Principals: Jack Martin, global CEO and chairman; Mike Coates, president and CEO the Americas; Lars Erik Gronntun, EMEA CEO and chairman; Richard Millar, UK CEO
Subsidiaries: Acertys, Blanc & Otus, Dewey Square Group, Group SJR, Ideal, PBN Hill+Knowlton Strategies, Public Strategies, Soho Partners, Wexler & Walker Public Policy Associates, and WPP Scangroup
Offices: Global 87; US 12; UK 1
Revenue: Global $350m to $400m; US $100m to $150m; UK £33m (estimate); APAC $49m (estimate)
Headcount: Global about 2,700; US about 650; UK about 300
Hill+Knowlton had another flat year in 2015, with performance particularly affected by problems in the firm’s China operations. Organic growth overall in 2015 at holding company WPP’s PR and public affairs operations was 6%. Group CEO Martin Sorrell said H+K was "less buoyant" than some of its sister firms, compared to the word "challenged," which he used to describe its 2014 performance.
Despite this, global chairman and CEO Jack Martin was pleased with the year, both financially, and by what H+K accomplished. Profit and margins were up for the third year running.
"Top line was flat mostly because of China," Martin says. "China is a tough market, and we took our eye off the ball in terms of HR and culture after a phenomenal 2014."
Martin explains the problems limited the firm’s opportunity to grow, "which is crucial," but the situation has now been stabilized under the leadership of Ye Yu, EVP of H+K APAC and chairman of China and APAC chairman Vivian Lines. Global staff turnover in 2015 was 33%; it was worse in China.
In the fall, Beth Balsam came on from Citizen Relations as president and CEO of H+K U.S., which grew in 2015. She was formerly MD of the BlueFocus subsidiary’s New York office and managed its global relationship with Procter & Gamble. In 2014, Mike Coates, CEO and president of the Americas for H+K, set up a regional U.S. management structure.
"Now Beth is on board, the goal is to get people spending their time doing client work," says Martin. "As people rise up within the firm they are bogged down doing finance, budgets, and HR. Let’s get our best people doing what they do best." Martin himself spends more than half his time on client work.
Content agency subsidiary Group SJR had a "great year," well up in revenue, and is now complemented by H+K’s Center for Creative in the U.K.
Former Xerox CMO Christa Carone came on as COO in February 2016.
"Content could be the engine for our 21st-century offer," says Martin. "It has two drivers — one external, one organic — that changed the way we do business."
A work in progress
New York has been an enduring problem, and in June the 82 people in H+K’s office will join 95 at Group SJR in a new location with sister WPP advertising agency JWT, with which H+K partner on content marketing unit Colloquial.
"New York is still a work in progress," accepts Martin. "For the past 10 years it’s been the weakest link and we have to fix it. It’s Beth’s first priority and she’s already made a difference."
Houston-based Michael Kehs was promoted to head H+K’s global energy practice from his U.S. role. Claudia Gioia joined as president and CEO of its Latin America operation, which in September acquired Brazilian advertising, PR, digital, and content firm Ideal, adding 170 employees and doubling the size of H+K’s LatAm offer.
In January, H+K also acquired 13-strong public engagement specialist Acertys in Montreal. There are no plans for further acquisitions at the moment.
U.S. crisis lead Greg Hitt moved to Wal-Mart as VP of global corporate communications. On the West Coast, H+K subsidiary Blanc & Otus’ CEO Josh Reynolds departed the tech specialist firm, though he continues as an adviser. In May, Blanc & Otus had lost the multimillion dollar Oracle account to a consortium led by WPP sister firm Burson-Marsteller.
Blended and diverse teams
Martin set up a special group focusing on H+K’s top 50 global clients, with blended and diverse teams in terms of geography, age, and experience.
"Senior people’s experience is critical for good client advice," says Martin. "But younger folks are crucial in understanding the new publics and how we communicate with them."
He cites Huawei as a relatively new client benefiting from a blended team, content, creative, and digital. "We won a repitch for Tata in London that was similar," adds Martin. New clients Hotels.com in Dallas and Godiva Chocolate’s Turkish owner Yildez Holding were won with a blended approach. Other notable work was done for GE spanning Group SJR in the U.S. and H+K in the U.S., India, and Brazil.
Accounts lost included 20th Century Fox Home Entertainment after a repitch; Brocade, though H+K still handles public affairs work for the data and storage supplier; and America’s Natural Gas Alliance, as it winds down to a DC-only strategy.
Martin sees U.S. growth potential in working with sister WPP firms on financial communications and in DC to produce a new public affairs offer.
In finance, he notes private equity firms need to pay more attention to the public, activist issues are on the rise, and most boards have to stand for re-election.
"The conventional way of doing things in terms of the public seat at the table is going to change," says Martin. "We need a platform without silos. I see a vacuum and an opportunity to be collaborative with someone like [sister WPP firm] Finsbury."
H+K’s U.S. staff feedback survey showed a big improvement following the introduction of initiatives aimed at improving work-life blend and helping and mentoring female execs to rise up the organization.
"I’ve been [global CEO] for five years and I feel we’re finally firing on all cylinders," Martin says.
UK & EMEA
Hill+Knowlton Strategies parent company WPP saw its PR and public affairs revenue grow around six per cent to £945.8m in 2015, after a strong Q4. However, according to WPP chief executive Martin Sorrell, H+K was "less buoyant" than some of its other agencies.
Nevertheless, it was a record year for H+K Strategies in London, according to UK CEO Richard Millar, with the agency recording high single-digit revenue growth, and double-digit profit growth across the whole firm. The best performing sectors in London were energy and technology, while the fastest growing division was healthcare.
The agency is nearing 300 staff in London, having invested heavily in recruitment last year in its content division, hiring experiential designers and videographers. H+K hired data consultant Vinay Chhana from The Social Partners at the end of last year and launched a behavioural science offer led by Matt Battersby.
From a regional perspective, EMEA CEO Lars Erik Gronntun said 2015 was "a good year" with strong growth across Germany, Benelux, the Netherlands and the Middle East – where the most competitive markets are Dubai and Saudi Arabia. The agency’s two offices in Paris also performed well, with Turkey another key market for growth. He adds that the Mediterranean region is bouncing back, in Spain and Italy. Africa has continued to do well year on year, especially South Africa. "I would like to see better performance in Eastern Europe, Russia and the Nordics," says Gronntun.
Two offices closed last year – Estonia and Latvia – becoming affiliate branches.
In terms of sectors, content and digital is increasing in value, the tech sector is "outstanding" and healthcare is strong. Gronntun says energy is performing well, although the recent collapse of oil prices is putting pressure on the sector.
The agency’s most rapidly growing client across the EMEA region is information and comms tech provider Huawei. Meanwhile H+K won a competitive pitch for eToro, the online investment company, becoming its retained agency across the UK, Germany and Spain. Food business General Mills continues to bring in work across several markets while P&G brought in new business after a pitch.
In addition, there were a couple of high-profile business wins from Norwegian companies, including cruise liner operator Hurtigruten Group and national development bank Innovation Norway.
Millar highlights the agency’s new business conversion rate in London, where he says the agency is winning nine out of 10 pitches. He attributes part of this to the appointment of chief creative officer Simon Shaw in 2014.
The agency’s food and drinks practice is thriving, he adds, with clients such as Arla, General Mills and Associated British Foods, while continued growth in healthcare comes from Shire and Novartis.
Adidas, Intel and HSBC were the fastest growing client relationships in 2015. H+K retained all of its top 20 clients last year. There have been a handful of senior hires across EMEA, including Jenny Astrom, who joined H+K Sweden in January this year as CEO. In the Middle East Stuart Macaulay was appointed as general manager, having previously been GM for Weber Shandwick in Doha. Newly created roles include general managers in Dubai, Istanbul and Italy. Two executive hires were made in Brussels; Alain Berger and Philippe DeBuck.
In London, director Jess Walsh has been made managing director of healthcare. Millar says that in London investment has been channelled into skills rather than appointments.
In 2014 H+K global chairman and CEO Jack Martin restructured the EMEA business, making it less centralised and with individual heads reporting to Gronntun, who was appointed EMEA chairman and CEO. He says: "2015 was the first full year H+K operated as an EMEA organisation after the regions were merged together. It’s enabled us to develop a more aligned strategy."
As a result of the restructure, Gronntun says he is beginning to see an increase in revenue. While H+K’s primary route for growth is organic, rather than through acquisitions, Gronntun says there are deals on the table in Europe.
Over the next 12 months, Millar says there are opportunities in London in infrastructure, such as UK nuclear power plants. Further opportunities are being presented by brands in emerging markets and clients with global ambitions. Millar says he is looking at ways to monetise some of the products the agency developed last year, particularly from its behavioural science offering.
From an EMEA perspective, finding talent is the primary challenge. "We need to change according to the marketplace and retain the best people by using churn in the right way. We want to attract non-typical talent; people who are more creative, visual and digital," says Gronntun.
However, in London the pressures are different, Millar explains: "The other greater challenge is client procurement departments. Their short-term planning horizon is based on uncertainty in their own businesses, so for us demonstrating the value of our own talent and what we can deliver is the single biggest challenge in London."
Even with client cutbacks and deferrals due to uncertain economic conditions in the region, Asia continued to be a strong market for Hill+Knowlton Strategies in 2015, firmly in line with previous years. Among the stars was Japan, invigorated by a new team led by John Morgan, who joined in 2014.
"We achieved significant revenue growth [in Japan], which helps prove that if you have the right people coupled with strong leadership, then client demand for services increases," says Vivian Lines, H+K APAC chairman.
Thailand also witnessed robust growth, the 15th year that revenues had risen year-on-year, credited to agency head Kanpirom Ungpakorn "and the team that she has built over the years."
The firm also launched EastWest at the end of last year, to provide PR services to Chinese firms looking to break into Europe and the Americas. "EastWest links our China team with key markets along key investment routes to help companies in those markets tie up with Chinese companies, and for Chinese companies to promote themselves more strongly in these international markets," Lines explains.
The agency’s efforts in Hong Kong and China to integrate Rice 5 – a digital online agency acquired in 2014 – more comprehensively into the existing structure has paid off, says Lines. More joint pitches and greater staff integration have resulted in account wins such as content creation and management of the global Facebook site for China’s Wanda Group, which operates the world’s largest property business.
Elsewhere in the region, on the back of client requests H+K re-established a presence in Melbourne through a tie-up of its content arm with J Walter Thompson. Known as Colloquial, it will operate in key global markets and provide content solutions primarily to JWT clients.
In 2015, H+K added a broad mix of new clients to its stable, including ANA Airways, Costa Cruises, and Nikon (all Japan, plus each in another market), UFC, Ferrero Rocher, and Northrop Grumman (all South Korea), Morgan Stanley (India) and Aon (Australia).
The firm continues to face the industry-wide issue of key staff retention—in 2015 H+K lost global technology practice director Amanda Groty to PayPal; Sara Gourlay replaced her. Pamela Teo became head of Asia-Pacific HR, tasked with uncovering talent from creative and digital industries, to dovetail with the industry’s growing demands.
Overall though, these are part and parcel of the industry. "No significant changes at an Asia-Pacific level," is how Lines calmly puts it.
He identifies the need for a paradigm shift in response to helping clients communicate better. This has involved the greater use of content, online and digital, faster response times and adaptability, all initiatives that will be deepened in 2016.
The importance of social and digital marketing has matured to the point that it has "moved beyond ‘evolving’," Lines says. It now has to be an integral part of any programme or campaign.
H+K’s approach has been to develop or acquire in-house strength in Korea, China, and Hong Kong, collaborate with sister companies in the WPP Group in Australia, or to outsource some services in markets such as Singapore and India.
The biggest areas of growth for the company overall in 2015 were digital, B2B marketing, and publishing, media planning, and placement."Clients want more integrated marketing solutions than ever before. They need their agency to be ahead of them in terms of strategic thinking. And they want responses very fast," Lines explains.
The joint venture with JWT will help, he adds, "a great initiative for responding to clients needs with all types of owned, earned, paid, and shared content."
The ever-shifting norms of technology are demanding creative solutions. In some markets such as India "whole cycles of communication are leap-frogged" as mobile access replaces more traditional internet access.
"This changes the way brands need to communicate and impacts PR strategies enormously," says Lines.
He sees Asia as sophisticated a PR market as anywhere else on the globe. "PR is as mature in Asia as it is in other parts of the world; sometimes it even leads the way. The challenge is to ensure that we are proactive with these trends as an agency rather than being reactive.
"Some of our largest accounts such as Ford, Microsoft, Coca-Cola, and LG Electronics are also businesses that use multi-branded Team WPP solutions. By being part of those solutions we get to work alongside our colleagues at other WPP companies in creating fully integrated marketing and communications campaigns for clients."
PR firms must also factor in that brands want to be seen to be responsible and sustainable, Lines adds, while also respond to the increased pressure from consumers to communicate more, respond faster, and to be seen to care.