Ketchum-Pleon merger shakes up European market

This week's Ketchum-Pleon merger creates a single firm entity of great size and scope.

This week's Ketchum-Pleon merger creates a single firm entity of great size and scope. The number of Ketchum wholly-owned and affiliated offices is now 103 with more than 2,000 employees. And, with its bolstered presence in Europe the firm has propelled itself to among the top of the list of major firms serving clients in that region.

Ray Kotcher, CEO of Ketchum, a leadership role he will retain, is confident that the two firms united are a unique and unmatched offering.

“We are, by far, the market leader in Europe,” he says.

Richard Edelman, global president and CEO of Edelman agrees.

“They become the number-one player in Europe,” Edelman says. “It kind of pushes us all down one level. In a matter of size and scale, it puts Ketchum in a different league.”

To compete, Edelman says his firm will have to continue to tout its own merits such as its independent status and its strengths in digital.

“Those don't change,” Edelman notes, adding that the firm will be keeping an eye on this new addition. “We'll be further on our guard.”

Journalists covering the PR industry in Europe agree that Pleon is the recognized leader in Germany with credibility in the European marketplace. Ketchum, is better known as a marcomms-focused shop while Pleon has a good reputation in corporate communications and public affairs, notes Uwe Foerster, editor-in-chief of PR Report, PRWeek's sister publication in Germany.

Others in the industry say the impact of the merger is limited to that European market. And it remains to be seen how well the two organizations will handle the inherent challenges to a merger.

“Ketchum will be able to compete more compellingly,” says a chief executive of a large international agency. But, “Pleon is only known in the German world.”

Matt Cartmell, public sector reporter at PRWeek UK, notes that in the UK, Pleon “is little-known” while Ketchum is “a well-respected, solid agency” that ranked number 11 in the PRWeek UK top 150.

“There's a new competitor that can now look more global, but there are already a number of competitors,” says the agency executive. “Nothing changes.”

With their differing specialties, it will “take a while to build out each other's competencies,” the source argues. (The firms expect the merger to complete January 1, 2010.)

Kotcher disagrees.

“It's not only about the geographic scope of the agency, but also from a client service proposition,” he says. “I don't believe there's any other organization that can offer a client service profile the way that Ketchum and Pleon can together.”

Rick Gould, a managing partner at StevensGouldPincus, a merger and management consulting firm for the PR industry, believes there could be more of these types of mergers on the horizon as PR firms seek to gain a greater foothold in international business.

“I think that could be a trend; that we're going to see a lot of those kinds of combinations,” says Gould. “We're hearing that a lot, ‘We would be bigger and more profitable if we had that international reach.'”

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