Ketchum US: Agency Business Report 2015

The year 2014 was one of "transformation" according to Ketchum CEO Rob Flaherty.

Principal: Rob Flaherty, senior partner, CEO, and president; Barri Rafferty, senior partner and North America CEO
Ownership: Omnicom Group, as part of Diversified Agency Services division
Subsidiaries: Access Communications, Capstrat, Harrison & Shriftman, MMG, and Zócalo Group
Offices: Global: 80; US: 31
Revenue: Global: $500 million to $550 million; US: $300 million to $350 million
Headcount: Global: about 2,500; US: 1,600*
*PRWeek estimate

 The year 2014 was one of "transformation" according to Ketchum CEO Rob Flaherty. "We did mid to high single-digit [organic] growth," he adds. "It was a solid year."

This compares to the 4.1% full-year organic growth achieved by parent Omnicom’s Diversified Agency Services division, which contains the network’s PR agencies.

"It was the best year in the firm’s history for new business at $91 million," says Flaherty.

This performance was a counterweight to replacing the legacy effects of winding down its Bank of America business, a client of its Emanate division prior to Burson-Marsteller taking it over – it still numbered multiple-million-dollar billings in 2013. Russia’s Gazprom pulled out of the US because of political conflict and Ketchum’s global business with the world’s largest gas producer was reduced to virtually nothing.

In March this year, Ketchum also stopped working with the Russian Federation, with revenue from the controversial client having already wound down considerably in the past 12 months.

March also saw the agency lose Mattel’s Barbie and Hot Wheels accounts to Golin. And it ended its long run with Weight Watchers. Its business with FedEx was also under review. Flaherty attributed the Hot Wheels loss to the "usual churn" and "regular ‘decremental’ stuff where business goes up and down." He noted the firm replaced all the lost business: "Thirty-two of our top 40 accounts grew in 2014, including big accounts such as P&G and Philips [the latter shared with FleishmanHillard].

He says the year revolved around transforming the firm for the future in terms of new talent, continued acquisitions and scouting for acquisitions, training, and new services and offerings. Award-winning producer Lori Beecher joined from 60 Minutes as EVP of media and content strategy. Former Today producer Dana Glaser came on as VP and senior media specialist in January from Kaplow; Kelly Mullen came over from Paramount Pictures, also in January, as VP of branded entertainment in Ketchum Sport & Entertainment’s LA office.

Creative hires
Gabriel Araujo was signed in June from Ogilvy & Mather Brazil as EVP of creative and digital for Ketchum’s São Paulo office. Former Disney exec Mike Hay joined as VP of analytics, research, and insights for Ketchum West; Diana Garza Ciarlante returned to Ketchum in July as director of the agency’s Atlanta office.

"We’re hiring people from movie studios, TV networks, and ad agencies – I’m thrilled they’re interested in our sector," he adds."All our clients are becoming publishers, so the need for content, particularly on the earned side that has more of a journalistic/creative angle to it – not just an ad – is huge."

Staff turnover was 28%, which was higher than last year. Nick Ragone, partner and director of the firm’s DC office left in May 2014 for Ascension – he was replaced by Bill McIntyre, who came over from Edelman.

Deanne Yamamoto departed in August to rejoin Golin; Chris Shreeve, SVP and head of the social marketing practice, left in February and Nicholas Scibetta, director of the firm’s global media network, joined Stony Brook University as VP of comms in January. The firm hired 400 people during the year.

"We’re transitioning out generalists and bringing in more specialists," says Flaherty.

Content-wise, Ketchum installed StoryWorks in 10 offices and it will be in 30 by the end of 2015. It focuses on research, social listening, insights, strategy, creative, content creation, and amplification services. Ketchum Digital fuels StoryWorks through physical assets for owned and shared content such as Web design, cinematography, mobile, and digital and social strategy.

Change management business Ketchum Change posted a fifth year of double-digit growth and is "quickly becoming a differentiator and a strategic advantage" under newly minted president Tyler Durham.

Ketchum also picked up high-profile crisis work in 2014 for Malaysia Airlines, the University of Virginia – through its Capstrat subsidiary – the Anthem data breach, and the UN High Commissioner for Refugees.

In March, Ketchum also launched a specialty unit to help clients engage with consumers aged 50 and over.

"Growth was decent, even though this was a year of heavy investment," says Flaherty. "If you can deliver that performance and invest in the future, it’s a very solid year."

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