BlueFocus Communications Group: Agency Business Report 2015

Back in 2010, BlueFocus was the only Chinese PR company to be publicly listed in the country. That was also a watershed moment that fueled CEO Zhao's determination to grow the firm beyond public relations into what is now, a sizable communications portfolio.

Oscar Zhao
Oscar Zhao

Principal: Oscar Zhao, chairman and CEO
Ownership: Independent
Offices: 13; Beijing, Shanghai, Guangzhou, Shenzhen, Xi’an, New York, Los Angeles, Irvine, London, Toronto, Vancouver, Montreal, Quebec
2014 Revenue: China US$179.2 million; International US$37.7 million (excludes Huntsworth stake)
Headcount: 5,000 (Global)

Back in 2010, BlueFocus was the only Chinese PR company to be publicly listed in the country. That was also a watershed moment that fueled CEO Zhao’s determination to grow the firm beyond public relations into what is now, a sizable communications portfolio of specializations in advertising, social media, technology, ecommerce, CRM and even product design—via a well-organized global acquisition process.

It was previously hard to imagine a China-based PR company going global in such a speedy manner, but it is on precisely this strong PR foundation that BlueFocus’ expansion is built, from both the expertise and geographical standpoints.

Founded in 1996, BlueFocus’ tech-PR wing was formerly known as ‘BlueFocus PR Consulting’ and renamed in 2013 to ‘Blue Digital’, which Zhao acknowledged was confusing outside of its home market. Even within mainland China, Blue Digital is nicknamed ‘Little BlueFocus’ while the entire firm with all its portfolio agencies under it has the moniker ‘Big BlueFocus’ in order to differentiate between the holding group and the core PR unit.

At the group level, the company controls Vision7 in North America, whose major brands include Cossette and Citizen Relations. Its other PR investments include a minority 20-per cent stake in Huntsworth in the UK, whose four owned consultancies are Citigate, Grayling, Huntsworth Health and Red; it also holds a 55 per cent ownership stake of Singapore’s Financial PR. Combined, these businesses contributed about 30 per cent to the group’s total financial results, down from 50 per cent in 2012.

Two years after going public, BlueFocus already had inkling that a pure-PR play would not be scalable. In 2012, the proportion of revenue from PR and advertising services reached a ratio of 1:1, with a tilt towards advertising and ecommerce.

Despite diversifying into new areas of ambition to turn BlueFocus into a digital communications conglomerate, Zhao is not letting up on traditional PR. In fact, he is redoubling efforts in crisis management practices—still the sweet (or sour, from a client viewpoint) spot for PR practitioners in the Chinese market.

"There are plenty of crises in China to deal with, of course. But the benefit to us is actually not the fee income from directly providing crisis communication services, but instead an increase in client stickiness as well as a gain in long-term accounts as a result of handling a sudden crisis well," Zhao told PRWeek.

When it comes to China, perhaps the elephant in the room is the shady practice of ‘black PR’—the deliberate seeding of negative posts about competitors on the internet and the earning of commission from coverage placed in ‘sweetheart deals’ with media publishers. Zhao is adamant that none of his firm’s profit comes from such tactics.

"The bulk of our clients are multinationals with their own stock listings, meaning strict processes," he says. "To drum home the point, even the clients’ auditors come to our offices to check their books."

Domestic revenue for the agency increased 45.3 per cent year-on-year with about one-third of the growth being organic, gained through PR retainers with existing clients (about 85 per cent). Lenovo, Haier and Baidu represent some of these key accounts. The remainder derives from new business wins in China: Mars, P&G, UnionPay, Microsoft; and from overseas: McDonald’s, Gaz Metro, Koodo Mobile, Fondation Chagnon.

In 2014, to address the growth of digital channels, the group established a talent empowerment center (TEC) to encourage internal innovation with a focus on collecting staff suggestions for ‘intrapreneurship’.

The most prominent senior hire during the past year was Holly Zheng, who was brought on board in San Francisco to oversee international expansion with a particular emphasis on North America and Europe. BlueFocus grabbed headlines last year when it scooped up UK-based We Are Social and US design agency Fuseproject. But these are only two of a staggering 30-odd acquisitions the company made recently to bolster its capabilities. Zhao has taken note of the history of WPP and the other holding-company giants and believes he understands what it takes to compete on an international stage.

By 2022, Zhao has previously articulated, he intends to execute a tenfold growth goal. Expect that target to mean a much bigger bag of mergers and acquisitions.

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