INTERNATIONAL REPORT: Global growth patterns

Global PR agencies are so far holding their own - and their breath - as they continue to expand into new markets in a tougher 2008. Alex Black reports.

More than ever, PR is a global industry. As companies find new ways to sell their goods and services outside their home country, PR agencies are finding more ways to help them.

Big international agencies are setting up shop - mostly by buying up budding local businesses - in a growing number of markets. But the big areas of growth as we move into the second half of 2008 are Eastern Europe, the Middle East (or, more accurately, the UAE) and the ‘BRIC' bloc
of Brazil, Russia, India and China.

New offices are springing up all the time in Moscow. In December 2007, Fleishman-Hillard became the latest international agency to open a practice there in the hope of securing lucrative work from Russia's rapidly expanding economy.

While the picture in emerging markets is varied, many of the more established markets are polarising between full-service comms consultancies and agencies that specialise in market segments, such as investor relations or energy markets.

Working at a global or continental level is more of a challenge than ever. It requires the ability to absorb vast amounts of market data and understand local sensitivities, at the same time as seeing the bigger, global, picture.

PRWeek asked the European and global heads of ten of the biggest PR agencies what threats and opportunities they face and what their hopes are for the future (see pages 25-31).

We also spoke to Sally Sykes from Johnson & Johnson-owned healthcare multinational DePuy to get an in-house perspective, and picked the brains of Lou Capozzi, head of global PR trade body ICCO.

Recruiting talented PR staff remains a headache wherever one is in the world, and firms have to tread a line between sending experienced staff from HQ to new climes and recruiting locally.

Picking the right path through the shifting digital landscape is something in-house and agency PROs alike will have to get right. And any global firm not showing complete transparency in its dealings will find fewer places in the world to hide.

Tickets are still available for PRWeek's International Reputation Management Summit in London on 29 September. Go to prglobalconference.com for more details. Discount prices if booked before 7 August

 

BURSON-MARSTELLER PR agency
HQ New York
Ownership WPP
Europe president & CEO Jeremy Galbraith

Was 2007 a good year?
Yes. Our European division won Doha 2016, DeBeers, McCain and Sony Ericsson.

How is 2008 shaping up so far?
We look set for the best financial performance in more than 20 years. Virtually all markets are having a great year. Cross-market work has increased significantly.

What was the worst headache last year?
Managing the expectation of a downturn in the economy which, so far, has not hit us.

What recent campaign made you really proud of your agency?
Our work on behalf of Doha's 2016 bid for the Olympic and Paralympic Games - the first bid from the Arab world. We achieved a share of voice that far outstripped other bid cities. Ultimately, it was not selected by the IOC, but the campaign was so high profile the international media positioned the decision as highly controversial.

Is the credit crunch squeezing margins?
It hasn't yet, although some procurement-led pitches this year have sought to do this, and we have withdrawn from them as a result. I expect it to get tougher in the final quarter of this year and in 2009, though.

Where, or what, is the next big market?
The Middle East. There is massive investment, and many local businesses are looking for global comms support.

What skills set will prove most useful to senior PR execs in 2008?
The ability to recognise the importance of different cultures and ways of doing things. Consumers now are influenced not only by local friends and media but by people from other geographies.

What would improve agency profits?
Way too much is spent on headhunters. Our staff can do a better job of identifying potential recruits at a fraction of the cost.


DEPUY INTERNATIONAL Global healthcare client
HQ Leeds, UK
Ownership Johnson & Johnson Company
UK, EMEA & Asia Pacific director of communications Sally Sykes

What was the worst headache last year?
Forecasting and budgeting. The uncertain economic climate has had a knock-on effect. We are more cautious with spend.

What recent campaigns have made you proud of your company?
‘My Knee: My Life' rolling out across Europe, the Middle East, Africa and Asia Pacific, aimed at raising awareness of treatment options for patients with painful joints. ‘Restoring the Joy of Motion', recently praised by Harvard Business Review as one of the most compelling company missions.

Is the credit crunch squeezing margins?
We see pressures on pricing, but it is driven by government pressure on spending rather than consumer credit worries.

Where, or what, is the next big market?
The BRIC bloc (Brazil, Russia, India, China) is showing tremendous growth. We recently opened a manufacturing facility in China.

What skills set will prove most useful to senior PR execs in 2008?
A senior executive has to make sure the communications strategy is directly linked to business outcomes.

Name one industry change that would help you in the next 12 months.
For all business leaders to be at the same high level of communications understanding, with realistic expectations and understanding of the profession.

Name one thing that stood out as damaging a firm's reputation in the past 12 months.
Allegations of Gap or Primark using child labour to make garments, and Hugh Fearnley Whittingstall's campaign against supermarkets selling intensively reared chickens.


EDELMAN PR agency
HQ New York
Ownership Independent
President & CEO Europe David Brain

Was 2007 a good year?
We saw record revenues and record margins. It started well and just got better.

How is 2008 shaping up so far?
It is holding up, but it surely can't last, can it?

What was the worst headache last year?
The length of time the big international pitches (such as HP) take to get through procurement. Another would be finding people with the guts to leave their home market and go to work for us abroad.

What recent campaigns have made you proud of your agency?
The launch of computer game Halo 3 in Sweden, the regeneration of Covent Garden in the UK and the launch of osteoporosis drug Bonviva in Italy.

Is the credit crunch squeezing margins?
Not at all yet, but it will, I am sure.

Where, or what, is the next big market?
Russia and the Middle East.

What skills set will prove most useful to senior PR execs in 2008?
As a business manager, the ability to respond quickly to changing fortunes. As a consultant, understanding the multi-stakeholder environment and society 2.0. A flair for communications and a bit of a humility go a long way too.

What single thing would improve your agency's profits?
Getting paid every time we produce a strategy or creative property.

Name one thing that has damaged a firm's reputation in the past 12 months.
Woolworths naming a range of girls' furniture Lolita has to be worth a mention.

Any words of wisdom for the industry?
It is doing a good job and has come of age.

 

FLEISHMAN-HILLARD PR agency
HQ St Louis, Missouri
Ownership Omnicom
President & CEO Dave Senay

Was 2007 a good year?
We saw double-digit top and bottom line growth, opened a new office in Moscow, and increased our Middle East footprint.

What was the worst headache last year?
Conflicts. The numerous choices we have in the same industry sectors make this our worst headache and greatest opportunity.

What recent campaigns have made you proud of your agency?
Sanofi Pasteur MSD with Fleishman-Hillard Ireland for our ‘Tell Her About It' campaign; F-H Germany's work with Phonak on ‘Hear the World'; our UK office's ‘Wizarding World of Harry Potter' campaign for Universal's Orlando resort.

Is the credit crunch squeezing margins?
The credit crunch has slowed (not stopped) our growth in some markets in the US.

Where, or what, is the next big market?
We are investing heavily in India and the Middle East.

What skills set will prove most useful to senior PR execs in 2008?
The majority of our top-200 clients ask us to work on more than one continent, so being able to understand what ‘global service' means, and having the network to deliver that service are key.

Name one thing that stood out as damaging a reputation in the past 12 months.
Our Irish division believes the recent ‘no' vote on the Lisbon Treaty has damaged
the reputation of Ireland, which has long been a beacon of all that's been good about European integration. The ‘no' vote also throws down a major challenge to the EU that it needs to work much harder at communicating simple, positive messages about Europe.


HILL & KNOWLTON PR agency
HQ (European) London
Ownership WPP
Chairman & CEO, EMEA Andrew Laurence

Was 2007 a good year?
It was a record-breaking year with remarkable performances from key markets and major international campaigns for DHL, Castrol and Egyptian development agency ITIDA.

How is 2008 shaping up so far?
So far, we're ahead of our goals. The Middle East and Nordic regions are performing particularly well and our Brussels and UK offices remain strong, acting as hubs for international services. Our financial practice is growing too, winning a brief from the Qatar Financial Centre Authority.

Is the credit crunch squeezing margins?
We are seeing a change in the way we work. There is still a great volume of briefs, but an increasing number are for short-term projects. We are also hedged to a certain extent by growth from clients originating in rapidly developing markets.

Where, or what, is the next big market?
The Middle East will continue to see growth, as will Russia, but we are also seeing an increase in work from firms looking for advice on entering the African market.

What one thing would improve profits?
Finding a workable solution around the issue of client conflict.

What skills set will prove most useful to senior PR execs in 2008?
The experience to act as a generalist adviser well versed in many specialist areas. Sensitivity to international cultures and issues, as geo-political shifts continue to change the way we do business, is also vital.

Any words of wisdom for the industry?
My view has not changed since last year. The challenge for the industry is to grasp the digital opportunity.


HOTWIRE PR agency
HQ London
Ownership Photon
MD Kristin Syltevik

Was 2007 a good year?
We started working with brands such as NEC and FT.com and hired some great staff. Our social-media team started to get traction, our offices in Europe started gaining real momentum. We also spun off our sister agency, Skywrite.

How is 2008 shaping up so far?
It started well but went flat quite quickly. However, things aren't too bad, and many firms are now back looking for agencies. Our pipeline is booming, and specialist services such as social media are big sellers.

Where, or what, is the next big market?
We have big hopes for social media. Expertise in this field is a key requirement for traditional tech firms, but we're also seeing other sectors asking for social media campaigns. In clean tech/energy, increased consumer demand and more funding mean briefs are getting bigger. In terms of geographical markets, we are seeing very positive growth in Spain and France.

What skills set will prove most useful to senior PR execs in 2008?
A wish to learn. The work we are doing is changing dramatically and, while it is natural for Generation Y, and maybe even Generation X, most senior execs probably belong to a slightly earlier generation.

What would help improve profits?
A better US dollar-to-sterling exchange rate.

Any words of wisdom for the industry?
If courting controversy, have the fortitude not to bow down to nay-sayers and bigots.
The recent Heinz Deli Mayonnaise homophobia scandal was a prime example. At the first whiff of opposition to a fairly uncontroversial TV ad featuring two men kissing, Heinz cancelled it, providing a platform for more homophobic sentiment.


HUNTSWORTH PR agency
HQ London
Ownership Independent
CEO Lord Chadlington

Was 2007 a good year?
Huntsworth had an excellent 2007. We won more than £50m of net new business, 40 per cent of it from existing clients. Our revenue topped £150m and our multi-office business accounted for 29 per cent of that figure.

How is 2008 shaping up so far?
New business is a little ahead of last year and the new business-pitch book is still very strong. Despite this, when every newspaper screams that we are about to face the worst recession in living memory, it is hard not to pause and think cautiously about the rest of 2008 and beyond.

What was the worst headache last year?
Managing the share price. We have built a profitable business, but the City is convinced all media stocks are going to be a long way from forecast numbers - if not in 2008, then in 2009.

Is the credit crunch beginning to squeeze margins?
No evidence as yet, but we have to be careful that when we lose a client or see a fee reduced, we do not excuse poor performance by blaming the recession.

Where, or what, is the next big market?
The Middle East, Russia, India and China are very exciting. The digital sector - and the way it interacts with CSR - is interesting.

What skills set will prove most useful to senior PR execs in 2008?
To be able to be bashed around the head by the clients and the economy and still come back for more - with a positive attitude.

Any words of wisdom for the industry?
If you do not stay customer-oriented then you will fail. It will be so easy to be self-obsessed in the next couple of years. In a recession, no task is too humble to help our clients get through the months ahead.


ICCO Global PR trade organisation
Name International Communications Consultancy Organisation
President Lou Capozzi

What was the worst headache last year?
Conflicting reports on the health of the business. Respondents to our World Report expressed a high degree of confidence in continued growth. Early benchmarking efforts by other associations also expressed optimism. But weak securities markets, the financial services crisis and a generally weak global economy continue to hurt some firms and geographies.

Where is the next big PR market?
India and China continue to be fast-growing markets. I don't expect either to slow down.

What skills set should a senior PR executive in a multinational company have in 2008?
The ability to lead integrated communications efforts is the skill most in demand. To do that,
professionals need to be comfortable with the rules of the new ‘Conversation Age'. Take a research-based strategic view, understand how to work with third parties and approach communications planning without prejudice toward any particular tactic or discipline.

If you could make one change to the industry to help PR professionals do a better job over the next 12 months, what would it be?
I would develop and promote a global measurement standard. Lack of accountability for results, and a broadly accepted view of how to do that, is our industry's Achilles' Heel.

Any words of wisdom for the industry?
Seize the moment. PR professionals have all the skills and abilities to lead the way in today's vastly changed comms environment. Now we need to step up to the challenge and show that we can work at a scale that matches the opportunity.


KETCHUM PR agency
HQ New York
Parent company Omnicom
Senior partner & CEO EMEA Jon Higgins

Was 2007 a good year?
It was the strongest in Ketchum's 84-year history.

How is 2008 shaping up so far?
Our performance for the first half of 2008 has been at record levels; however, economic uncertainties show no sign of abating.

What recent campaigns have made you proud of your agency?
Our work with the Presidential Press Service of the Russian Federation is telling the story of economic growth and opportunity for Russian citizens and investors both inside and outside of Russia. We are also working with Abu Dhabi-based non-profit outfit Kalima, spreading the word about its mission to translate great works of classic and contemporary writing from around the world into Arabic.

Is the credit crunch squeezing margins?
Between the credit crunch, rising fuel prices and global ‘stagflation', everyone is feeling the effects. This means tightening of budgets and caution when appointing new agencies and signing off new projects.

Where, or what, is the next big market?
The BRIC bloc, but the Middle East, most notably the United Arab Emirates, is another blossoming market with a great deal of potential.

What skills set will prove most useful to senior PR execs in 2008?
Senior execs must remain fully committed to ethical business practices.

Any words of wisdom for the industry?
There's a proverb that goes ‘Smooth seas do not make skilful sailors'. Let us not be the comms profession that battens down the hatches to weather a downturn.


PORTER NOVELLI PR agency

HQ New York
Ownership Omnicom
EMEA president Jean Wyllie

Was 2007 a good year?
It was. We were hired as global agency of record for British Airways and also won major new business with AstraZeneca and Pfizer. We also launched a joint venture with the Natural Marketing Institute to support our environmental comms and focused on social marketing in North America and the UK.

How is 2008 shaping up so far?
Like everyone, we are watching the global economic climate and we do expect some challenges over the next six months, but we are feeling very optimistic.

What recent campaigns have made you proud of your agency?
Taking 44 full-size recreations of National Gallery masterpieces on a tour of London for HP was a visual, exciting campaign, which attracted massive publicity. We have been working with an ambitious mobile technology start-up SpinVox, which has also generated a real buzz in the international business press.

Where, or what, is the next big market?
Turkey gets more interesting the closer it comes to accession to the European Community. Its location will make it an important strategic market, and its predominantly Muslim population will require a different approach to marketing. Other interesting markets include India, which continues to be a powerhouse in terms of ideas and population. Taiwan and Vietnam will be worth watching too.

What would help improve your agency's profits?
The industry needs to be firmer about over-servicing. Agencies provide a specialist, expert consultancy service, but some firms undersell themselves and this has a knock-on effect. We should all be confident about the value of what we do.


TRIMEDIA PR agency
HQ London
Ownership Huntsworth
CEO Michael Murphy

Was 2007 a good year?
It was a record-breaking year. We are now one of the largest European PR groups with a presence in 11 countries, yet still relatively unknown.

How is 2008 shaping up so far?
We have relaunched ourselves with our trends, tools and talent positioning and are now working on sustainability, CSR and corporate reputation management. The number of international clients we work for has grown by more than 25 per cent.

What was the worst headache last year?
Attracting good people.

What recent campaigns have made you really proud of your agency?
Our 13-country European CSR programme for Land Rover, our corporate work for Coca-Cola and McDonald's, and our increasing work for European governments.

Is the credit crunch starting to squeeze margins?
There is little evidence of this. We support clients through bad times as well as good.

Where, or what, is the next big market?
CSR is no longer ‘nice to have' but essential.

What skills set will prove most useful to serve senior PR execs in 2008?
Being street smart and culturally sensitive.

What one thing would help improve your agency's profits?
Recognising that the best consultants do not make the best business managers.

Name one thing that stood out as damaging a company's reputation in the past 12 months.
Terminal 5 does spring to mind.

Finally, any words of wisdom for the industry?
Never forget the value we bring.


WEBER SHANDWICK PR agency
HQ London
Parent company InterPublic Group
UK & Ireland CEO Colin Byrne

Was 2007 a good year?
New business wins and a strengthening of existing client relationships made it a good year across our EMEA network. Revenues on our top 40 clients were up 29 per cent year-on-year.

How is 2008 shaping up so far?
Better than we expected. Most of our UK business units are ahead of budget at the end of the first six months and year-on-year revenues are up eight per cent.

What was the worst headache last year?
Recruiting and holding on to the best talent always keeps us occupied.

What recent campaigns have made you really proud of your agency?
Sochi's winning bid to host the 2014 Olympic and Paralympic Games, the pan-European launch of Harley Davidson's 2008 bikes, and the ‘HIV and the Body' programme conducted for Gilead Sciences - first of a kind medical education scheme.

Is the credit crunch starting to squeeze margins?
Maybe in the property and financial sectors, but not overall. Where, or what, is the next big market?
Outside of Asia, we believe Eastern Europe represents a great opportunity. The digital and internal comms sectors remain the ones to watch.

Name one thing that stood out as damaging a company's reputation in the past 12 months.
The breakdown of trust at Northern Rock and the slowness of all parties to act.

Finally, any words of wisdom for the industry?
Let's think about how we can get more talent into the PR industry.

 

 

 

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