Edelman: Agency Business Report 2005

Richard Edelman, CEO

2004 revenue: $152,727,353

2003 revenue: $138,436,778

Up 10%

Number of offices: 12 US offices; 42 globally

Staff numbers: 1,779 worldwide, up from 1,659 in 2003.

Staff turnover: Percentage not supplied; Edelman reports a 3.5% decline in US turnover and 5% worldwide.

Senior hires: In North America, senior hires include Ferris Thompson, president, entertainment practice; Francois Tascherau, general manager, Montreal; Camille DeSantis, EVP, health creative director; Barbara Coons, SVP, StrategyOne

Senior departures: Edelman reports minimal senior turnover in the US. A key departure was Rich Moore, president, global director of the technology practice.

New offices: Edelman's most recent office, Portland, was opened in January 2004 and has grown to nearly $2 millon in fees and a staff of 25 people.

Regional performance: North America, up 10%; Latin America down 1.8%; Europe up 17%; Asia up 20.6%. Latin America's decline is a result of the firm's divesture of its operation in Rio de Janeiro in 2003.

Mergers and acquisitions: In March 2004, Edelman acquired Britain's leading consumer consultancy, Jackie Cooper PR (JCPR). The merger brings together two leading independent PR companies in the UK, with approximately 160 staff. In November, Edelman acquired SCH Consultants, a French firm specializing in public affairs. And in India, Edelman and R&P Management Communications entered into a 50/50 joint venture partnership which incorporates the assets of R&PMC to serve the growing reputation and relationship management needs of Indian companies going global, and global companies in India.

Number of practice areas: 14 global practices, including consumer brands, corporate, crisis and issues management, diversified solutions (includes design and production), diversity solutions, food and nutrition, health, entertainment, financial communications and IR, public affairs, sports and entertainment marketing, technology, and travel and tourism Edelman also has four specialty firms: Blue (advertising), BioScience communication (medical education and publishing), First&42nd (management consulting and corporate social responsibility), and StrategyOne (research).

Which are new? Edelman launched an entertainment practice to integrate clients into entertainment. Heading this up is Ferris Thompson, former COO of Creative Artists.

Which areas were strong? All global practices are growing. The employee engagement practice grew from zero to more than $1 million in revenues during the first six months of 2004; StrategyOne is up 33% since October '03; consumer was up 10%, healthcare up 15%, public affairs up 21%, and Edelman cites the 10% rise in the financial practice as the result of a breakout year.

Distribution of accounts across practice areas: Edelman is increasingly working for the same clients across both geographies and practices.

Key account wins: Abbott, Blockbuster, Chiquita, CNN, Diageo, DuPont, Georgia-Pacific, Fannie Mae, ImClone, Merck (HIV vaccine), National Cattlemen's Beef Association, Sears, Time Warner, Toys R Us

Key account losses: Edelman resigned KFC and lost Bayer.

Accounts expanded into new markets: Microsoft: from the US into Canada, the UK, France, Germany, Holland, Hong Kong, Korea, Singapore and China; Pfizer: from the US around the world; Samsung: from the US to Hong Kong, Singapore, Mexico and Canada.

Proportion of clients on a retainer: Approximately 30%

Did financial performance meet expectations? Edelman claims it is the first major firm to regain its 2001 revenue fee levels, and says its growth surpassed expectations.

Outlook: The largest agency featured in the rankings has seen revenues return to its 2001 levels. "All regions were growing, and all were profitable," says CEO Richard Edelman. One area of focus has been positioning the firm as "PR-centric," with satellite operations in advertising and research that support the core PR function, a kind of reverse holding company structure. Internally, the firm has launched a program called "Living in Color," encouraging staffers to follow their passion and bring life experience into work.

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