $8,398,711.

What was the % change over 2004 global revenue?
After larger than expected growth in 2003 and 2004, our global revenues dropped 5.6% in 2005.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
We did not anticipate our two largest clients making major cuts in their spending with us. Despite a significant amount of new business wins, we were not able to offset the cuts from these two large accounts. As a result, we did not grow as expected. We have replaced the billing on these large accounts in 2006 and are forecasting very solid growth for this year.

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