Hill & Knowlton: Agency Business Report 2008

The agency claims that revenue and growth exceeded expectations by nearly double in 2007, in what Taaffe characterized as "just a great all-around year."

Outlook
The agency claims that revenue and growth exceeded expectations by nearly double in 2007, in what global chairman and CEO Paul Taaffe characterized as "just a great all-around year."

The firm also exported its First Chairs management training program into a global initiative, which Taaffe says helps employees sharpen both their PR and consulting skills.

"Most of the people who network in this category are very good PR people, and most are pretty good consultants," he says. "So we're training our [employees] to help them become better consultants to their clients."

H&K expects to keep participating in a range of charitable activities, including Ashoka, Project Sunshine in New York, and the Student Conservation Association in Chicago. It has also done pro-bono work with the Gennadios Library in Greece, the Arab Children's Health Congress, DEBRA Ireland, and the Yard Sale for the Cure in Canada.

While H&K expects to grow on all fronts, it anticipates rapid growth in its digital practice. The reason: businesses of all kinds are using Web-based communications more often for their speed and efficiency, says Taaffe, who notes that PR is taking business away from marketing agencies.

"I think the market is waking up to the fact that PR people are better at having conversations than others," he says.

The major challenge H&K expects during 2008 is a shaky economy caused by fears of a recession. However, Taaffe says that the firm should be well positioned to weather that.

"The biggest challenge is the uncertainty in the US and to a lesser degree in the UK - they're the two largest marketplaces for PR services. I don't think it will be a bad year, but it will create some volatility," he says. "It's been a choppy year, and that's what I am looking forward to. I think we're in a position where we won't be terribly affected by it."

Staff

H&K did not disclose headcount. The firm lost 14 SVPs, as well as GMs Randy Pepple and Sharon Barclay in 2007. However, it hired nine SVPs, including Robert Gemignani, Christine Cassiano, Jeffrey Frick, Marc Wasserman, and Glen Rochkind, and two GMs - Hope Boonshaft and Anna C. Leonard - among its 18 senior hires. The firm also promoted eight employees to senior positions from within, including Julie Atherton, worldwide director of H&K Digital, and Kelli Parsons, EVP, GM of the New York office.

Regional performance
The Australia, Sweden, Persian Gulf, Puerto Rico, Vancouver, and Hong Kong offices grew significantly in 2007, while the Norway, New York, Ottawa, China, Spain, Denmark, and Estonia offices also showed growth. The largest operations from the London, New York, Washington, and Brussels offices had strong years as well. H&K opened two new offices in Prague and Guangzhou in 2007.

"For instance, [in] Australia and Canada, we're probably the largest agency in each case - we don't know for sure, but we're either number one or number two," says Taaffe. "The agency market is competitive, but the economies of those two countries are doing well, both [are] natural resource-based economies."

Practice areas
H&K has eight practice areas: healthcare and pharmaceuticals, technology, marketing communications, public affairs, corporate and financial communications, digital, crisis and issues management, and internal/change communications. Digital, technology, and healthcare played key roles in the company's core strategy, while the digital and healthcare practices grew the most. US lobbying grew the least, due to a slowdown in legislative activity during the run-up to the 2008 presidential election.

"Both [digital and technology] are in outsourced communications arenas," says Taaffe. "For example, they're more outsourced than the financial services marketplace."

Accounts
Key wins included eBay, Nivea, Beiersdorf, Project Better Place, Rio Tinto, and Adidas in the US; Basic Element, Bayer, Canadian Cancer Society, Relay, Enbridge, Maple Leaf Foods, Menu Foods, Michelin, Pitney Bowes, Intel, and Coca-Cola Torch in Canada; Hogan & Hartson, CondŽ Nast and NestlŽ in Latin America; Learning & Skills Council, Comet, KCI International, Boehringer Ingelheim, the Qatar Financial Center, Yahoo, Castrol, Pfizer Pharmaceutical, and DHL in EMEA; Business Objects, Etihad Airways, eBay, Samling Group, Australian Wool, Tsingtao Brewery, Sony Ericsson, Coca-Cola, and Powerade in Asia-Pacific. Of the key 2007 wins, about 30% were across three or more countries. Most clients expanded their agreements with H&K to engage the firm's digital services.

Financial performance
H&K did not disclose its global or US revenue, its percentage change over the previous year, or its profit margins. The firm indicated that its global revenue was between $300 million and $400 million, of which $50 million to $100 million was earned in the US. The agency also claimed to have had one of its best years ever in terms of top- and bottom-line growth, and estimated that 70% of growth came from new business and 30% was from existing clients.

Key facts
Principals:
Paul Taaffe, global chairman and CEO, US CEO; MaryLee Sachs, chairman, H&K USA

Ownership:
WPP

Subsidiary Agencies:
Blanc & Otus, Carl Byoir

Offices:
72 offices in 41 countries, including 16 in the US, plus partially owned offices in Poland and South Korea

Revenue:
Global, between $300 million and $400 million; US, between $50 million and $100 million

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