Chris Evans and the Daily Mail and General Trust’s radio company
DMG Radio are jointly bidding for the North West of England radio
franchise, due to be awarded later this year.
PRW # 08:08:97
Agency Strategy: Shandwick banks on international results -
Shandwick is counting the cost of the Hogarth defection with a predicted
fall in profits for the second half of 1997. Focusing on global client
relationships may cut dependency on individuals
By JULIETTE GARSIDE
Comparing Chris Matthews to Alan Shearer is not an analogy that
would spring to most people’s minds in the PR industry.
But, regardless of the football skills of the erstwhile chief executive
of Shandwick Consultants, the link became appropriate last week when the
world’s largest independent PR agency issued its half year results and a
The loss of Matthews and other senior colleagues to the Hogarth
Partnership has caused the expected dip in Shandwick’s financial
fortunes in the same way that news of Shearer’s ankle injury wiped
pounds 12 million off Newcastle United’s share price last week. Both
situations prove the vulnerability of people businesses to the
perception that the company is only as valuable as its star players.
When Shandwick International announced its interim results last week,
its share price dropped by ten per cent to 40.5p in one day. This was
partly due to a profits warning from the group’s chief executive, Dermot
McNulty. He admitted a ’loss of momentum’ in the group’s largest UK
division, Shandwick Consultants, following the departure of its chief
executive and four senior staff in February, and said that the company
expected a ’significant profit impact’ in the second half of the
Colin Trusler, chief executive of Shandwick UK, insists the agency is in
no great rush to find a replacement for Matthews, although it is
accepted that the knock on effect of his and his four colleagues’
departure will impact on results in the second half of the year more
than in the first.
Trusler has taken over as acting head of the division, and the post is
being rethought, with candidates such as management consultants being
That the UK business has been rocked is undoubted. But it is important
to set the troubles against the agency’s position internationally.
Shandwick Consultants only accounted for 6 per cent of the agency’s
worldwide revenue of pounds 121 million last year. The division expects
fee income of up to pounds 8 million over the coming year. Consultants
won 20 clients in the first half of 1997, although Matthews claims that
these wins were partly the fruit of his labours.
But over the same period Shandwick Consultants has lost at least ten out
of 100 clients. Three were retained clients and accounted for
approximately 5 per cent of the division’s income for the year.
The retained clients included Cookson Group, MAID and Pentland
The agency had worked with the others on a project basis with hopes of
extending the relationship. It is partly the departure of these clients
that has caused the loss of momentum within the group.
Across the rest of the UK group, which includes Paragon and Welbeck
Golin/ Harris as well as all the Shandwick branded agencies, revenue
declined by 2.5 per cent during the first six months of this year.
The agency was also hit by the strong performance of the pound against
the dollar. Shandwick reports in sterling and is listed on the London
Stock Exchange, but 60 per cent of its operating income came from North
America. The company says the strong pound reduced fees by pounds 4.1
million in the half year.
Taking into account the strong pound, business in Americas and the Far
East is booming. In the former, revenue increased by 19.8 per cent in
constant currencies. Revenue in the Asia Pacific region grew by 5.9 per
cent in constant currencies.
Along with its interim results, the company announced plans for
restructuring aimed at helping it protect itself against the damage
which can be inflicted by the departure of star players.
The agency intends to increase clients’ reliance on its services by
extending accounts across more than one country and, in the US, across
more than one office - an international account is not as threatened as
a local contract if staff walk out of one office.
’For large international clients the Shandwick brand is more important
than any one individual,’ says Andrew Best, a director at Shandwick
Consultants’ financial division and responsible for the group’s investor
With relationships extended over several countries, the agency and its
clients become in part reliant on each other for the success of their
Best says: ’The benefit of the partnership is that it is long term,
there’s a higher degree of commitment on both sides because both sides
are investing a lot in the relationship.’
’The demand for global services continues to increase and the process
requires more resources,’ says McNulty.
To that end, Shandwick is forming a new unit dedicated to international
clients. Based in the US, it will develop procedures needed for
international accounts and assemble a cadre of people familiar with
working in a multi-country environment. The unit will target and pitch
for large international accounts.
New multinational relationships for Shandwick include Reebok, Eastman
Kodak Company, the World Gold Council, and Microsoft’s interactive media
Aside from cultivating international clients, the company believes that
the Americas region’s success is partly due to branding changes. Trusler
is charged with reorganising the UK business to highlight its offering
and competencies more clearly to clients.
The agency is acting to reduce the influence individual staff have over
its success. But, according to Trusler, it must still recognise the
importance of letting people develop their own ways of working and the
need to cultivate star players.
For, as Shandwick has discovered, the old PR saying that ’the assets go
home in the lift each night’ still holds true.