Arun Sudhaman 14 Oct 2014 // 9:24PM GMT
Every business likes to think it is special. Among the big global PR networks, however, Ogilvy PR actually is unique. It is the only one of the top 10 PR agencies that is larger in Asia-Pacific than in its home region, a fairly remarkable state of affairs when you consider Ogilvy PR’s US origins.
This is also a recent phenomenon, with Ogilvy’s Asia-Pacific fee income only outstripping US revenues during the past couple of years. All of which means that new global CEO Stuart Smith is taking over a business that is rather differently shaped to the firm that former Asia-Pacific head Chris Graves took charge of in 2009.
Ogilvy PR Asia-Pacific has grown considerably over the past decade to exceed $130m in fee income, while the firm’s US operations have flatlined, hampered by difficult trading conditions, the conclusion of some large government projects in Washington DC, and senior staff turbulence. This may explain why not too many people at Ogilvy PR are keen to play up the shift; after all, it is a situation that owes as much to North America’s under-performance as it does to Asia’s impressive growth.
So, while Ogilvy & Mather global CEO Miles Young confirms the trend, he also notes that the US remains more profitable than Asia. “Overall I do tend to look a profit performance more,” says Young. “And this year we are showing strong double-digit growth, and the US is showing strong single-digit [growth].”
While the profitability of Ogilvy’s US operations should not be overlooked, the lack of US growth — in a market where other big firms are performing well — suggests that Smith will focus a considerable amount of his attention on turning this region around.
Young believes this process is already underway, and professes himself “very pleased” with the firm’s North American performance this year. New York appears to have finally stabilised under new management, after a number of senior departures weakened one of the country’s strongest consumer PR operations. Young also sees positive signs in Chicago and on the West Coast, where he thinks a small Ogilvy PR presence has plenty of room for growth.
In the firm’s largest PR operation, Washington DC, a powerhouse public affairs outfit has struggled amid government cuts. Even there, though, Young believes that a turnaround is in full effect, led by DC veteran Rob Mathias, who has headed Ogilvy PR’s North American operations since last year.
"The only challenge for us has been Washington,” says Young. "Here we had a lot of government business which has shrunk because of government policy. This is the only unit which did not grow, but I am glad to say that it is growing again.”
Indeed Young believes that "there has been a major reinvention” in DC, with the firm turning its government social marketing expertise towards private sector clients. "Rob Mathias has done an excellent job,” says Young. "We see a good pipeline and have good wins. I am optimistic for next year.”
Much, it appears, will depend on Mathias’ ambitious turnaround plan. Smith will not be unfamiliar with such a challenge, after reshaping Ogilvy PR’s moribund EMEA network to dramatic effect over the past two years.
"What Stuart has demonstrated in EMEA is taking a disparate collection of various performing offices and creating a cohesive network," says one senior executive who declined to be named. "Globally he can drive that machine across the world and take Ogilvy PR to the next level."
It is tempting to see Smith as something of a turnaround specialist, not least because his own career has benefited from a comeback of its own kind. Unceremoniously cleared from Edelman London to make way for the Robert Phillips regime in 2007, Smith has returned to prominence at Ogilvy PR, taking on a global role that few would have foreseen seven years ago.
Importantly, Smith’s rise has owed much to his management skills, particularly his ability to attract strong talent — the likes of Michael Frohlich and Marshall Manson — and give them the space to thrive. Within a holding group context, the latter point has proved especially relevant, says those who know Smith well.
“He is very good at clearing the way, unblocking the political barriers,” says the senior executive. “That’s where he will benefit the US."
“He was simply the best we saw,” says Young of Smith’s promotion. “We did look at a few external candidates but not for very long. Proven track record [and] knows the culture.”
Smith’s focus on network management and development is likely to prove welcome, particularly after the firm lost CFO Andy Kochar to a group role based in Hong Kong. It also seems clear that Smith will address the marketing vacuum that has existed since Rachel Ufer exited the firm last year.
As for Graves, the move to chairman clearly plays to his strengths allowing him to fully devote his time to intellectual leadership and client counsel. "Chris will be focussing even more on content and consultative engagement around it as it becomes the paradigm for the whole agency not just Ogilvy PR,” says Young.
It is worth noting that Ogilvy’s strength in Asia-Pacific is not its only unique competitive advantage. Young believes that the firm’s presence within the Ogilvy group affords it “nimble collaboration on content plays”. Its Social@Ogilvy unit remains one of the best in the business and, of course, there is an emerging markets expertise — beyond Asia into the Middle East and Africa — that other firms would dearly like to emulate.
Accordingly, Smith will spend as much of his time on continued efforts to grow EMEA into a $100m operation, banking on expansion in Africa, Middle East, Turkey and the UK, to effectively double the network’s size in the region. At some point next year, it is understood, responsibility for the region will pass to Frohlich, who has led the UK with considerable success since 2012.
Yet Smith will know better than most that the US is pivotal to all of these ambitions. It is the world’s biggest PR market and, crucially, growing at a healthy double-digit clip. Mediocrity in New York, Washington DC, Chicago or the West Coast, is simply not an option for a network of Ogilvy’s evident potential. Regardless of how strong Ogilvy PR is in Asia, much will depend on whether Smith can bring his Midas touch to the firm’s US operations.