Arun Sudhaman 07 Feb 2022 // 5:30PM GMT
NEW YORK — Edelman has reported a 15.4% revenue increase in 2021, reaching record revenues of $985m as the world's biggest PR firm closes in on becoming the first to cross the $1bn threshold.
The strong rebound comes after Edelman's revenues declined 5.7% in 2020, with a broad recovery starting around 18 months ago and gathering pace through 2021. As a keenly observed barometer of industry health, the earnings report is expected to signal continued resilience, even resurgence, from PR firms in the wake of the Covid-19 pandemic. It also reflects the third time (after 2001 and 2008) that Edelman has rallied after a recession.
Notably, 2021 revenues also represented a 9.8% like-for-like increase on Edelman's 2019 fee income of $892m. After outperforming its publicly-traded peers throughout the first half of the decade, the giant independent has seen its growth stalled over the past five years, having expanded by 1.7% in 2016 and 2.1% in 2017, before declining by 1.1% in 2018 and growing 2.1% in 2019.
Richard Edelman attributed the eye-catching recovery to strong demand from its two biggest client sectors. Fuelled by Covid vaccine work, Edelman's healthcare fee income expanded 22%, thanks to a client base that includes AstraZeneca, J&J and Lilly. Technology, meanwhile, led by such companies as Microsoft, Samsung and HP, grew by 12%.
There was also 15% growth from the firm's consumer brand practice, driven by food and beverage and integrated work. In addition, the firm's creative (+47%), digital (+24%), financial (+35%) and employee engagement (+35%) practice areas all expanded. And, an internal transformation project led by Edelman global president Matt Harrington saw the firm focus on its major clients, resulting in 18% growth from its top 100 accounts.
"I'm so proud of our team," said Edelman. "This is just a damn good example of a firm getting knocked on its seat and getting up. Out of recessions, Edelman springs forward. I'm not as focused on the margin; I want to have great people come work for us."
After laying off 390 employees in June 2020, Edelman hired more than 800 people in 2021, taking the firm past 6,000 in headcount, and also restarted acquisitions by snapping up public affairs consultancy Basilinna last year. Last month, furthermore, the firm bought 60-person Brooklyn content and creative shop Mustache, which will focus on supporting Edelman's specialist sector agencies, including Revere (technology), Salutem (healthcare), and Edible (food).
Both trends are expected to continue in 2022, said Edelman, as the firm targets continued international expansion. "Look for us to be aggressive in public affairs, and also in those geographies where we are underweight, relative to our global number one position," said Edelman, pointing to Continental Europe and major Asian markets. The US and UK continue to account for around 70% of the firm's global revenue, with only 10% coming from developing markets.
Edelman's US operation grew 15.5% to $613m, while EMEA was up 17% on a like-for-like basis to $209m. The firm also returned to growth in Asia-Pacific, increasing by 7.4% to $106m, while Latin America (+40%) and Canada (+18%) also exceeded expectations.
Specific markets that grew at a double-digit rate included Chicago, New York and Washington DC; Germany and the UK; Hong Kong/Taiwan; Brazil; Toronto; the Middle East; India; and, Africa.
"The tide is turning for us relative to the ad agencies," added Edelman. "Combining brand and reputation when consumers want belief-driven brands. All the indicators are showing that our kind of thinking — cross-stakeholder, focused on action — is important."
However, Edelman sounded a note of caution regarding inflation rates, which he expects to impact CPG and food companies. And he noted that competition is only becoming more broad, encompassing agencies focused on PR, digital sustainability, creative, planning and management consulting.
"There is a clear effort of Accenture and others to come into our space," he said. "And then the idea that we can do a broader job in the marketing services we are up against. I think we're making headway on that. I've got another 20 years for that to happen."
New business was led by FedEx in LatAm, SodaStream in Canada, Avis Budget Group in the US, MediaTek in Asia-Pacific and Tinder in EMEA. Several new offerings were also launched, focusing on such areas as social impact, public affairs advisory, trust, digital storytelling and protection from disinformation.
In addition, by September 2021, Edelman had also reached its target of being 30% racially and ethnically diverse in the US. The firm did not break down its diversity data across different staffing reveals, but did note that its global leadership is now 53% female, which rises to 57% in the US.
Edelman also reiterated that his firm will "set the agenda for our industry on climate change", amid sustained pressure from climate activists to cut ties with fossil fuel companies. "Without actions, communications are not going to mean much," he said, pointing to the launch of a new unit called Edelman Impact.