Edelman EMEA: Agency Business Report 2015

Edelman is in global rude health despite a challenging recruitment market in the UK

Michael Stewart: President and CEO, Edelman Europe & CIS
Michael Stewart: President and CEO, Edelman Europe & CIS

Principals: Michael Stewart, president and CEO, Edelman Europe & CIS; Ed Williams, CEO, Edelman UK
Ownership: Independent
Offices: Global 65; UK 1
Revenue: Global $812.3m (£545.6m); UK $79.6m (£53.1m)
Headcount: Global 5,175; UK 390

Michael Stewart, president and CEO of Edelman’s Europe & CIS region, says he was "very happy" with the performance in 2014, and with good reason.

Like-for-like revenue rose nine per cent across the region. Most notably, the UK arm, which accounts for half the region’s revenue, pipped Brunswick as the country’s biggest PR agency after like-for-likes grew 10.1 per cent (more on the UK later). Growth in Germany excelled at 14 to 15 per cent, while the Turkey business doubled over the year.

The agency also saw a strong performance in more challenging economies, with "mid-double-digit" growth in Spain and an "almost double-digit" rise in Italy. Edelman targeted growth clients and growth sectors in these countries, says Stewart: "You can’t let the economy be the excuse."

Total growth was 18 per cent following two "tremendous" acquisitions: Elan, France’s biggest independent comms consultancy; and Swedish creative agency Deportivo. Stewart says both have brought in clients and enabled the agency to target new opportunities. For example, the Deportivo acquisition has led to new work with Philips and an expanded brief with Heineken.

It also helped sec­ure Unilever’s entire beauty category brief in Sweden. Stewart reveals: "We’ve got a couple more acq­uisitions this year and going into next year in the pipeline that we hope are going to be similar." He cites an expanded brief with Danone as ano­ther major win, and there were "no big losses".

Stewart highlights a major trend in Europe: multinational clients who would previously secure agencies across six, seven or more countries are now consolidating their work into fewer states, typically just the UK, Germany and France.

The trend, which Stewart describes as "structural" rather than "cyclical", began with tech firms but has since spread to sectors such as retail, FMCG and even financial services.

"There’s been a consolidation and sometimes a big withdrawal," Stewart says. "The aggregate amount of money didn’t change substantially, but they definitely went to a smaller number of targets."

Stewart expects to add more regional specialism chairs this year for areas including corporate and public affairs. The aim is to increase the depth of expertise in particular sectors. "We’ve seen in the US it opens up tremendous opportunities."

In April 2015 Edelman announced plans to close its Russian operation and form a partnership with local agency PRT.  However, Stewart reveals that Edelman secured the right of first refusal to buy its new Russian partner.

"Right now is not the time to buy them, but what we’d like to do is nurture them, get them into the network, see how the geopolitics and economics play out, and if there’s a moment to go back in, we’ve got a trusted and tried partner we can buy."

Changing markets
This reflects a broader approach in the region, where Edelman is looking to scale back in local markets that do not currently suit serious investment. "Russia isn’t the only market we’re looking at," says Stewart. "There are other markets where we’re saying, we’re going to focus and make it a bit more narrow, and others where we do think we need to be that big, integrated agency."

UK CEO Ed Williams says that country’s operation has experienced compound growth of 40 per cent over the past three years, adding: "From my knowledge we’re the first ever PR agency to break the £50m barrier [in the UK]."

Edelman expanded its media client roster with Disney and UKTV. Its energy client list grew with an extended brief for Shell and work for Energy UK, the trade body for the UK energy industry.

Its work with the latter is indicative of how Edelman is evolving its offer, Williams says. The agency helped to develop the Energy UK brand and created an advert that ran in national newspapers. It also bought the ad space and handled traditional PR and media relations around it. "Increasingly it’s the full sweep of comms disciplines," Williams points out.

Elsewhere, the UK arm won accounts with Ericsson and the Shard building in London, and worked on campaigns such as 100 Lives, a project to publicise the Armenian genocide backed by actor George Clooney’s Not On Our Watch foundation.

On the downside, Williams says he was "very disappointed" to have lost the Starbucks UK account. He also bem­oans the recruitment situation in the UK – "it’s like a scene from a Hitchcock movie: people const­antly pecking talent away from us, or trying to anyway". In response to this challenge, the agency beefed up its employment benefits in the year.

Another major change saw the Ireland business incorporated into the UK division, creating a combined entity with revenue of £53m.

Finally, in an intriguing move, in April this year Edelman appointed Lord Paul Myners, former chair of troubled rival Huntsworth, to the new role of UK chairman. The agency will hope his influence and experience will help Edelman UK retain its crown as the country's biggest PR firm in the years ahead.

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