Edelman US: Agency Business Report 2015

Edelman experienced a topsy-turvy year with some bumps along the road that garnered negative coverage in mainstream media across a range of issues in 2014.

Edelman president and CEO Richard Edelman
Edelman president and CEO Richard Edelman

Principal: Richard Edelman, president and CEO
Ownership: DJE Holdings
Subsidiaries: Edelman Berland, BioScience Communications, United Entertainment Group, Krispr, Edible, and Assembly
Offices: Global: 65 wholly owned; US: 15
Revenue: Global:$812.3 million (CY’14), $776.5 million (FY’14); US:$482.1 million (CY’14), $463.5 million (FY’14)
Headcount: Global: 5,455; US: 2,569

Edelman experienced a topsy-turvy year with some bumps along the road that garnered negative coverage in mainstream media across a range of issues in 2014.

But ultimately, the juggernaut continued rolling as it added $67 million in revenue and grew 8.2% organically to break $800 million globally for the first time, down from 11.4% growth in the previous 12 months.

US growth was 7.1%, resulting in $482.1 million of the $812.3 million revenue. New business accounted for about 50% of growth and Edelman also picked up the PR Grand Prix at Cannes for its work on The Scarecrow for Chipotle.

"We proved a PR firm can do all three things: Evolve, promote, and protect," says agency CEO Richard Edelman. "Working with clients such as CVS Health and Gap on key announcements about tobacco in stores or labor rates was part of a brand evolution. The mandate for PR is changing and we are helping lead that transformation."

The bumps started with the July disappearance of China CEO Steven Cao, detained by authorities investigating services Edelman supplied a Chinese TV station in Davos in 2009 and 2010. Cao was released in October, but hasn’t returned to work.

Further unwelcome coverage came from an interview Richard Edelman gave Vice Media’s Motherboard about a Guardian article saying the agency had a conflicted policy on climate change due to ongoing work with the American Petroleum Institute. In the piece, Edelman blamed the firm’s former US CEO Mark Hass for mishandling the response to the furor. Hass left in July and was replaced in the role by its New York
president Russell Dubner. Global consumer chair Jen Cohan filled Dubner’s position.

Edelman subsequently said it had not worked on the API’s PR account since early 2014.

The agency also divested its full-service reputation and advertising subsidiary Blue Advertising, which bought media for the API, in February 2015.

Reputational challenges
There was more trouble in November when client strategy documents relating to Edelman’s work with TransCanada were obtained and leaked by environmental NGO Greenpeace. The energy company parted ways with the agency a week later.

"The reputation challenges come along with the territory of being the market leader and doing important work," says Edelman.

The firm’s up-and-down 2014 continued into Q1 this year as it lost two AOR contracts to Golin – Humana and Crayola, while winning an AOR assignment with Taco Bell across DJE Holdings, which includes Edelman and Zeno Group. In March, it emerged that Edelman and his wife are divorcing. The firm said this will not affect the ownership of the agency.

In August, it introduced a new structure and appointed new global chairs in four of its five major practice areas. Silicon Valley GM Maria Amundson became global tech chair, replacing Joe Paluska; Edelman Australia CEO Michelle Hutton moved to London in November to succeed Cohan.

Stephanie Lvovich was made global chair of Edelman’s public affairs practice in October. Kathryn Beiser joined Edelman from Hilton in March 2015 as global head of the firm’s corporate practice, replacing Ben Boyd, who was promoted last August to president of practices, sectors, and offerings.

"It works well on accounts such as eBay, which is shared between New York and San Francisco," says Edelman. "Wherever the comparative advantage is where we put the work. We try to incentivize not just by office, but also by region."

Previous practices and sectors lead Alan VanderMolen became vice chairman of DJE Holdings. Gail Becker became president of strategic partnerships and global integration. She also joined the board of DJE Holdings’ joint venture with United Talent Agency founder Jarrod Moses.

Announced in October, the new firm – United Entertainment Group – combined with DJE’s Matter subsidiary to focus on entertainment, sports, and experiential marketing. Global client relationship MD Andrew Silver left for MSLGroup.

"This is the time to invest and take some chances," says Edelman. "Our acquisitions such as Deportivo [in Sweden] and Elan [in France] are where we’re going to be in the next few years. We are moving the core business – we’re not doing line extensions anymore."

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