A clutch of big stories reminds us of the burgeoning corporate comms discipline, which has received a further shot in the arm from recent global crises.
To a certain extent, the move – which also sells those running these three firms a combined 49.99 per cent equity of the combined venture – is a defensive one by WPP’s CEO, Mark Read.
The founders of these firms have been pushing for some time to buy back at least a stake, most notably charismatic Finsbury founder Roland Rudd. And in such a merger, the scale will obviously provide savings in back-office costs. (In these senses, it is a further part in Read’s “tidying up” of WPP’s sprawling empire since he took over from Sir Martin Sorrell in 2018.)
But Read, who joins the new board of Finsbury Glover Hering, told me today that he also sees a big “growth opportunity” here, recognising that this segment of professional services is booming.
“Corporate communications has risen up the c-suite agenda recently with a growing interest in ESG (environmental, social and governance activities). This has only been accelerated by COVID-19, Black Lives Matter and the Facebook ad boycott. This area of senior level comms support is a growth opportunity for us," says Read.
The combined annual billings of FGH will be about $200m, which means it will now rub shoulders with the other three global corporate/financial comms specialists Brunswick ($307m) Teneo (an estimated $280m) and FTI ($243m).
Most importantly, the various partners in FGH will now have further incentive to grow the combined business with more ‘skin in the game’. WPP and the individual firms won’t talk about the precise equity arrangements but it is understood that some equity will be made available as a war chest for incentivising staff, and for hiring.
But talking to clients and consultants this week, there is consensus that FGH now needs to significantly broaden its offer if it is to grow as WPP and its partners wish.
“Finsbury, Glover and Hering are great brands but they’re not broad-based or successful enough as it stands,” says the CEO of a large corporate consultancy. “Finsbury really is a niche operator in a very lucrative niche (M&A work). Is it strong in ESG, in corporate comms, in digital? Not really. The challenge for the new firm will be to round out its offer in a way that clients actually want.”
The boss of another large rival is similarly sceptical. “These are all quality businesses but how will they integrate? I see there are co-chairs (Finsbury’s Rudd and Glover Park Group’s Washington DC-based founder, Carter Eskew) but the CEO will be Alexander Geiser (managing partner of Germany’s Hering Schuppener). There are a lot of egos at play here. Getting everyone aligned around the world will be difficult.”
Nevertheless even this rival boss concedes this is a buoyant global market in which to (re)launch such a firm: “Corporate comms now has almost ‘key worker’ status. Clients are going through these situations now – COVID-19, Black Lives Matter – where the c-suite needs strong professional advice. In the global pandemic every organisation is judged on how they respond.”
Indeed the consensus is that ESG – or corporate purpose – will continue to be a massive area of opportunity for corporate comms specialists.
This was also highlighted by another big industry story this week, as Edelman hired former Labour Party and Change UK MP Chuka Umunna to lead its ESG offer. Edelman may not have quite the c-suite clout of Brunswick or Teneo but it is much bigger overall (2019 billings, $892m) and certainly sees major growth in ESG work.
As the boss of one consultancy puts it: “Corporate purpose is now a huge play. For most organisations the underlying message has become more important than the news cycle.”
So the really big question for PR consultancies around the world is precisely how to provide the advice and support that organisations now demand.
There is a question mark over whether the FGH or Teneo model of a global advisory firm headquartered in New York with hubs around the world is the best solution.
“Do clients really want a big international practice like this?” muses the CEO of one large consultancy. “Corporate and financial comms is tougher in this respect. Providing seamless c-suite service to a client organisation is a real challenge. Where a client is headquartered makes a big difference to the relationships a consultant has.”
Certainly, boutique corporate comms consultancies believe they can compete via a completely different model. The co-founder of one tells me: “Clients have become very sophisticated buyers of comms advice. Yes they might want specific advice on capital markets. Or they might want to be challenged on strategic issues around their reputation. What they really want are good advisers that can give them different and credible perspectives on the challenges they face; backed up with real insights that come from robust data. On top of that do they really value a big New York agency office?”
Clearly the quality of one’s advisers has always been the crucial competitive advantage that corporate comms agencies seek, and that is more the case today in this febrile political and business environment.
There are now many boutique consultancies that claim to offer high-quality, bespoke advice to organisations. In the UK alone this includes Headland, Milltown Partners and Apella Advisors, plus those consultancies with a more political or policy bent such as Hanbury Strategy and Flint.
In the middle ground there is another large swathe of options for clients, such as SEC Newgate, MHP Communications, Lansons or Instinctif.
Will the merger of FGH at the scale end of the market now create a ‘squeezed middle’ effect as one experienced corporate consultant predicts? Possibly.
But another battle-hardened corporate consultant thinks there will be enough work to go round: “Every year more is added to the corporate comms agenda. In my experience, even if we see a lingering recession, there will be opportunities here as clients look to raise capital and other challenges. The really big change is that it used to be about reporting financial results. But increasingly now it’s about corporate behaviours. There’s never been more public scrutiny of this area.”