Weber Shandwick: Agency Business Report 2009

The year has started strongly and the agency remains optimistic about meeting its growth forecast for 2009, despite the general global consensus of a troubled year ahead.

The year has started strongly and the agency remains optimistic about meeting its growth forecast for 2009, despite the general global consensus of a troubled year ahead. The firm was buoyed by key client wins in 2008 that helped offset some client cutbacks in 2009.

"[2008] was a terrific year, not withstanding the last two months," says CEO Harris Diamond. "We saw double-digit growth in the first nine months, but it slowed down in the last quarter, which just left us with 8% growth."

Toward the end of 2008, several clients froze their budgets and some slated projects were cancelled, he adds. While last year's high staff retention was due mostly to the business growth, Diamond expects the dismal economy to play a larger role in employee-retention figures this year. "But employee satisfaction and morale are still at an all-time high," he asserts.

Diamond predicts the firm's newly launched social innovation practice will continue to be a major growth area. "Social innovation continues to be an area where WS is engaged and it will be a source of growth for us," he says.

"We're seeing more and more companies embrace the concept," adds Andy Polansky, president. "We're also seeing a lot of growth in the governmental contracts arena. We saw a lot of that throughout the year and we're seeing a continuation of that." Additionally, the agency expects its "healthy pipeline" of new business opportunities to continue, particularly in its crisis, government/public affairs, consumer, and healthcare practice areas.

Polanksy adds that WS has already seen "significant budgets" associated with new digital projects that include organic initiatives with existing clients and opportunities for new client wins. Yet even though some new client wins have mitigated client cutbacks, growth is limited this year.

"So far we are flat, slightly up," says Diamond. "This year it's month-by-month, rather than quarter-by-quarter."

Weber Shandwick declined to release information on its headcount, including staff turnover from FY 2007. It hired several senior-level staff, including Sally Squires as SVP and director of health and wellness; Jennylee Haines, SVP of healthcare; Chad Boettcher, SVP of corporate responsibility; and Michael Lane, SVP of technology. Four senior staff departed, including Bonin Bough, EVP of digital, interactive, and emerging media, and Carol Felton, EVP, Silicon Valley. Ten senior-level promotions were made.

Regional performance
Its core business in North America grew more than 8% in 2008. Solid growth performance was also reported in the United Kingdom (5%) and Asia-Pacific (11%). China and Australia's growth levels exceeded 25%.

The agency reported no regions shrinking, but did close its Orange County, CA, office in January 2009. WS opened an office in Kolkata, India, in late 2008. Its office in Athens, Greece, previously an affiliate, became a wholly owned office in July. The agency also opened a second office in Milan, Italy, in late February 2008.

Practice areas
WS has 30 practice areas and specialist teams. Its practice areas include business marketing, clean tech, consumer marketing, corporate and crisis communications, digital communications, financial communications, financial services, food issues, governmental relations, healthcare, public affairs, social innovation, technology, travel, and lifestyle marketing. Its specialist teams include a variety of niche divisions from automotive to litigation support.

WS' business breakdown is as follows: consumer marketing (32%); tech (18%); corporate (19%); healthcare (13%); financial services (7%); and public affairs (11%). It launched food issues and social innovation practices last year, in response to client growth demands. No practice areas were phased out. Strong growth was reported across all areas, with an emphasis on healthcare, corporate, and digital, which won some large clients during the second half of 2008. WS' financial services group was impacted by the global downturn and slowed from prior years.

WS participated in and won several high-profile pitches in 2008. These included; Bayer Animal Health; Centers for Medicare & Medicaid Services; The Dial Corporation; The Federal Deposit Insurance Corporation; Microsoft (US, EMEA, APAC); Samsung; and Sygenta Seeds. Five wins – including Microsoft and Samsung – were across three or more countries. Losses in 2008 included eBay, BT Global Services, Nestlé, RBS, and Statoil. Several existing accounts expanded, including American Airlines, General Motors, Microsoft, and Mattel.

Financial performance

The firm declined to provide information on its 2008 revenue, citing IPG policy. The agency also declined to provide profit margins, ranges, and changes from 2007. It experienced top- and bottom-line growth, noting its bottom-line conversion was solid.

WS' organic growth slowed after recording historic highs in recent years, but some larger clients did expand to new regions. The majority of its growth was fueled by new business wins. The agency reported meeting its original expectations for the year and would have likely exceeded those figures had the economy not declined in Q4.

Key facts
Principals: Harris Diamond, CEO; Andy Polansky, president; Jack Leslie, chairman

Ownership: The Interpublic Group of Companies

Offices: 83 wholly owned global offices; 19 in the US. More than 40 partially owned globally

Revenue: Would not reveal a revenue range, but noted that growth was 8%, a decline from double-digit growth the year before

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