As PRWeek exclusively reported on Wednesday, the long-running relationship between Omnicom PR agency Ketchum and the Russian Federation is finally coming to an end.
The jury is still out on who finally jilted who, but it is likely that pragmatism prevailed as it became clear the objectives of both sides in the nine-year partnership were becoming untenable. Work ended on December 31, 2014.
It’s largely semantics anyway, but let’s be clear: Russia did not "fire" Ketchum. Kremlin representative Dmitry Peskov told the Russian news agency Interfax yesterday: "The current situation of information hysteria and what is essentially an information war against Russia does not facilitate the activation of image-building efforts."
And Ketchum’s statement on the subject that preceded Peskov’s said only: "Ketchum no longer represents the Russian Federation in the US or Europe with the exception of our office in Moscow. Our partner in the consortium, [Omnicom subsidiary] GPlus, continues to operate under the terms of the contract."
Russia found itself in a situation where the relationship was no longer productive, and in fact it was getting some heat itself for employing an American PR firm. And Ketchum was likely looking for a way to uncouple from the account in a way that wouldn’t offend its client or look as though it was bowing to uninformed and kneejerk public opinion.
Ketchum will continue to do business in Russia, where it has 30 clients, including many multinationals. For context, none of the top 100 companies doing business in Russia have pulled out of the country – they are still trying to do the same amount of business out there.
Strange as it may seem to people in some quarters, it is still possible for two organizations to mutually agree on something that is in the best interests of both parties, even in a sensitive situation like this.
When the partnership commenced in 2006, the world geopolitical situation was very different to what it is now. Russia hosted the G8 Summit of world leaders from the richest industrialized countries for the first time and was made up into a full member.
Since the contract started, Ketchum has earned around $23 million from the Russian Federation for work intended to stimulate economic investment into Russia, but fee levels had been declining in the last 18 months as relations with the West deteriorated in the context of increased tension in Ukraine.
The arrangement became particularly controversial when Ketchum placed a high-profile op-ed from Russian President Vladimir Putin about Syria in The New York Times in September 2013, which on the surface would normally be seen as a great achievement for a PR firm, but which prompted some commentators to label the Omnicom firm unpatriotic – and which caused unease among some who worked within the agency.
Ketchum felt compelled to release a statement last year emphasizing it wasn’t working with Russia on foreign policy issues, but in truth the writing was already on the wall for the future of the overall account.
There is still a team of people in Moscow working on the account through Omnicom sister firm GPlus and Ketchum continues to service its global clients in Russia and some former Soviet states through its subsidiary Ketchum Maslov.
Economic sanctions have also made it hard for Ketchum to work with clients such as Russian oil giant Gazprom, an account that garnered the firm $17 million up to 2012 according to ProPublica. Billings from the US are now down to zero and Gazprom is concentrating its efforts on Europe – where Ketchum still works with it.
The bigger picture here is the perennial topic of which clients agencies should choose to work with and where the line is drawn. PR firms have worked with, and still are working with, countries that have just as significant issues surrounding them as Russia, such as Saudi Arabia, Syria, and Bahrain.
Then there are specific industries or sectors, such as tobacco, defense, fracking, companies associated with particular religious or political views, and so on.
Agency CEOs I speak to say they receive numerous lucrative offers to pitch for business each year that they turn down for ethical reasons or because they don’t feel those clients are compatible with the mission of their firm and, most importantly, people.
And that last factor may be the most important one in the long term. Sometimes it is better to terminate, or uncouple from, controversial accounts for the good of everyone involved, no matter how lucrative they are.