Paul Holmes 10 Feb 2020 // 7:30PM GMT
NEW YORK — Edelman returned to modest growth in 2019, up by 2.1% in like-for-like terms — although currency fluctuations meant that in actual US dollar terms global revenues increased by less than half a percentage point to slightly more than $892 million, from $888 million in 2018.
After outperforming its publicly-traded peers throughout the first half of the decade, the giant independent—and the world’s largest public relations firm—has seen its growth stalled over the past four years, having grown by 1.7% in 2016 and 2.1% in 2017, before declining by 1.1% in 2018.
So 2019 represented a welcome return to growth—if not exactly to form—with revenues increasing in every region. The firm’s Asia-Pacific operation was the strongest performer, up 4.5% in fixed-rate terms and by 1.3% after currency fluctuations. EMEA revenues were up 2.4% in fixed-rate terms, the US was up by 1.6%, Canada was up by 0.7%, and Latin America was up by 1.1%.
Chief executive Richard Edelman pronounced himself “pretty happy” with the return to growth, adding: “I can’t help what happens in the currency markets, but with the things we can control, we are back to growth across all our regions. The diversification strategy is working, we have strong leadership in the key markets, and we are continuing to do big and important work.”
Evidence that the diversification strategy has been effective comes from the growth of practices such as research (up by 11%) and financial PR (up 32%), and the firm’s experiential UEG business (up 9%), Edelman says, as well as from the kind of non-traditional assignments the firm is winning.
In terms of leadership, he pointed to new roles for Ed Williams, who took over the EMEA region in September, and Stephen Kehoe, who was appointed to lead Asia-Pacific in June. More recently, the firm has brought in Pfizer’s Kirsty Graham to head a new global public affairs practice and named Megan Van Someren global chair of its brand practice.
In terms of clients, big wins included FedEx in the US and Europe, ViacomCBS and Scholastic in the US, DP World in London and Dubai, Standard Bank in South Africa, and Heineken in Brazil. The firm’s top 12 clients, Edelman says, are growing globally by more than 2%. The most significant loss was the Kellogg’s business.
The most significant trend impacting the firm’s results is still the softness in brand and digital work, which drove most of Edelman’s rapid growth in the first half of the decade but has dried up in recent years.
Edelman traces much of that softness to the interest taken in consumer goods giant Procter & Gamble by activist investor Nelson Peltz back in 2017, and the company’s subsequent decision to cut digital spending by $200 million. While Edelman is not a P&G agency, many other marketers followed the company’s lead and cut back on digital spend.
Still, Edelman has no regrets about his firm’s investment in digital and creative, which he continues to see as essential if Edelman is to compete not only with other PR firms, but with ad agencies. “We have 600 people in creative and planning, we have 700 people in digital, and we need that if we are going to compete with ad agencies and digital firms.
“We believe our ideas are different from and better than the ideas coming from ad agencies. Earned digital ideas rely on trustworthy content and move at the speed of the news cycle.”
Growth in the corporate realm, meanwhile, is being driven by a number of factors, including the increased interest in environmental, social and governance issues highlighted in the latest Edelman Trust Barometer, as well as a significant increase in employee engagement issues.
“A large corporate assignment can be $1-2 million, whereas a large brand assignment can be $6 million and up,” says Edelman. “But while the corporate projects are not as large, there are a lot more of them.”
As for the year ahead, despite some obvious turbulence—the US election, the fallout from Brexit, and the coronavirus that has closed Edelman offices in China in recent weeks—Edelman is bullish. He says he is hoping to grow by 4-5%, driven by the firm’s investments in areas like data and analytics, public affairs, and influencer marketing.