LONDON: In acquiring Austin, TX-based public affairs powerhouse Public Strategies last week in a deal reportedly worth as much as $90 million, WPP stresses that it is augmenting its total public affairs capability.
The approximately 175-employee Public Strategies has annual gross revenue of about $50 million and offices in 15 US cities, as well as in London and Mexico City. Clients over the years have included electrical utilities, Bridgestone/ Firestone, and Chinese oil company CNOOC.
WPP said operations at Public Strategies will remain independent from that of the parent company and its other agencies – including Burson-Marsteller, Hill & Knowlton, and Ogilvy PR – but said the newly acquired firm will nevertheless benefit from training programs and other "professional development" provided by WPP to its affiliates, as well as the means to partner with the other WPP agencies for particular projects.
Howard Paster, WPP Group's EVP of PR, said Public Strategies' service niche and "marquee" clients prompted WPP's interest in the company.
"It's not about bulk; it's about adding a particular business that has its own strategic position," Paster said.
In fact, WPP has sought for several years to acquire the company, noted both Paster and Public Strategies MD Mark Palmer.
Under the WPP business model, the companies retain their autonomy in staffing and strategy while benefiting from WPP's resources in professional training.
But one Washington-based independent agency executive questioned whether acquisitions like this would lead to a score of WPP agencies constantly going up against each other for business and staff, thereby undercutting the benefits of a holding company structure.
Wes Pedersen, principal of Wes Pedersen Communications and Public Relations, said, via e-mail, that while it remained to be seen how the acquisition would affect Public Strategies, WPP is known for its historic success "in blending its new acquisitions into a framework that produces results."
Paster emphatically denied that the WPP business model creates any conflicts of interest for the companies or dilutes the value proposition and said such questions miss the point about how WPP operates.
Opportunities for new business are growing all the time as the economy expands, he said, and, in any case, WPP's acquisitions are based on meeting specific market objectives. In the case of Public Strategies, WPP has acquired a company with its own defined position and very significant clients.
Palmer said the acquisition will give Public Strategies the means to better represent clients in many other parts of the world, including Asia and South America. WPP, which last year generated more than $9 billion in revenue, has more than 91,000 employees located at more than 2,000 offices in 106 countries.
He said the acquisition gave Public Strategies a bigger footprint.
Paster agreed, saying, "They have large clients that need services in places they are not located, and that's... the breadth of access they can get from us."
"We [already had] Mexico and London," Palmer said, "but in places like Asia and India, we've now got the ability to really put together a team quickly. It will really help us with resources and people in places that we don't necessarily have now."
He added that the company's leadership remains basically the same following the acquisition by WPP, with Jack Martin continuing as chairman and Mark McKinnon as vice chairman. Jeff Eller has been promoted from MD to president of the firm, and Meredith Marks will continue as COO.
Martin, who before founding the company in 1988 was a senior aide to former Sen. Lloyd Bentsen (D-TX), has based the firms' expertise on what the firm calls its "Fifth Seat practice," in which the company provides strategic counsel to clients' highest-level executives during crises or campaigns of one form or another.
"We go in at a very high level and become a consultant on par with the financial consultants, the business consultants, the accountants, the lawyers," Palmer said. "Then we are that fifth seat at the table."
Other WPP firms include Cohn & Wolfe, Blanc & Otus, Penn & Schoen, and Quinn Gillespie & Associates.