MEDIA: In Brief - Evans bids for North West radio

Chris Evans and the Daily Mail and General Trust’s radio company DMG Radio are jointly bidding for the North West of England radio franchise, due to be awarded later this year. ..HL.- PRW # 08:08:97 Agency Strategy: Shandwick banks on international results - Shandwick is counting the cost of the Hogarth defection with a predicted fall in profits for the second half of 1997. Focusing on global client relationships may cut dependency on individuals ..BL.- By JULIETTE GARSIDE ..XP.-< Page_07 Photographs (omitted)

Chris Evans and the Daily Mail and General Trust’s radio company

DMG Radio are jointly bidding for the North West of England radio

franchise, due to be awarded later this year.

..HL.-

PRW # 08:08:97

Agency Strategy: Shandwick banks on international results -

Shandwick is counting the cost of the Hogarth defection with a predicted

fall in profits for the second half of 1997. Focusing on global client

relationships may cut dependency on individuals

..BL.-

By JULIETTE GARSIDE

..XP.-<

Page_07

Photographs (omitted)



Comparing Chris Matthews to Alan Shearer is not an analogy that

would spring to most people’s minds in the PR industry.



But, regardless of the football skills of the erstwhile chief executive

of Shandwick Consultants, the link became appropriate last week when the

world’s largest independent PR agency issued its half year results and a

profits warning.



The loss of Matthews and other senior colleagues to the Hogarth

Partnership has caused the expected dip in Shandwick’s financial

fortunes in the same way that news of Shearer’s ankle injury wiped

pounds 12 million off Newcastle United’s share price last week. Both

situations prove the vulnerability of people businesses to the

perception that the company is only as valuable as its star players.



When Shandwick International announced its interim results last week,

its share price dropped by ten per cent to 40.5p in one day. This was

partly due to a profits warning from the group’s chief executive, Dermot

McNulty. He admitted a ’loss of momentum’ in the group’s largest UK

division, Shandwick Consultants, following the departure of its chief

executive and four senior staff in February, and said that the company

expected a ’significant profit impact’ in the second half of the

year.



Colin Trusler, chief executive of Shandwick UK, insists the agency is in

no great rush to find a replacement for Matthews, although it is

accepted that the knock on effect of his and his four colleagues’

departure will impact on results in the second half of the year more

than in the first.



Trusler has taken over as acting head of the division, and the post is

being rethought, with candidates such as management consultants being

considered.



That the UK business has been rocked is undoubted. But it is important

to set the troubles against the agency’s position internationally.



Shandwick Consultants only accounted for 6 per cent of the agency’s

worldwide revenue of pounds 121 million last year. The division expects

fee income of up to pounds 8 million over the coming year. Consultants

won 20 clients in the first half of 1997, although Matthews claims that

these wins were partly the fruit of his labours.



But over the same period Shandwick Consultants has lost at least ten out

of 100 clients. Three were retained clients and accounted for

approximately 5 per cent of the division’s income for the year.



The retained clients included Cookson Group, MAID and Pentland

Group.



The agency had worked with the others on a project basis with hopes of

extending the relationship. It is partly the departure of these clients

that has caused the loss of momentum within the group.



Across the rest of the UK group, which includes Paragon and Welbeck

Golin/ Harris as well as all the Shandwick branded agencies, revenue

declined by 2.5 per cent during the first six months of this year.



The agency was also hit by the strong performance of the pound against

the dollar. Shandwick reports in sterling and is listed on the London

Stock Exchange, but 60 per cent of its operating income came from North

America. The company says the strong pound reduced fees by pounds 4.1

million in the half year.



Taking into account the strong pound, business in Americas and the Far

East is booming. In the former, revenue increased by 19.8 per cent in

constant currencies. Revenue in the Asia Pacific region grew by 5.9 per

cent in constant currencies.



Along with its interim results, the company announced plans for

restructuring aimed at helping it protect itself against the damage

which can be inflicted by the departure of star players.



The agency intends to increase clients’ reliance on its services by

extending accounts across more than one country and, in the US, across

more than one office - an international account is not as threatened as

a local contract if staff walk out of one office.



’For large international clients the Shandwick brand is more important

than any one individual,’ says Andrew Best, a director at Shandwick

Consultants’ financial division and responsible for the group’s investor

relations.



With relationships extended over several countries, the agency and its

clients become in part reliant on each other for the success of their

business.



Best says: ’The benefit of the partnership is that it is long term,

there’s a higher degree of commitment on both sides because both sides

are investing a lot in the relationship.’



’The demand for global services continues to increase and the process

requires more resources,’ says McNulty.



To that end, Shandwick is forming a new unit dedicated to international

clients. Based in the US, it will develop procedures needed for

international accounts and assemble a cadre of people familiar with

working in a multi-country environment. The unit will target and pitch

for large international accounts.



New multinational relationships for Shandwick include Reebok, Eastman

Kodak Company, the World Gold Council, and Microsoft’s interactive media

group.



Aside from cultivating international clients, the company believes that

the Americas region’s success is partly due to branding changes. Trusler

is charged with reorganising the UK business to highlight its offering

and competencies more clearly to clients.



The agency is acting to reduce the influence individual staff have over

its success. But, according to Trusler, it must still recognise the

importance of letting people develop their own ways of working and the

need to cultivate star players.



For, as Shandwick has discovered, the old PR saying that ’the assets go

home in the lift each night’ still holds true.



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