2005 Agency Business Report: APCO

Margery Kraus, CEO

2004 revenue: $33,779,462

2003 revenue: $26,507,582

Up 27%

Number of offices: Five in the US, 23 globally

US staff: 164

Staff turnover: 10.9% globally

Senior hires this year (VP and higher): As senior counselors, APCO added Senator Bob Dole and entered into an exclusive alliance with Kissinger Associates, the consulting firm headed by former US Secretary of State. The latter arrangement added Kissinger and co-principals Alan Batkin and Stapelton Roy as senior counselors, to help clients with their most serious challenges and opportunities with international and domestic legislative, policy and regulatory affairs as well as on healthcare policy and related matters. For full-time staff members, hires included former director of Porter Novelli's Washington, DC public affairs practice Roger Lowe joined as SVP in DC, and Mike Tuffin, former at America's Health Insurance Plans and Pharmaceutical Researchers and Manufacturers of America, became VP in that same office; Patty Kennedy

Senior departures: Stephen Kehoe, managing director, UK

Offices closed: Los Angeles (January 2005)

What region is growing? All regions are experiencing growth; North America remains APCO's largest and strongest region, and is the driver of its global business.

Changes in ownership status: APCO completed a management buyout from Grey Global Group.

Number of practice areas: APCO has an integrated model and does not count individual practice areas.

What areas were strong? Corporate reputation, crisis and litigation communication, CSR and research through APCO Insight(r) were particularly strong. APCO also experienced growth in online activities. The agency's healthcare, pharmaceutical and biotech clients are a key growth driver for the company globally.

Key account wins: AHOLD - reputation management; Canadian Embassy - online communication; Global Business Coalition on HIV/AIDS - representative in China; Governments of Indonesia, Kazakhstan, and Mongolia; US Department of Agriculture (food safety and inspection service) - partner on media campaign

Key account losses: Brussels: Roche Pharmaceuticals - Campaign around their HIV treatment drug FUZEON; Sacramento: The California Endowment - completed project

Accounts expanded into new markets: Elsevier - expanded work to US. Microsoft - expanded communications brief work with Microsoft EMEA HQ to include government relations support; IKEA - work by the Sacramento office in Portland, Las Vegas

Proportion of clients on a retainer: Approximately half.

How did revenues meet expectations? APCO's worldwide revenues grew 24% last year. We have an internationally diversified revenue stream and 2004 exceeded our revenue expectations, especially in the last quarter.

Outlook: Completing its management buyout from former parent Grey Global, APCO entered a new era in 2004. "We are going to end up with more than 50 people with equity, buying into the firm," says CEO Margery Kraus. With over 70% of its business from referral, the agency has focused on making it a seamless transition for clients. The firm plans to stick to its core competency of corporate and public affairs work. "We're never going to be anyone's consumer agency because it's not what we do."

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