2006 Agency Business Report: Hill & Knowlton

The rebounder

The rebounder

After experiencing slow growth over the past few years, H&K is poised for a turnaround.

"It's been a very good year for H&K growth all over the world," says CEO Paul Taaffe. "Very traditional issues facing corporate clients was the largest single area that grew."

Araft of prominent senior level hires speaks to the agency's momentum shift. In fact, the agency has enjoyed relatively stable leadership, and lost only a handful of key personnel. In the past year, it has restructured its management, with MaryLee Sachs taking on the role of chairman to focus more on H&K's core service offering of marketing communications.

Taaffe is now driving US operations, and notes that the agency has won a number of consumer accounts and rebounded from a disappointing 2004 performance.

Tom Reno's leadership of the New York office continues to add much-needed continuity to a role that had passed through several hands over five years. The change is evident in talking to its leaders, who are filled with confidence that H&K has entered a new era. H&K is building its research capabilities to position itself as a thought leader in the industry, and has also seen new wins for its technology and healthcare practices, two areas of expertise it hopes to develop.

With its parent company, WPP, making concerted efforts to pitch for, and win, the holding-company-wide reviews that some global clients are holding, H&K stands to benefit from its ownership. Deloitte & Touche, Verisign, and HSBC are just a few of the year's highlights. But as both the technology and healthcare markets experience a slowdown in the US, H&K must remain ever alert to take on its competitors overseas, where it has traditionally been a powerhouse.

Now well into 2006, Taaffe says that the firm has seen further increases in pharma and consumer. "The type of business has been changing in pharma," he says. "It's not just drug launches and marketing, but issues related to reimbursement and public policy relative to drugs. The sector is increasingly politicized around the world."

Among large firms, H&K has arguably been subject to the most speculation and prognostication over difficulties in transitioning out of the downturn. All the while, its quiet focus on talent and structure seems to be paying off.

Name of parent division/company

Name of subsidiary companies
Dome HK, Rockey Hill & Knowlton, Blanc & Otus, Carl Byoir.

Name of global CEO and US CEO (or most senior equivalent)
Paul Taaffe

Name of person, if any, the most senior person named above reports to
Howard Paster.

What is your current headcount, and how has it changed from this time last year?
Our parent, WPP is a public company listed on the NASDAQ in the US, as well as on the London Stock Exchange. Therefore, the Group is subject to the provisions of the Sarbanes-Oxley Act. Our US-based legal advisors have advised us that we could be in violation of the law if we supply revenue and other financial data to publications and professional bodies for the purposes of compiling league tables in their prescribed formats, which are not consistent with GAAP (Generally Accepted Accounting Principles.)

Did you make any senior hires in 2005 (VP and higher)?
H&K has made a number of senior hires including:
Sally Ann Barton - svp/director, healthcare NY - Ketchum
Paul Oestreicher - director healthcare, US - DeVries Public Relations
Wendy Hutter - director of business development & marketing, US - In The Round
Scott Kirkpatrick - director sports marketing, US - Draft Worldwide
Julie Atherton - svp & director interactive & innovation, US - Independent Consultant
Steve Getzug - svp media, Los Angeles - Fleishman-Hillard
Tim Bird - svp healthcare, NY - Burson-Marsteller
Jeff Levine - svp, director, healthcare media relations, Washington & NY - American Institute of Research
Peter Jefferies - svp public policy, Washington - Office of US House Speaker, J. Dennis Hastert (R-IL)
Jennifer Eidson, svp corporate, Chicago - founder and EVP, Summit Consulting Group
Mike Breslin, general manager, Houston - Ketchum
Harry Wade, svp healthcare, NY - Ketchum
Jonathan Capehart - svp & senior counselor, US - New York Daily News
Jonathan Yarmis - svp corporate - analyst relations, NY - Waggener Edstrom
Leo Bottary - svp corporate, Tampa - St John & Partners Advertising & Public Relations
Tim Warner - svp and healthcare practice director, Washington - APCO Worldwide
Sean Murphy - svp head of corporate group, Chicago - Summit Consulting Group

What senior staff have departed the firm?
Paul McDade
- worldwide head of healthcare
Harlan Teller - worldwide head of corporate
Jim Sloan - svp corporate, Chicago
Ron Hartwig - president of H&K California
Harlan Loeb - head of litigation US
Dr Reyn Archer - SVP healthcare, Washington
Steve Singerman - head of US marketing communications
Megan Mastal - general manager Houston
Lily Loh - director of new business & marketing, US

Other senior management changes -
Kelli Parsons
was appointed general manager of H&K Washington
Gene Reineke took on the additional responsibility of chief operating officer, Chicago
Erica Amestoy was promoted ot head of H&K Irvine

How many offices do you have globally?
We have 71 offices in 40 countries
North America
18 offices

6 offices
South America
4 offices

Central America/Caribbean
4 offices

24 offices

Middle East & Africa
7 offices

Asia Pacific
9 offices

What offices closed in 2005 or early 2006?
In 2005 we closed our operations in Atlanta, USA and Auckland, New Zealand.

Is there a particular region, US and globally, that is growing right now?
H&K is growing across the board.

How many practice areas do you have?
We have three core service lines: Corporate, Marketing communications, and Public Affairs
And, two sector specific areas of expertise:
Healthcare & pharmaceutical communications and technology

What key account wins did you have in 2005?
Key wins for 2005 included:
Merck, Deloitte, tomtom, adidas, Chevron, Hershey's, VeriSign, Johnny Rockets, Computer Associates, Peabody, Portland Pirates, Corporation for National & Community Service, UK Trade & Investment, Tampa Bay, NASDAQ, HSBC, Ameriprise, BIOGEN, Sony Home Entertainment, US Oncology, REAL D, Exelon.

What key accounts did you lose in 2005?
The only significant loss of 2005 was the Aventis account.

Did you expand any existing accounts into new domestic or international markets?
tomtom, Tahitian Noni, VeriSign and Computer Associates were among the accounts we expanded into new markets.

Did any dormant clients start to spend with you again?
Yes, we saw some renewed activity from various previously dormant clients.

What proportion of your clients are on a retainer?
Less than 5% of our clients are on a retainer.

Has this changed over the past year?

Did you experience top-line or bottom-line growth in the past year?
H&K has experienced both top-line and bottom-line growth during 2005.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
Our performance in terms of revenue and growth exceeded expectations.

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