The first half of Edelman’s financial year—which runs from June to June—was robust, with growth in almost every Asia-Pacific market, but the second half (the first six months of 2009) saw a dramatic downturn, with the Japanese and Korean markets down by about a third and several other markets experiencing high single or low double digit declines. The result was a fiscal year in which the firm just about managed to hold its own (“the new growth,” as many Asia execs have dubbed flat revenues), reporting regional fees of slightly better than $40 million. There was new business from some major global clients, including Microsoft, Starbucks and Wal-Mart.
Edelman has 16 offices in eight Asia-Pacific markets, providing coverage of all the major markets while handling emerging countries through affiliates. In China, there are more than 160 people divided between the Edelman (corporate, healthcare, tech) and Pegasus (consumer and some tech) brands, with offices in Beijing, Shanghai and Guangzhou, supplemented by substantial operations in both Hong Kong and Taipei. The firm has solid operations in Tokyo and Seoul—both of which had their difficulties in 2009—and in Australia (Sydney and Melbourne offices), although it has struggled to stand out from its peers in all three markets. In South-East Asia, the firm has a market-leading presence in Indonesia (via Indo-Pacific, acquired three years ago) and smaller operations in Malaysia. Perhaps the biggest success story of the past couple of years is Singapore, which has been growing steadily even through the downturn and has particular strength in public sector work and healthcare. The most significant change of the past 12 months, however, occurred in India, where founder Roger Pereira was replaced at the helm by Edelman veteran Robert Holdheim, who will be challenged with expanding the Delhi office to match the strength of the firm’s Mumbai base, and winning more multinational business.
Edelman has impressive strength in the three major U.S. markets: in New York, its headquarters, where it has strength in pretty much every practice area; in Washington, D.C., where its core public relations and public affairs business is among the market leaders; and in Chicago, where traditional strength in consumer has grown into a full-service offer that is one of the two leaders in the Second City. The firm’s west coast operations—offices in Los Angeles, Sacramento, San Francisco, and Silicon Valley—add up to one of the strongest statewide offerings. Some of the firm’s smaller offices have also been turning in impressive performances: the Portland, Ore., office, started in 2002, now has more than 50 staff. The firm also has a formidable operation north of the border—offices in Montreal, Toronto and Vancouver—and to the south, where it has a branded presence in Mexico, Argentina and Brazil supplemented by a network of affiliates. In Europe, the flagship U.K. operation continues to account for about half of the firm’s regional revenues, and continues to rank among the market leaders, particularly in consumer and healthcare categories. The second largest market is Germany and the firm is a top five player in Italy and remains a significant force in Paris, the Netherlands, Ireland, Spain, and Russia.
Edelman has four core practice areas in the Asia-Pacific region, including a corporate practice that accounts for about a third of firm revenues and is among the top two or three in the region, with particular strength in CSR work and broader trust-related issues; healthcare and technology, both formidable; and consumer, which is under strength in Asia compared to Edelman’s impressive capabilities in the U.S. and Europe. Much of the growth over the past 12 months came from healthcare and technology—and from a digital practice that is among the strongest in the region, strengthened this year by a strategic alliance with online intelligence service Brandtology—while corporate and consumer were largely flat. The firm sees public affairs as an area of opportunity and has made some hires to strengthen its credentials, and would also like to see its tech practice expand in India.
Despite Edelman’s impressive performance in Asia over the past few years—under regional chief executive Alan Vandermolen, the firm has catapulted itself into the top tier of agencies chasing market leader Ogilvy—the firm has embarked upon a major restructuring of its regional leadership team. Last year saw a new role for former Greater China managing director Charles Lankester, named president of North Asia, responsible for reenergizing the firm’s Japanese and Korean operations, and the addition of Mark Hass, most recently global chief executive of MS&L, as head of Edelman’s China operations, and Robert Holdheim—a veteran of Edelman in Frankfurt, London and New York—as country head for India, working alongside founder and vice-chairman Roger Pereira. There have been significant moves in the first few months of 2010 too, most notably in Japan where the firm has added PRAP’s Ross Rowbury as president and Australia, where Hill & Knowlton’s Michele Hutton joined as chief executive.
Edelman has been expanding its professional development activities in the region over the past 12 months, and its AP Academy curriculum includes intensive two-day training sessions in each major market; biweekly online learning forums on key topics; an annual academy meeting that brings together top performers from around the region for two-and-a-half days of leadership training. All that means that 5 percent of staff hours are allocated for training annually.
Edelman’s 10-year-old Trust Barometer research is probably the most sustained and robust piece of intellectual property in the public relations business, and over the past four years it has been expanded to include more Asian markets and marketed more aggressively to media in the region, providing the firm with a platform to discuss a wide range of related issues, from the rise of social media to the importance of social responsibility. This year, the firm has also extended its goodpurpose (CSR and cause branding) research into China, India and Japan, and conducted some interesting new research into the impact of social media on the public policy process in China.
Some of Edelman’s most interesting work in recent times has drawn on its corporate and financial expertise, as it assisted Nomura in its acquisition of the Asia operations of Lehman; supported Coca-Cola’s bid for Chinese juice company Hui Yuan; and handled Asia communications for the merger of Delta and Northwest Airlines. The firm also picked up crisis business from Inner Mongolia Yili, a dairy company caught up in the melanine scandal. The firm’s CSR work includes helping Wal-Mart address its supply chain issues and working with Coca-Cola on water issues in India, while in the digital media environment it is helping Coke with social media engagement in China, blogging for Kia in Korea, and leveraging social media for Starbucks as part of a campaign to promote its Frapuccino products. Other highlights include building trust in the Microsoft brand and reinforcing stakeholder relationships for National Australia Bank.
Edelman is the most clearly differentiated brand among all the major, full-service public relations firms, a status that can be attributed to its independent status—it can say what it thinks, regardless of whether it tows a parent company’s corporate line—and the strong personality of its leadership in all three regions, including Vandermolen in Asia. The firm’s intellectual leadership work around issues of trust and social responsibility provides those leaders with a strong platform upon which to build a strong, distinctive brand for the firm.
Despite the lack of growth in 2009, Vandermolen remains convinced that Edelman can more than double in size over the next five years, targeting Asia-Pacific fee income of $100 million by 2015. One way he expects to achieve that goal is by becoming more local, making sure that Edelman offices around the region are embedded into their domestic markets and “playing more home games,” as he puts it. In some markets, that may mean a slightly different ownership model, one that encourages higher levels of entrepreneurship from local leaders. Another obvious priority should be further growth in India, the one major market where Edelman is noticeably under-strength compared to many of its peers.