Edelman boosts 2014 global revenues 8.2% to $812 million

Global organic calendar year growth of 8.2% resulted in $66.8 million more revenue, with the US up 7.1%, APACMEA 14.4%, and Europe 6%.

CEO Richard Edelman
CEO Richard Edelman

NEW YORK: Edelman achieved equal amounts of success from new and existing clients in 2014 to post organic global growth of 8.2% and increase revenues to $812.3 million, up from $745.5 million in calendar year 2013.

The 2014 figure compares with organic growth of 11.4% in 2013 and 9.6% in 2012. The $745.5 million was adjusted from the $741 million that Edelman originally reported last year and in PRWeek's 2014 Agency Business Report.

The $66.8 million of extra revenue was fueled by new-business wins such as Sunkist, Tough Mudder, and Flextronics, and organic growth from existing clients including Unilever, Microsoft, and Johnson & Johnson.

"Almost half of our growth came from new wins, and half was from our existing portfolio," said Richard Edelman, the agency’s president and CEO, partly attributing the lower year-on-year growth figure to "a transition in management on the West Coast, in New York, and Chicago."

Last July, US president and CEO Mark Hass was replaced by Russell Dubner, who was promoted from president of Edelman New York to run the whole of the US.

In January 2014, Edelman promoted Jay Porter, EVP and global client relationship manager for Starbucks, to president of its Chicago office, replacing the departing Rick Murray. Also in July, Cricket Wardein, head of the firm's US digital operation, was promoted to serve as president of the Western region, a position vacant since Curt Kundred left in 2013.

Health, financial services, food and beverage, and consumer packaged goods performed particularly well - technology and public affairs less so.

"Brand work and pharma at Johnson & Johnson, Astra Zeneca, and Novartis boosted our health clients," said Edelman. "Our health and consumer brands businesses are very strong."

US revenue in 2014 increased 7.1% to $482.1 million from $450.4 million in 2013, with New York and parts of the West Coast strong.

"In the US we’ve developed a deep expertise with universities," added Edelman. "We’ve worked with half a dozen major schools on issues ranging from drinking to sexual assault, which came out of the work we’ve done for years with Penn State and Duke."

Edelman also highlighted very visible US crisis assignments such as Virgin Galactic and activating and growing big client ideas such as the Starbucks veterans program, Gap raising its minimum wage levels, CVS dropping tobacco products from its stores, and GE’s eco venture fund. "Some of this work is as good as it gets," said Edelman.

International revenues for the 12 months were up 11.8% from $295.2 million to $330.1 million. In Europe, revenue was up 6%, with a lot of growth coming from the UK, where half of Edelman’s European business is based.

"We’re going to continue to invest in continental Europe," said Edelman. "We get big exciting work in the UK, including Diageo, Astra Zeneca, and new assignments for ICANN and Barclays. They’re hubbing as much global business there as any of our offices."

Asia-Pacific, Africa and the Middle East posted growth of 14.4%; Latin America grew 18.1%; and Canada was up 16.7%.

"We’re still growing at 10% in China, despite our problems there in the past year," said Edelman, referring to the detainment last July of DJE China Group CEO Steven Cao. "The investigation is continuing and we’re cooperating with the Chinese authorities. Our clients have been remarkably good about it."

Cao was released in October but has not returned to work. In his absence, the Chinese operation is being managed by Shanghai MD Tony Tao and Beijing MD Sanjay Nair, overseen by North Asia CEO Bob Grove in Hong Kong.

Overall growth was 9%, including the acquisitions of Elan in France and Deportivo in Sweden, the completion of a joint venture between Edelman’s Matter and United Entertainment Group, and the impact of foreign exchange rates. Margins remained stable at around 14%.

Edelman said its subsidiary Zeno grew just under 10%, suffering from less work with Sears but new assignments with Anheuser-Busch and Hershey. "The next stage is for us to really globalize the business," he added.

Edelman’s financial year runs from July to June. In 2013/14, it grew 10.3% organically, from $707.2 million to $776.5 million.

The agency’s former full-service reputation and advocacy advertising subsidiary Blue Advertising, run by president Bob McKernan, is no longer part of Edelman.

"He’s [McKernan] spun off and is doing his own thing," said Edelman. "It’s a $2 million business. His main client is the American Petroleum Institute and he was only really serving our [Edelman‘s] Washington, DC office.

"Our PR team has not worked on API for more than a year," he added.

The agency hired approximately 1,000 new employees, increasing headcount to more than 5,700, including people from disciplines such as creative, planning, media relations, analytics, research, and marketing.

"Digital is 20% of our business now," said Edelman. "In some markets it’s a bit more. We’re mixing [skill sets] and increasingly putting people [in senior positions] who can do both. That’s really important because programs increasingly are both.

"We’ve got a very strong core business, a wonderful brand and history, and we have an opportunity to stretch ourselves - to the CCO of course, plus the CMO and the CEO. We want to do corporate and marketing, and we want to be sure that we’re pushing ourselves in creative and in research. But we take nothing for granted."

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