NEW YORK: Hill+Knowlton Strategies is divesting its content division SJR and the Alex Jutkowitz-led firm will now operate independently of any one WPP company.
The move comes as part of a global restructure that sees Richard Millar and Lars Erik Grønntun become global presidents, reporting jointly to Jack Martin, who remains global chairman and CEO.
Group SJR, or SJR as it is widely known, was acquired by H+K in 2013 and has grown significantly since then, but from January 1 it will operate independently and collaborate with any WPP company, retaining a "special attachment" to H+K on common clients.
"The earnouts were up for SJR at the end of this year," said Martin. "It was always anticipated that Alex would eventually have a bigger role within WPP."
SJR will continue to be led by Jutkowitz and Mitch Stoller. Martin said it was likely that the agency would move out of H+K's HQ in NYC, where the combined agencies take up one floor of a building that also contains WPP creative firm J. Walter Thompson.
Martin replied "no" when asked if these changes were a precursor to H+K merging with another WPP agency. Earlier this year, sister WPP PR shops Burson-Marsteller and Cohn & Wolfe merged to form Burson Cohn & Wolfe, and several other agencies within the holding company have been consolidated in recent times.
U.S. CEO Jutkowitz and U.S. president Erin Gentry will continue to lead H+K in the U.S. while a search for a new leader is undertaken. Martin will also play a more active role in the U.S., as will Millar and Grønntun.
Jutowitz said Group SJR had grown fourfold since it was bought by WPP five years ago. At the time it was acquired, it had 50 staffers and had just posted annual revenue of $13.6 million for the 12 months to May 31, 2013. It now has 180 employees worldwide, 130 of them in New York.
He describes the firm as a "corporate content consultancy" that still has "no direct competitor that does this day in, day out." He expects to achieve double-digit growth next year and said the firm has the potential to scale to "several hundred million."
SJR's joint venture with JWT, called Colloquial, has fueled much of the firm's growth in its London office. Truffle Pig, a joint venture with the Daily Mail and Snap, operates in the media and entertainment space, mainly from SJR's Los Angeles office.
"Since SJR joined the WPP group, [new CEO] Mark Read has been one of our earliest supporters and advocates. If you look at where WPP is going, with a content-first, digital, analytics-based strategy, it's a logical place for SJR to be within WPP's operating companies."
Martin described overall financial performance at H+K U.S. in 2018 as "flat," mirroring a similar story in 2017. "I'd like to see it do better and that's one of the reasons we're taking this approach," he added.
He often pinpointed SJR as a key part of the engine for growth at H+K, especially in the U.S. In 2016, SJR grew 26% and Martin told PRWeek for its 2017 Agency Business Report: "The integration of SJR into the U.S., in terms of clients and now cohabiting in the New York office, has been a real plus."
Grønntun has led H+K’s operation across Europe, Middle East, and Africa since 2014 and is a senior strategy consultant within corporate communications and public affairs. He is also senior lead for some of H+K’s top global and European clients, including Equinor, formerly known as Statoil.
He said growth at H+K EMEA in 2018 was in the "very high single digits."
"At the point of acquisition of SJR, the situation for both companies was very different," added Grønntun. "There was an acute need to build content capabilities, and SJR was an important incubator across all of H+K. Today, we have digital content capabilities in all offices."
Millar took on the leadership of H+K’s U.K. operation in 2008 and since 2014 has driven a creative agenda that included the formation of the Global Centre of Creative Strategy and Shanghai Addition in China. He also leads on global clients including Adidas across all categories.
Millar said H+K U.K. had posted four record years of growth in a row and was "on track to achieve a fifth."
H+K has offices in more than 40 countries worldwide, with recent developments including Flight School +, a crisis communications training and simulation tool, Better Impact, a new approach to brand purpose and CSR, and H+K Smarter, a behavioral science unit.