Global Market Players

There are several market players within the public relations industry, in-house PR departments, big PR firms, the “Big Four” conglomerates, and PR Associations. These market

37 http://www.bls.gov/ooh/management/public-relations-managers-and-specialists.htm#tab-5

38 http://www.bls.gov/oes/current/oes112031.htm

28 players have their own role in the market and the interestingly part is to see the relationships between them and the impact on the PR market.

In-house PR departments

Almost every organization from big companies to small companies, even for university will have their in-house PR departments. Sometimes it is not named public relations but public affairs. For example, for most of the university will set up a department like foreign students affair as a way to deal and manage the issues related to foreign students. As for most of the company, the in-house PR department is being set up for the purpose of internal communication and also taking responsibility of filtering the incoming and outgoing information within the company.

Big PR firms

The top 10 global PR firms 2012 were ranked by the Holmes reports according to the fee income from 2011 and company growth. Among these ten big PR firms, Edelman is placed at the top with the annual fee income of $614 million and about 16% in revenue growth. Others big PR firms includes Weber Shandwick, Fleishman-Hillard, MSL Group and others. Interestingly, we can see that the ranking for these ten firms in 2011 was the same as 2012. These could be applied to top ten always remain on place where these ten companies have their own sustainable advantage to stay the best at the marketplace. However, most of these top ten companies are not independent PR firms except Edelman. Most of them are tied to the conglomerates in PR industry.

29 Table 4: The top ten global PR firms in 2012

Conglomerates

WPP began in 1985 as a UK based manufacturer, Wire and Plastic Products. The company shortened its name to WPP Group and began to acquired companies to expand their global network. Now, WPP owns 30 PR companies including three of the top ten big PR firms, Burson-Marsteller, Hill+Knowlton Strategies and Ogilvy Public Relations Worldwide. With this large network, WPP becomes the world leader in communication services, with more than 150 companies within the Group. The revenue of WPP in 2012 was £10 million. With their tailor-made range of integrated communications services provided to their clients, they are capable in serving those client companies that came from 350 of the Fortune Global 500, 30 of the Dow Jones 30, 63 of the NASDAQ 100 and so on. Their core strategy is to focus on the fast growing markets like Asia-Pacific regions, also to achieve “horizontality” where a large number of employees can work together primarily under two integrators (clients leaders and country managers).

Omnicom Group, the second largest communication service conglomerate. Omnicom owns two of the top 10 big PR firms, Fleishman-Hillard and Ketchum. Omnicom is a leading global advertising and marketing communications services company. They have 175 companies within the Group and more than 63,000 employees. Omnicom is a leading global advertising and marketing communications services company. They are serving more than 5,000 clients from 100 countries in different industries. The major business segments are advertising, CRM, public relations and specialty communications. According to Omnicom CEO, John D. Wren, their core

30 strategy came from the excellence practice in all aspect of business management. With more than a decade invested in formalizing and disseminating their collective business knowledge through advanced education programs, seminars and conferences.39

Publicis Groupe, a France-based company and the third largest communications group worldwide. Publicis owns MSL Group, ranked number 4 at the top ten lists. Also, Publicis is the leader in digital and interactive communication, which accounted 33% of total revenue in 2012.

They have offices operate in more than 220 cities and 108 countries with 58,000 employees. In 2012, there were 11 acquisitions in emerging countries, particularly India, China, Brazil and others. They segmented the business into three categories, advertisng, specialized agencies and marketing services (SAMS), media advice and purchasing. However, pure digital operations have become Publicis’ most important segment. Publicis has formed global partnerships with Microsoft for development of digital media and IBM to enhance their utility in e-commerce. With the collaborations, Publicis has developed the capacity to anticipate the market changes and for continuous growth.

Interpublic Group (IPG) was first formed in 1930 under the name McCann-Erickson Incorporated but later using the name IPG since 1961. IPG has 95 companies with the Group and around 43,300 employees work in offices in more than 100 countries. IPG is the holding company for Weber Shandwick, second largest PR firms worldwide. They are actively developing offices in the BRICs and other fast growing economies like Africa, Southeast Asia and others. In 2012, IPG reached the record of 12 acquisitions in critical business including digital, healthcare, social and mobile marketing. IPG enhance their businesses through merger and strategic alliance, and develop relationships with technology and emerging media companies.

One of their current strategy is re-organized the media operations into a single management structure.

39 http://www.ceoqmagazine.com/mostrespectedceos/ceo_omnicom_johnwren.htm

31 Du Pont Analysis of the Top Four Conglomerates in Public Relations Industry

Source: The Author

These conglomerates are so huge in terms of the company size, communication networks, service provided, and others. However, by looking at the return on investment (ROE) of the Du Pont analysis, these “Big Four” groups show different perspectives. For example, Omnicom Group has the highest and increasing ROE of 23% in 2010 to 29% in 2012. While, WPP has the lowest ROE of 10% in 2010 and 13% in 2012. Besides that, Omnicom also has the highest total asset turnover (TA TO) while WPP Group has the lowest total asset turnover. Publicis has the lowest in leverage factor but still the average of leverage factor is about 4, although is the lowest compared to others but is considered risky. However, Publicis has the highest profit margin

32 among these conglomerates. In other words, we can conclude that Omnicom Group has good return on investment because the assets was being used efficiently but Omnicom need to watch out its leverage factor because is too high and risky, 5.4 in 2010 and 6.4 in 2012.

From the Du Pont analysis, we can see that Publicis has the highest profit margin (PM) among others followed by WPP Group. The profit margin is calculated from net income divided by revenue. In other words, these two conglomerates have high and increasing revenue although they were actively involved in M&A activity. WPP’s increasing revenue growth was impacted by the strength of pound against the Euro and good performance in regions like Asia Pacific, Latin America, Africa. On the other hand, Publicis successfully launched Vivaki, an innovation platform in 2008 has strengthen its business. Vivaki was created to accelerate the digital transformation of Publicis and its agents, and initiated the partnerships with Google, Facebook, Microsoft and other players by providing innovative products and services such as The Pool and Audience on Demand (AOD).⁴⁰

PR Associations

Public Relations Society of America (PRSA). The PSRA was formed in 1947, New York City.

PRSA is a community of more than 21,000 public relations professionals across the United States, from recent college graduates to the leaders of leading PR firms. Their mission is to promote greater understanding and adoption of public relations services, provide professional development, set standards of excellence and upholds principles of ethics for its members or even for global public relations practitioners.⁴¹

International Public Relations Association (IPRA). IPRA, London was founded in 1955 with the objective of raising standard of public relations practice. Currently, IPRA has 700 members from 0 countries worldwide.

Public Relations Consultants Association (PRCA). PRCA began in 1969, represents many of the major consultancies in UK. Currently, PRCA has over 317 agency members around the world, including the majority of the top 100 leading consultancies in UK.

40 http://www.prnewswire.com/news-releases/publicis-groupe-transforms-vivaki-a-new-step-for-growth-177658821.html

41 http://www.prsa.org/AboutPRSA/

33 Institute for Public Relations (IPR). Unlike PRCA, Institute for Public Relations is an independent non-profit foundation with the mission in promoting public relations. IPR also providing professional training.

The Council of Public Relations Firms (CPRF). CPRF is a leading industry association with more than 100 of U.S. leading PR firms joins the membership. For example, all the top ten big PR firms are CPRF’s members. Their mission is advocates for and advance the business of PR firms by building the market and the value of firms as strategic business partners.⁴²