Recent Spate of PR Deals Reflects An Industry In Search of Scale


M&A fever is gripping the PR field. In the last few weeks, a slew of PR mergers and acquisitions have been announced. These deals include both independent agencies looking to create more scale on behalf of their clients and large PR shops that want to bolster their services and expand their global footprint. Financial terms for each of the deals were not disclosed:

• In early June advertising agency allen & gerritsen (a&g) acquired PR firm Neiman. The combined agency, with nearly 200 employees, creates one of the nation’s top 20 independent media agencies.

• Also in June, Ketchum announced its acquisition of Brandzeichen, one of Germany’s top PR agencies, which specializes in lifestyle communications and social media. The move is in keeping with Ketchum’s global strategy to partner with other PR shops in order to enhance its services and geographic coverage.

• Less than a week after the Ketchum deal, French/West/Vaughan (FWV) said that it acquired Grooms Athletic Management and Entertainment (G.A.M.E.), a sports and entertainment management, marketing and consulting company. G.A.M.E., which is being integrated into FWV’s Sports and Entertainment practice, is the latest effort by FWV to grow via acquisition.

PR agencies large and small have hardly been immune to the media M&A sector that’s been characterized by fits and starts for the last decade. However, these latest deals reflect a sense of urgency among PR agencies to either buy other media-related outfits (or sell out to larger firms) in order to offer clients a full suite of media services and land bigger advertising and PR budgets.

Indeed, a&g’s acquisition of Neiman plays into the dramatic changes in marketing communications and the growing demands among clients for more nimble, yet comprehensive media services, according to Tim Reeves, formerly CEO of Neiman, who is now a principal at a&g.

FLAT IS UP

“It’s just a fact of business life that greater corporate structure has a negative impact on agility,” Reeves said. “It’s also a fact of life that when you have competing profit centers it has a negative affect on your ability to approach problem-solving from a purely agnostic position.”

Call it the Walmart model, in which a potpourri of media products and services reside under one roof and encourage one-stop shopping.

“What we’re all seeing in marketing is that the segregation of the paid-earned-and-owned circles is eroding,” Reeves added. “There is more and more concentricity among those once separate circles. The notion of PR as a wholly separate enterprise becomes more and more of a stretch every day.”

Reeves pointed to three factors that PR and advertising agencies need to consider upon merging:

Sincerity: Both parties need to have a genuine desire to merge and appreciate the differences between the two practices.

Educate: PR and advertising are different crafts that need to be explained in a way “that’s not paternalistic and is accepting of the fact there needs to be two-way learning,” Reeves said.

Acknowledge: After a merger, be sure and tell clients and prospects about the new offering (whether it’s advertising or PR), but don’t upsell. “One of the best ways to inject a poison into your relationship with a client is to do a deal and then make them feel like your whole life work is now to have them buy the extra services you now offer,” Reeves said.

FWV has also grown via combining PR and advertising. In 2002 then-Richard French & Associates, a PR agency, acquired West & Vaughan, a regional ad agency, to form French/West/Vaughan.

FWV’s acquisition of G.A.M.E. is the latest in a string of deals that has boosted the agency’s investment in its sports and entertainment portfolio, which now represents roughly 5% to 7% of overall revenue, said Rick French, Chairman-CEO of FWV.

FOCUS ON TALENT

French recommended the following guidelines for deals involving marketing communications companies:

▶ The deal needs to focus on “talent acquisition” rather than “client acquisition.” Clients may come and go, “but if you acquire talent that can help you grow your business, that’s something that’s sustainable,” he said.

▶ “You also need to make sure you have talent at the very top that shares your vision of the agency and where it’s going. That’s the best practice of all,” French said. “Those people have to have a desire and willingness to grow with you, and should not be looking for an exit strategy because that seldom, if ever, works.”

▶ Acquisitive agencies need to look for extensions of existing practice areas or new practice areas that are complementary to existing departments.

Rob Lorfink, senior partner, president and COO of Ketchum, amplified French’s comments that media deals need to keep the focus on the talent being acquired.

“Be cautious of agencies that lack talent and leadership depth beyond the founder and avoid entrepreneurs who don’t appear to be in it for the long term,” he said.

Regarding the integration of Brandzeichen into Ketchum Lorfink said that Brandzeichen’s staff starting next month will attend “Camp Ketchum,” a five-day training program focused on creativity and developing “big ideas” for Ketchum’s clients.

Asked what the deal meant strategically, Lorfink added: “We can only say this is right on target for Ketchum’s strategy to identify and bring on board the very best talent for our clients. Also, it reflects that agencies that are strong in digital, social media and creative are hot right now.” PRN

CONTACT:

Rick French, rfrench@fwv-us.com; Rob Lorfink, rob.lorfink@ketchum.com; Tim Reeves, treeves@a-g.com.

3 Tips to Follow When Media Disciplines Merge

Bringing two organizations together is tough. When you’re merging disciplines as well as cultures, it’s tougher still. We worked more than a year on allen & gerritsen’s acquisition of Neiman. We’re still learning as we go, but here are three key tips we’ve gauged so far about what to when merging different media disciplines:

Include your leadership teams early: We brought our leadership teams in from the start, and it made all the difference. With their genuine up-front buy in, we have created a shared vision and shared growth strategy that is paving the way for a genuinely melding of cultures.

Be willing to look at your own role with open eyes: Before I reached out to a&g CEO Andrew Graff, I had already decided that my sweet-spot role, if we did a deal, was to run PR. It’s hard for CEOs to say but Andrew’s a better CEO than I. We need him at the helm. And the agency needs me leading PR.

Over-communicate: We set an early goal—every Neiman client, and every Neiman employee, would be told personally and privately about the news before it wasannounced publicly. News this big should be shared one on one. You can’t promise people they wil l be respected in a new structure, if you don’t show that respect in how you tell them.

Tim Reeves is a principal at allen & gerritsen.

This article appeared in the June 24 issue of PR News. Subscribe to PR News today to receive weekly comprehensive coverage of the most fundamental PR topics from visual storytelling to crisis management to media training.




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