BlueFocus: PRWeek Global Agency Business Report 2016

Oscar Zhao, chairman and CEO, BlueFocus
Oscar Zhao, chairman and CEO, BlueFocus

Principal: Oscar Zhao, chairman and CEO
Ownership: Independent
Offices: Asia 13
Revenues: US $245 million (£168.4m) (PR revenue only) 
Headcount: Asia undisclosed

If ever there was a year when BlueFocus was a victim of circumstance, it was 2015. For all the work being done at the firm in terms of investing heavily in digital and impressive international expansion, the China-headquartered company was left at the mercy of the highly volatile Chinese markets last year.

As a result, some of the numbers don’t make for pretty reading. But Oscar Zhao, BlueFocus’ chairman and CEO, is not too worried; the firm itself is firmly on the right track and had a "remarkable year" overall. The factors under his control are all in order, and the markets will do what they will.

"Although the macro economy is facing challenges, we still managed to achieve pretty impressive top-line growth," he says.

From that perspective, BlueFocus certainly had a strong year. It saw revenues of 8.6 billion yuan (US$1.32 billion) in 2015, which is a significant 44 percent leap on 2014’s efforts.

Zhao is optimistic that things could get even better. "In Asia, we still see huge potential, as there is a tonne of unmet needs out there, so I am expecting further growth in this region."

This headline revenue figure accounts for the holding company BlueFocus as a whole. What’s more exciting, according to Zhao, is that the company’s flagship PR unit BlueDigital, saw big returns in 2015, particularly from its digital work, something BlueFocus is hugely invested in.

"In our PR business, the digital-related revenue of BlueDigital accounted for 80 percent of its total income," he said. "We are excited to see this tremendous transformation from our traditional PR work."

But, then come the bad numbers. BlueFocus’ total operating profit was 51.7 percent lower than in 2014, excluding asset depreciation and impairment of goodwill. Add that, and losses plunge to -447 million yuan (-US$68.6 million) 149 percent lower than the previous year.

The company attributes this to huge increases in financial expenses because of high interest payments on bank loans and bond issues, which in China’s economic meltdown led to massive impact on profit.

In addition, BlueFocus saw long-term asset depreciation because of "market change and business adjustment", which particularly affected three units including We Are Social.

Zhao admits that one of his biggest challenges is "how to further propel the overall profitability of the company," but not because of the market fluctuations. In fact, he explains that "regardless of the turbulence of the Chinese stock market", the company raised capital by successfully issuing 1.4 billion yuan worth of bonds, illustrating the confidence investors have in BlueFocus. 

Rather, the company has made significant recent investments, home and abroad, in its digital businesses and other areas, that have yet to bear fruit but are projected to do so eventually.

One such area is mobile, and in 2015 BlueFocus acquired two of China’s top mobile ad platforms, Domob and Madhouse. The company then set up BlueFocus Mobile Internet to expand its services in the mobile space, because as Zhao puts it: "mobile is such an important vehicle that we have to win".

The company also opened We Are Social’s Shanghai office in early 2015, which Zhao says has been a rapid success, turning a profit since September.

Moreover, the company’s expansion plans are progressing well. BlueFocus International, the holding company’s global arm, hits its target of accounting for 20 percent of revenue in 2015. As the only China-led comms group breaking out internationally, Zhao is particularly pleased about this.

"We firmly believe this figure will be refreshed with a higher figure soon enough," he states.

The group’s digital investments have seen it maintain an impressive stable of clients across many sectors, such as Tencent, Baidu, Canon, Toyota, Mead Johnson and P&G. Zhao said the firm also welcomed Audi to its portfolio in 2015, among several others.   

The focus is very much on digital shaping the company’s offerings, including PR. Zhao says the firm has built up its big data and analytics capabilities because it is set on integrating PR with other comms functions such as marketing, and with technology.

"We see technology and data playing a much more crucial role in marketing and communications, so it is imperative for PR companies to grow these capabilities to win over competition," he explains.

The key, Zhao says, is providing an end-to-end service for clients that tackles all aspects of a comms strategy, including creative, digital, social media and monitoring.

"By doing so, we can create more tailored and quality social/digital programmes that address the real issues our brand clients are facing," he says.

With the investments made and global growth looking upwards, Zhao is very positive about what 2016 holds for BlueFocus. It’s the company’s 20-year anniversary, and he is determined to perform even better in this auspicious year.

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