The Fleishman-Hillard unit of Omnicom, rebranding as FleishmanHillard, www.fleishmanhillard.com, has embarked on “new direction” so it can “better serve marketer clients in the 21st century,” said Stuart Elliott’s feature on the changes in the New York Times April 29. It was headlined: “The New Look of Public Relations.”
Madison Ave. veterans, noting that the firm aims at bringing numerous disciplines together for more impact, say this has been done countless times before and wonder about its effectiveness.
We covered advertising in a daily column from 1964-72 for the former New York Journal-American and Chicago Tribune and wrote about the rage then which was “total communications,” a combination of ads and PR. Consumers were going to hammered into submission two different ways, went that school.
Young & Rubicam in the late 1970s “invented” the “whole egg” approach, a reprise of the same theory. In the 1990s and after that it was Integrated Marketing Communications.”
Newly added to the mix, which is beginning to sound like a stew, are social media and Big Data (tracking the demographics and buying habits of millions of consumers).
What chance does the hapless consumer have with such a barrage aimed at him or her? Maybe a lot.
FH Spending $750K on Itself
What grabbed us is that FH is spending $750,000 to promote its new image.
Had it remained in the O’Dwyer rankings, from which it was forced in 2001 by OMC, it would not need to spend such a sum to get noticed.
Taking part in such rankings is the best way to get on new biz shopping lists. Unlike awards and honors, which may last a few days in the news, rankings are present 24/7/365. They tell a non-stop story. No ad campaign can hope to bring such visibility.
The ad conglomerates, OMC, WPP, Interpublic and Publicis, started buying up many of the most famous names in PR around 1980 (19 of the 25 top-ranked O’Dwyer firms).
Financiers took over the ad agencies so that the PR firms came under two cultures hostile to the openness and interactivity that are hallmarks of PR.
PR cultures were crushed
Hill and Knowlton, the crown jewel of PR and as open as the day is long, was squashed by owner WPP. Its blue chip client list of nearly 500, proudly displayed for many years in O’Dwyer’s Directory of PR Firms, vanished. It no longer sat atop a list of more than 100 PR firms.
The conglomerates insisted that accounting rules barred them from reporting their numbers. Clients, they also said, did not want their names in any directories. They pulled themselves out of the best vehicle ever for firm promotion.
Tossing around large sums of money, the conglomerates were able to buy just about every ad agency and many, but by no means all, substantial PR firms.
Current debt of the four is $15.79 billion, with WPP’s debt of $7.66B by far the biggest. The congloms show steady growth but some analysts say they are buying their growth by going into debt. Investors have not been impressed because OMC, at $59.30 this week, is only $5.80 higher than it was 13 years ago on Dec. 19, 1999 when it was $53.50.
Edelman and Others Stayed and Grew
Edelman, which took part in the O’Dwyer rankings from their start in 1970, posted revenues of $655 million and an employee count of 4,518 for 2012 which is five times as big as the next independent.
FH told NYT that has revenues of $500M+ and 2,500 employees but does not offer any documentation. The 127 PR firms on the 2012 O’Dwyer list have provided top pages of corporate income tax returns, W-3s showing total payroll, attestation by outside CPA firms, and client lists.
Edelman noted that FH has hired a number of top people who have advertising and graphics backgrounds.
While he agrees with FH CEO Dave Senay’s views on the convergence of media and recruitment of non-traditional talent, “Where we part company is his strategy for becoming a one-stop shop that is as much an ad agency as a PR firm. At Edelman, we are going to evolve and expand the remit of the PR business.”
“The horizontal, peer-to-peer conversation is supplanting the top-down, controlled messaging that is the essence of advertising,” wrote Edelman.
Many Ad/PR Leaders Send Wrong Message
Edelman is one of PR’s most visible executives, taking part in PR industry trade groups including the Arthur W. Page Society and PR Society of America and its Foundation and student groups.
The opposite example is set by heads of two of the conglomerates, John Wren of OMC and Sorrell.
OMC’s offices are only about five blocks from the O’Dwyer offices and we used to attend its annual meeting since we have a few shares of stock.
That was the only time we had a chance to see him or question him. Our questions, however, elicited little information. Such meetings only lasted about five minutes before they were declared over. After a couple of years of such confrontations, Wren moved the annual meeting out of New York and across the country, never to return.
Sorrell Is Visible in U.K.
Sorrell is highly visible with the U.K. press where he trades remarks with reporters and does not hesitate to zing one that may annoy him. He has never held a press conference in New York that we know of.
Given the attitudes toward the press of Wren and Sorrell, who have also deeply cut the amount of information available on their PR acquisitions, it is no wonder that their staffs avoid press relations.
WPP, OMC and IPG have full-time people whose job is corporate press relations but we haven’t seen or heard from any of them for years although they are a few blocks from our offices.
There were numerous strong ad personalities in the 1960s through part of the 1980s including David Ogilvy, Bill Bernbach, George Lois, Rosser Reeves, Stanley Resor, Mary Wells, Norman Strouse, Jerry Della Femina, etc.
Where are such figures today? How can advertising and PR win the public’s attention if there are few celebs?
Ronald N. Levy (May 9, 2013): Jack, you say "OMC, at $59.30 this week, is only $5.80 higher than it was 13 years ago." But many of us value a stock, as companies value an executive, by how well it pays off for us. So notice that OMC dividends are UP by a five year average of 21.67%!!!
Are OMC and WPP employed and trusted by many of the largest corporations on earth? Are OMC and WPP clients managed by many of the world's savviest corporate executives, respected worldwide, whose business education and ability to evaluate OMC and WPP may not be less than your own?
Can you think of many companies with a five year dividend growth history of 21.67%? Improvement is important so notice how OMC dividends have improved: dividend growth for the past year is UP 33.33%! Also up is the stock price which closed today at $62.04.
Ronald N. Levy (May 6, 2013): What is old but still very good is the desire to do more for clients. So over the years top PR forms have added capabilities in polling and research, social media, and over a score of other profit
centers that profit clients and PR firms alike.
PR firms incur debt for the same reason that other companies, hospitals and communities incur debt: to pay for facilities that will benefit the customers.
Great PR firms spend $750,000 and more not so much "to promote a new image" but to increase worldwide awareness of new realities in capabilities to help clients and their managements triumph.
Notice three drawbacks to disclosing annual billings,although certainly there can be advantages:
1. Lawyers and regulators who love an oportunity to sue may say billigs were inflated by including research or other activities as PR. (Go try to prove what's PR and what isn't, so it can be safer not to disclose a billings figure.)
2. It can make a firm look bad if billings decline but getting rid of a client with a new pain-in-the-ass management can make a PR firm stronger and with fewer demands for time that a fee doesn't cover.
3. Not disclosing billings frees a firm to always require enough fee to do great work--and never be tempted to take on unprofitable business or borderline dishonest clients for the sake of having a bigger billings number.
Far from being "squashed" by WPP, Hill and Knowlton was empowered by WPP to do more things for clients, spend a higher proportion of time on doing PR work rather than on client hand-holding, and be more predictbly profitable (I think Sir Martin Sorrell may have started as an accountant) because it is very much in the interest of clients for their PR firms to make a good profit.
"We want to sometimes fail," great PR firms gladly communicate to clients and new business prospects, "because we want to try exciting new things for you, not just safe things. We want to hire worldclass PR superstars who can serve you brilliantly if we can fit them in with our firm and with what is safe for you (and to get rid of them if we can't work that out)."
WPP, Omnicom and others are so hugely successful because they are hugely capable of producing PR results that are sometimes breathtaking. Corporate and government leaders who retain great PR firms are not schmucks.
Reader (May 6, 2013): The conglomerate heads are just bean counters seeking to maximize shareholder value and the CEOs of the agencies owned by the conglomerates are just figureheads. The only thing that matters to these people is $ growth. Sad.