Feature: The Collective comes good

As the revamped Bell Pottinger releases its interim results, David Quainton interviews its chairman.

It has been nearly a year since Chime's PR division was restructured, with the Chime Communications moniker dropped in favour of the Bell Pottinger Group. This week's half-year results (to 30 June) are the first for the remodelled firm, and chairman Kevin Murray could scarcely be more delighted.

There has been a 17.5 per cent year-on-year rise in operating income to £22.8m, and a 22.5 per cent hike in profits to £4m. What's more, Murray's Collective - senior practitioners sharing clients with cross-group requirements - has pulled in enough revenue that, were it trading in its own right, it would be in the top third of PRWeek's annual Top 150 league.

Murray says: ‘We saw that clients had integrated marketing and PR requirements across different agencies within the group. It was up to us to respond.'

He has restructured Bell Pottinger's agencies (including Resonate, Good Relations and Harvard) to provide individual services as well as a collective offering. The Collective, headed by former Bell Pottinger Corporate & Financial CEO Tim Ryan, has been briefed to bring in as many larger clients that suit this model as possible.

Murray admits the change has not come without its difficulties: ‘An agency might be nervous about a client
relationship being affected [by cross-group PR] so we had to show individual agency MDs what was in it for them.'

His final act in the implementation of his model was to drop the QBO Bell Pottinger name in favour of three divisions - Business & Brand, Consumer, and Sports & Sponsorship. All Chime agencies are now marketed as ‘part of the Bell Pottinger Group'.

Collective change
The chairman has been keen to create a genuinely collaborative culture in a bid to ease the transition. So, cross-agency clients are charged centrally, preventing individual agencies from jealously guarding revenue. ‘Rewarding people for their work is a big part of keeping agencies happy,' he says.

Ex-Bell Pottinger staff, who prefer to remain anonymous, agree the changeover was generally successful.

‘The restructure was largely public-facing,' says one. ‘Internally there was already a Chime PR division of sorts that sold across agencies to clients. Kevin wanted to establish the Bell Pottinger Group as an entity and Tim [Bell, Chime chairman] felt the Chime name was insulating the business.'

The group's niche consumer agencies stand to gain the most from the changes - those firms not outwardly part of Chime, including Good Relations, one of the PR industry's oldest brands. ‘I'm realistic, our brand does need energising,' says Good Relations MD Ann Fossey. ‘I'm quite bullish that we can ride on the Bell Pottinger energy train. Having the power of the Bell Pottinger brand on our business cards is a good thing.'

Bell Pottinger's ‘energy train' is an ambitious three-year plan, which, according to the results, is well on its way to being met. The Group raised its average fee per client from £34,000 to £42,000 in the first half of this year. It also increased its average revenue per employee from £49,000 to £52,000. Eliminating net debt was achieved six months ahead of schedule.

‘The results are very, very good, they've exceeded expectations,' says Teather & Green media analyst Ji Park. ‘Niche segments such as healthcare, political and financial are growing, and the company is taking advantage of its reputation as a big agency. Wins such as Network Rail will only help more.'

Numis executive director Lorna Tilbian  argues: ‘At the moment PR is riding the crest of a wave because it tends to do well in the middle of a business cycle. Companies have money to spend, and they're turning to PR.'

Murray is particularly proud of City arm BPC&F, led by Charles Cook and former Edelman financial head Stephen Benzikie. ‘They've done marvellous things this year, with very strong growth,' Murray says, pointing to major wins such as Network Rail (PRWeek, 8 September), directory services firm The Number and the Qatar Financial Center. The latter came courtesy of Collective CEO Ryan, who was previously a UN refugee affairs officer in the late 1980s.

The Collective also brought in sizeable revenue this year from Dubai Ports and the Criminal Justice IT Programme, contributing to Bell Pottinger agency operating profit of £3.95m, up from £3.2m.

Moving forward
The Bell Pottinger Group is currently going through a general expansion, which has seen it open offices in Dubai and, last month, in Liverpool. ‘We're looking to expand regionally but the real growth will be in the Middle East and Russia,' says Murray. 

Meanwhile, he is recruiting for the Collective: ‘Comms is becoming increasingly complex. Good communications are essential to success and the business community understands this,' Murray says. ‘But the complexity puts an enormous stress on in-house departments. PR agencies must take advantage of this.'

Operating income: £22.8m in the first six months of 2006, up from £19.4m in the same period in 2005

Operating profit:
£4m in the first six months of 2006, up from £3.2m in the same period in 2005

Hear Kevin Murray talk about his results on this week's PRWeek/CTN podcast

LORD BELL, CHAIRMAN, CHIME

‘These results mean Chime is very much on track with our three-year targets. The results have been so good we've had to raise the bar in two areas - the amount of cross-selling in the group and the size of fee.

‘Although it's always hard for any one company to say how the market is performing, I'm pleased to say we seem to be ahead of many of our rivals. New business has been particularly strong this year, even in the summer quarter where, traditionally, there is a slowdown. This summer we're ahead of expectations.

‘Chime will favour organic growth, simply because we don't need to acquire to grow. That said, we have had impressive international expansion, and that will continue to be a focus. I think the growth has come through modernisation. We present ourselves as a modern comms firm with a modern comms repertoire so have to deliver that. We still operate in a media-led market in the media capital of the world, which is good for the industry.

‘For the next few years I can't foresee any major downturn. In my experience the marcoms industry operates in a ten-year cycle, with seven years of plenty. The upturn began in 2004, so we're enjoying that now.

‘Of the agencies that performed well, Bell Pottinger Corporate & Financial has had an outstanding year. It has struggled in the past due to lack of management, but Steven Benzikie has turned it around.

‘And Public Affairs is still number one in its market. With a lot of interest in Gordon Brown and David Cameron, and increasing regulation, opportun­ities should continue.

‘We used to live in an era of "awareness" being the prime function of marketing, but that has changed to "influence". Which can only be good for PR.'

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.