MSLGroup - Firm looks to bounce back

Firm looks to bounce back by expanding its U.S. operation through acquisitions

Principals: Guillaume Herbette, CEO, (pictured); and Ron Guirguis, CEO, U.S.
Ownership: Publicis Groupe
Subsidiaries: CNC Communications & Network Consulting, Kekst and Company, PBJS MSLGroup, Qorvis MSLGroup, and Salterbaxter MSLGroup
Offices: Global: 117; U.S.: 15
Revenue: Global: $450 million to $500 million; U.S.: $150 million to $200 million
Headcount: Global: 3,133; U.S.: 565
U.K. revenue: £35 million; Headcount: 207
Asia revenue: $137 million; Headcount: 1,325

In 2016, Publicis further ensconced MSLGroup within the holding company mothership, and it is now fully integrated with sibling firms in local markets while remaining a standalone global PR and integrated communications agency.

Change was also announced at the top, as iconic holding company leader Maurice Lévy will step down on June 1 and be replaced by Publicis Communications CEO Arthur Sadoun, who will become global chairman and CEO.

Revenue-wise, MSLGroup posted low single-digit organic global growth in 2016, driven by strong performance in the U.K.

"We were flat in the U.S., had double-digit growth in EMEA, and were slightly down in Asia, mostly due to lack of performance at one of our China businesses," explains CEO Guillaume Herbette.

Difficult currency fluctuations were exacerbated by the loss of PayPal’s business, with Edelman snagging chunks of the work. "When you lose a client like PayPal, it takes a while to recover," says Herbette. "That’s why we were flat in the U.S. — it was in our top 10 accounts."

MSL, though, plans to strengthen its North America presence, mostly through acquisition.

We need to double in size in the U.S. in 18 months. We're looking at five deals

Guillaume Herbette

"We need to double in size in the U.S. in 18 months," he notes. "We’re currently looking at five deals, two of which are in good shape, mostly in the digital, data science, measurement, and technology spaces."

MSL’s financial and corporate practices in the U.S. and U.K. posted strong growth, and healthcare also did well in the U.K. Subsidiary Kekst and Co. had a "fantastic" 2016, with "significant" growth; CNC Communications & Network Consulting did likewise in Europe. This March, Gershon Kekst, founder of the eponymous consultancy, passed away at age 82.

U.K. and Asia growth
"The U.K. grew 18%," notes Herbette. "Our three U.K. brands — Salterbaxter, MSL, and CNC — had an amazing year with significant wins such as Garnier, Häagen-Dazs, Shiseido, DSM, and food service company Elior, and more work for P&G."

The holding company’s Power of One integrated concept helped MSL access the top 20 Publicis clients, of which it previously worked with only eight. "Twelve months in, we work for 14. We’re now concentrating on the top 50," says Herbette. He adds MSL won more than 60 clients in Asia via the offer. "Now it [Power of One] is full speed and working like crazy. In 2016, it brought us about €25 million of extra business, mostly in Asia, the U.K., Germany, Italy, and in the U.S. in Q4, mainly due to two large wins."

A significant U.S. score was a multimillion-dollar PR account for USAA as part of an integrated play alongside Saatchi & Saatchi and Razorfish. Other wins included Disaronno with Digitas and employee and corporate communications work for HSBC across EMEA and Asia.

MSL also won Nestlé Waters with Publicis Worldwide and work on Nestlé’s Purina PetCare, Nespresso, and Maggi brands. "We pitch under this banner on a weekly basis," he says. "We won assignments on L’Oréal and SK2 in Asia and Heineken in Asia with Starcom Mediavest Group."

Major growth driver
Conversation2Commerce (C2C) is an influence-to-impact performance platform MSL introduced in October with sister firms Publicis Communications and Publicis Media. The offer is designed to put influence at the heart of all marketing and comms.

"We’ve sold it to many clients and are trying to close about 45 opportunities," explains Herbette. "It was a major growth driver in 2016."

Business for existing client Procter & Gamble grew nicely after the CPG behemoth consolidated PR in January 2016 with MSL, Citizen Relations, DeVries Global, Hill+Knowlton Strategies, and MMK+.

"P&G is our number one client," he says. "The agency consolidation took two waves and about 18 months. We lost the U.S. oral care business, but were delighted to expand our work elsewhere."

MSL also won Johnson & Johnson assignments in the U.S. and expanded corporate and brand work out of Atlanta and New York for VF Corp., owner of The North Face, Timberland, Vans, Wrangler, and Lee. Big wins in China included Hyundai and Volkswagen.

On the downside, MSLGroup didn’t win any of General Motors’ PR reviews in 2016. GM selected FleishmanHillard as U.S. brand comms AOR; M Booth as GMC and Buick PR AOR; Weber Shandwick for Chevrolet; and Kovert Creative for Cadillac.

But GM is still a good account for MSL and Publicis: MSL has 20 people in Detroit, mostly on consumer marketing work. It won Cadillac in Japan and Buick in China last year. The firm lost Netflix business in Singapore and Malaysia, but it remains a major client in 20 countries, including the rest of Asia.

MSL expanded its offices by 17 across 11 countries, as PR assets owned by Publicis in Asia and the Middle East were rebranded MSLGroup, including LeoComm PR. The firm acquired Venus Communications in Vietnam and Quadrant in Nigeria.

Asia PR veteran Faith Brewitt joined MSL in June as Greater China CEO when it acquired her Beijing-based consultancy Have Faith In Your Brand. However, her stay was short-lived, and she departed in December, subsequently filing a lawsuit with the Shanghai Arbitration Bureau alleging gender discrimination. In March, MSL said the situation had been "resolved" by mutual agreement.

MSLGroup helped Netflix when the company undertook the ambitious task of rolling out its service in 130 countries on the same day, and did so with a relatively modest budget. The campaign was awarded Best in Technology at the 2017 PRWeek Awards.

Other senior departures included New York MD Andrew Silver in August, who left by "mutual agreement" with U.S. CEO Ron Guirguis taking on his duties. Anders Kempe, EMEA president, stepped down in early 2016 and was replaced by Nordics co-CEO Peter Steere a year later. Steere became EMEA chairman overseeing 1,100 staff across 30 markets.

North American chief editorial officer and Netflix account leader Stephanie Smith became chief client and development officer and SVP of paid media and cross-channel strategy. Erin Lanuti was upped to global chief influence strategist, overseeing C2C, and Danielle Wuschke rose to EVP, global director of practices and sectors, having joined in March 2016 as global tech practice leader and Boston MD. All three were named to MSL’s global management committee.

Former Boston lead David Close retired in January 2016 after 22 years at the firm and its predecessor Schwartz Communications. Mia Pearson became CEO of MSLGroup Canada when her agency North Strategic was acquired in December.

Overall staff turnover in 2016 was 30%, up from 25% in 2015. In May, MSL laid off staffers across a number of its U.S. offices, including Boston, San Francisco, and New York.

"We are doing the same revenue with 15% fewer staff," Herbette adds, "but we’re now frantically rehiring. In Q1 2017, we hired 40 people in the U.S."

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