Edelman: Agency Business Report 2012

With a slew of executive promotions, new accounts, and agency acquisitions, CEO Richard Edelman is getting closer to his goal of building Daniel J. Edelman Inc. into the first billion-dollar PR agency.

Principals: Richard Edelman, president and CEO; Matt Harrington, US president and CEO, and COO as of July 1
Ownership: Independent
Subsidiary agencies: Blue, StrategyOne, Ruth, DJE Science, Matter, First&42nd, Edelman Consulting
Offices: Global: 63 wholly owned; US: 15
Revenue:
Global: $614,858,225 (CY'11)
$575,130,237 (FY'11)
US: $383,424,570 (CY'11)
$367,194,411 (FY'11)
Headcount: Global: 4,076; US: 2,149

With a slew of executive promotions, new accounts, and agency acquisitions in 2011 and early 2012, Richard Edelman, CEO of the independent firm, is getting closer to his goal of building Daniel J. Edelman Inc. into the first PR-centered holding company and first billion-dollar PR agency.
 
“PR is our core and we want to build research, experiential, entertainment, and some paid around that,” he explains. “We can be the centerpiece on the PR side because all holding companies at the moment are focused on advertising.”
 
Edelman recently appointed president and CEO of global practices and diversified insights business Alan VanderMolen to vice chairman. Kym White, former global vice chair of health, was promoted to global chair, while US CEO Matt Harrington will become global COO, a newly created role at the firm, on July 1.
 
Mark Hass is returning from China to replace Harrington as president and CEO of Edelman US. Overall staff turnover in the year was 23%.
 
Edelman's US revenue was up 9.8% in the 2011 calendar year, to $383.4 million, with global revenue up 14%. It achieved significant growth in its digital and tech practices. In some of its offices, such as Washington, DC, digital accounts for as much as 25% of the agency's revenue.
 
“We really have an advantage in our digital business,” adds Edelman. “It's where we're going.”
 
About 600 of the firm's 4,076 global staff work on digital. In the first three months of 2012, the New York office created 400 pieces of content. Edelman generated a video for BlackBerry DevCon Europe 2012, a Ben & Jerry's app, and an infographic for Barilla.
 
The agency also developed the tagline and print ad execution for Girl Scouts of America. “I see this as a direction for us,” says Edelman. “If we're clever enough to come up with the creative, why shouldn't we do all the execution, ads, pop-up stores, and research?”
 
However, he adds, the firm will most likely not compete for ad business in big client pitches. Rather, it will consider going after small and midsize accounts in markets where there are fewer ad agencies.
 
Another big change is that tech is now the firm's number-two practice, comprising 20% of its business. “It's always been consumer and health,” says Edelman. “It's now consumer and tech.”
 
Some of Edelman's new tech clients include Advanced Micro Devices, Juniper Net- works, and SAP. Accounts such as T.J. Maxx and Marshalls, Volkswagen of America, and Hilton Worldwide were also added. Edelman lost Burger King, a top 50 client, and the firm declined to pitch in the review.
 
Earlier this year, the agency created the K Group, later renamed Krispr, to service its newly won Kellogg account. The conflict shop will run PR for Kellogg's US brands.
 
Edelman has made a number of global acquisitions in the last year, adding Gosub Communications in Germany, Significa in Brazil, Hinfelaar PR in The Netherlands, Switzerland-based K Comms, and Vietnam-based AVC Communications.
 
In 2011, Edelman India went from 90 to 220 staffers. In the last two years, China revenues doubled from $9 million to $18 million.

“The US has gone down in the last two years from being 65% of our business to 61%,” he explains. “We're aiming for 50-50 in the next five years.”

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