Five key takeaways:

  • Edelman is laying off 330 people, more than 5% of its global workforce
  • The firm will abandon some specialist brands such as Edible (food), Salutem (health), and EGA (government affairs) but will keep Smithfield (financial PR and M&A)
  • Richard Edelman says the move reflects the need for a more integrated approach bringing together corporate reputation, public affairs, and brand—especially for large clients
  • That’s because changes such as political polarization, media fragmentation, and disinformation are creating a complex environment for clients
  • He says the changes won’t make Edelman less agile or less entrepreneurial—“just the opposite”—and he remains optimistic about the future

NEW YORK — Edelman is laying off 330 people—a little more than 5% of its global workforce, in a restructuring that CEO Richard Edelman is presenting as a “simplification” of the firm’s business model.

In addition to what is the largest single reduction in headcount the public relations business has seen in many years, the move will see Edelman discontinue its Edible (food specialty business),Revere (for startups and innovation), Salutem (health), Mustache (an integrated creative agency), EGA (government affairs and geopolitics), and Delta (brand and strategy consulting) units.

“Our strategy for the past five years has been in two directions,” said Edelman in a blog post about the restructuring. “We built an advisory capacity to compete with specialist firms in financial, public affairs, employee engagement and impact. Simultaneously, we also have been building our marketing business, emphasizing earned creative based on action, with ideas that connect with the burgeoning creator economy.

“We structured our advisory units as boutiques and positioned creative and strategists as dedicated teams.”

But he pointed to a shift in the market, and said: “Clients now require integration of specialist services into the larger firm for speedy access to our geographic reach, deep industry knowledge and creative ability. We are best when we bring the full force of Edelman to the complex problems facing our clients. Corporate affairs, marketing and government affairs are now all closely aligned on the client side.

“We are skating to where the puck will be—everything is interconnected now.”

A handful of specialty brands will remain, reflecting the fact that some offerings are not easily integrated into the full-service parent company. Most notable, Smithfield will continue to operate as a corporate and financial communications consultancy, the only one owned by a global, full-service firm that regularly appears on lists of leading M&A advisors.

The move follows a challenging year that has seen losses or budget cuts from a number of key clients including Adobe, Sunkist, Florida Citrus and DMI, and recent departures of senior executives such as Susan Isenberg and Karmen Johnson (who had been CEOs of the Edible and Salutem brands respectively), global chair of climate Robert Casamento, Edelman Chicago president Kevin Cook, and head of crisis Brooke Buchanan, who joined Panera Bread as communications chief.

“We see an evolution on the client side,” Edelman told PRovokeMedia. “An intersection of corporate affairs and government affairs and marketing, in order to deal with three or four important trends. One is geopolitics. Look at the Korea declaration of martial law this week, which is a question for Korean brands and for companies doing business there. Or look at the unbelievable shift in tenor on business and society, and Walmart last week.”

He also pointed to changes in the media environment, of significant declines in subscriptions at the Washington Post or viewership at CNN, “in favor of podcasts, both liberal and conservative.” Disinformation too is becoming a global challenge, all of which requires a centralized and integrated approach between communications disciplines, he said.

“We've got to combine all the elements that we had put into the verticals, and they now need to be in the main house because we need access to them quickly and they need to be in the teams every minute because of the needs of clients.

“There's no longer a brand world and a corporate world. And I see a massive opportunity for PR because if you're moving quickly and you're dealing with societal issues and a creator economy, all of this requires nuance, speed, and trust.”

The challenge of integrated reputation management, public affairs and brand is particularly acute for large, global clients, and Edelman says that 75% of the firm’s revenue now comes from clients spending $1 million or more—and 50% of the revenue comes from clients spending $7 million or more. “That's a massive change in the last three or four years. And so I have to look at the best way to serve the clients."

He pointed to the EGA unit—a major investment in recent years—as an example of the way the market has shifted.

“What people really want is public affairs as part of Edelman because need multi-market we also need creative and we need industry expertise and we need, somebody who can today do publicity, tomorrow do advisory. And we have all of those things as Edelman and we need to be able to bring them all together.”

As an example, he cited the firm’s recent addition of Brand America, the campaign to celebrate the 250th anniversary of the country’s founding, which will require just that kind of integrated approach. “It’s public affairs, but it's inherently a brand thing, a digital thing, it needs influencers, and it's better served in this new construct.”

Asked whether the firm will be sacrificing the nimbleness that its boutique brands could offer, or some of the entrepreneurial spirit that separates Edelman for other large, publicly-traded agencies, he told PRovoke that he believed the opposite.

“That implies that you have to be in a boutique structure to be entrepreneurial. I don't buy it. I think we can be entrepreneurial with our people who are client facing. I want to grow our existing clients. That's a key message out of all this. We have the best clients in the world and I want to continue to make it about the clients.

“There are two different ways to be an entrepreneur. One is grow your existing clients, the others go get new ones, that's point one. And the second is, are we investing in the growth of the business? And we're putting millions of dollars into AI, a suite of tools, which is a very important contribution to the sector, saying we can compete in AI.”

In addition to Smithfield, Edelman will continue to operate two client-specific brands—Assembly for Microsoft and Kinisi for J&J—while conflicts will continue to be managed by sister firms Zeno and RUTH. DXI (data and intelligence) and UEG (entertainment and sports marketing) will be “connective tissue between Edelman and Zeno in the DJE family.”

Edelman’s blog post concluded: “I am deeply optimistic about the future of Edelman. We are a $1 billion revenue business, 5,870 employees strong. We are ideally suited for a world of geopolitical uncertainty, the proper role of business in societal issues, and dispersion of authority away from experts. We maintain our 60-office network as a dramatic competitive advantage.”