The meticulously crafted changes at Shandwick UK, while not
revolutionary, should clear up some of the confusion about the brand in
this market. This week’s announcement completes its transition from a
clutch of independent agencies acquired in the late 1980s into a single
entity. As such it is a milestone for the company.
But aside from making itself more comprehensible and accessible to clients
in the UK, the parent group will also be looking to impress another key
audience - its investors.
That the City doesn’t understand Shandwick was fairly evident from the
reaction to last year’s defection of several directors from Shandwick
Consultants. The financial press translated what was an evident blow for
the UK operation into a crisis for the worldwide group, despite the fact
that the lion’s share of its income comes from overseas, with well over
half generated in North America.
Since then, and despite some solid group results, the share price
continues to hover at around 48p, although some analysts are suggesting
the price should be over 70p.
The problem is not the underlying soundness of the business, which is now
on an even keel. Its debt has been whittled down to a manageable level and
is expected to be below pounds 20 million within three years. Meanwhile,
the earn-out payments which contributed so much to the financial pressure
on the company in the early 1990s have slowed to a trickle and will dry up
altogether this year. The appointment of Colin Trusler as group operations
director, charged with making all its businesses more efficient, will also
But the problem is that, like its smaller quoted PR fellow Chime
Communications, Shandwick faces an uphill struggle to excite the City. All
people businesses are perceived to be volatile, and PR consultancies in
particular suffer from a general lack of understanding about the service
they provide. Hence Chime’s purchase of ad agency HHCL last year, which
was aimed at doubling the size of the operation and increasing its
visibility in the City.
For Shandwick, exercises like the consolidation of the UK operation will
make the previously piecemeal company easier to understand. The
introduction of new products like the recently announced Step evaluation
programme will also help its reputation as an innovator.
But it is hard to escape the conclusion that something more spectacular
may ultimately be needed to return the kind of shareholder value the City
expects. Globally, Shandwick is now the only independent PR group of its
size. The pressure to find itself a partner to take the company on to
the next level may now be irresistible.