Edelman growth slows as global outstrips US for first time in FY 2011-12

NEW YORK: Edelman reported significantly slower growth in the US than the rest of the world for the first time in its results for the 2011-12 fiscal year, according to data seen exclusively by PRWeek.

NEW YORK: Edelman reported significantly slower growth in the US than the rest of the world for the first time in its results for the 2011-12 fiscal year, according to data seen exclusively by PRWeek.

The largest PR company in the world achieved organic growth of 10.8% worldwide and 6.4% in the US in the financial year from July 1, 2011, to June 30, 2012, well down from 15% and 14% respectively in the previous 12 months.

Worldwide revenue was up from $575.1 million to $636.4 million in the period; US revenue grew from $367.2 million to $391.5 million. At sister agency Zeno Group, which reports earnings separately, revenue was up 27% year-over-year to $16.6 million, all in the US.

President and CEO Richard Edelman attributed the slowdown in the US to a “budget impasse last summer that scared clients for a while,” and because “healthcare and pharma got a bit soft.”

“Almost 65% of our business is marketing-focused and concern from marketers about the deficit and debt affected spending,” he said. “With healthcare, spending by some clients was down by more than 30%.”

High-tech was strong, with Juniper gained as a new client and more work for existing clients Adobe and EMC. Edelman also had a “nice run” in corporate, with new business from Chesapeake and Samsung and an extension of work with General Electric. Public affairs was strong and steady, with particular growth in work in Brussels.

Edelman added that the agency had grown more than 250% in India, from $4 million to $11 million, principally on the back of work for multinational conglomerate Tata. It was up more than 40% in China, to $18 million, due to more work for HP and Starbucks. Edelman also benefited from crisis work in the UK for News Corp.

Growth in the year was principally organic, with a small acquisition in Vietnam of AVC Communications and one of K Comms in Switzerland. That is set to change in the next 12 months, said Edelman, who expects to acquire at least one firm in New York City and possibly one in London.

Once again, Edelman said his firm retained its top 50 clients, though he commented that numbers 11 to 50 saw most growth. Income in the period from the agency's conflict shop Krispr, set up to service the Kellogg account, was $1 million to $1.5 million.

Staff turnover in the 2011-12 fiscal year was 23%, up from 20% last year, including senior departures such as Nancy Turett, chief strategist for health and society, and chief creative officer Mitch Markson.

Mark Hass returned from China to replace Matt Harrington as US CEO. Harrington was promoted to global COO, effective July 1.

In PRWeek's Agency Business Report in May, Edelman reported 2011 calendar year revenue of $614.9 million globally and $383.4 million in the US, up 14% and 10% respectively. Headcount was 4,076 globally, 2,149 in the US.

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