Building a bigger buzz

Edelman, the largest independently owned U.S.-based PR firm, has expanded globally through acquisitions—while retaining its culture and spreading it to the acquired firms.

By Thomas W. Durso

In a little over half a century, Edelman has grown from a tiny marketing and public relations start-up in Chicago to a global, comprehensive communications firm. With 3,100 employees and 51 offices in more than 20 countries, Edelman is now one of the ten largest U.S.-based PR companies. It is also the only one of the ten that is independently owned.

It’s not as if Edelman has remained immune to the M&A trend that has consolidated so much of the industry. Rather, the firm has effectively exploited that trend, growing itself through numerous acquisitions while retaining its independent, almost idiosyncratic culture and spreading it to its new partners.

Scores of companies like to crow about how differently they approach their business. At Edelman, it just might be true. And it could explain how a PR giant can talk like a mom-and-pop shop, in more than a dozen different languages, and mean it.

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You’d expect the founding chairman and president and CEO of a large, global PR concern to receive visitors in a sleek, soulless conference room, high above Madison Avenue, the bustle of Manhattan a silent vision below. Or perhaps in a corner office inside a muscular glass-and-steel skyscraper stabbing the clouds over downtown Chicago, the company’s headquarters.

Instead, 88-year old Daniel Edelman, the founder and chairman of the firm that bears his name, and his son Richard, 53, now the company’s president and CEO, are seated at the dining table in Dan’s home, a quiet condo on the sixth floor of a building a couple of blocks west of Lake Shore Drive, well north of the Loop. Lake Michigan’s massive expanse, shimmering in hazy sunshine, is an imposing presence outside the window; inside, though, there is graciousness and easy conversation, as father and son talk about a corporate culture they see as vastly different from those of their competitors, whose need to keep Wall Street happy, they believe, stifles client-centered thinking and risk-taking.

That culture, Richard Edelman says, stems from his father’s philosophy, “which is that the thing that really matters is your outstanding work for the client. If you do a great job for the client, you’ll wind up making money.”

That outlook goes back more than 50 years. In 1952, after four years as the public relations director at the Toni Company, a Chicago company that manufactured and marketed the first popular home permanent brand, Dan Edelman hung out his own shingle. Toni was his first client.

While at Toni, Edelman had overseen the first-ever product media tour, and after launching his own firm, he continued to innovate. Edelman PR was an early adopter of the celebrity endorsement, created the first “do not call” list and launched the first free consumer help-line on behalf of Butterball Turkey, saving countless Thanksgiving dinners over the years. The company claims to have “invented litigation PR” by helping CBS News respond to charges made by General William Westmoreland in his lawsuit over a 60 Minutes report. It also takes credit for having “created environmental PR” on behalf of StarKist’s dolphin-safe tuna, for representing the first biotechnology product launch (Schering-Plough’s Interferon) and for being the first public relations firm on the World Wide Web. Current clients include such corporate heavyweights as Microsoft, Shell, Wal-Mart, General Electric, Unilever and a host of Big Pharma companies.

Those initiatives represent a diversification in scope and portfolio, a systematic expansion that Dan Edelman oversaw over the years. As it evolved from a straight PR firm to one that delved into digital marketing, research and other areas, the firm shortened its name from Edelman Public Relations to, simply, Edelman, which was how it was being referred to in the marketplace anyway.

The company’s geographic expansion occurred more by happenstance. In the mid-1960s Dan was visiting London and was having lunch with John Peters, an executive at Gillette (which had bought Toni several years earlier), and Michael Morley, Gillette’s account representative at the U.K. firm that was handling its PR there.

“At about 1:30 or 1:45 —it [lunch] started at noon —[Peters] got up and said, ‘I’m going to leave now and leave you two guys to get to know each other better,’” Dan says. “Morley and I talked for two or three hours, and before I know it I had a London office, which was what Peters had in mind all the time. He didn’t like the agency, but he liked Morley.… I hadn’t planned to be international; I just got the idea from Peters, this big, tall guy, and he said he would give us the business as long as we had an office. So Morley became the head of our London office and we were international.”

Edelman opened offices in Hamburg and Frankfurt, but remained a largely U.S.-focused firm until the early 1980s, when Dan Edelman realized his competitors were expanding geographically.

“A couple of the firms— Hill and Knowlton, and Burson-Marsteller—had already done that,” he recalls. “Their clients had taken them overseas in the ’60s and ’70s. We were lagging that.”

Duly inspired, Edelman went hunting, first in Europe, then later in Asia, Canada and Latin America, for small, independent firms it could acquire. Gradually the firm grew ever larger, and it continues to keep its eyes open for new opportunities.

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Edelman has specific criteria for the firms it acquires, which helps the new companies to become integrated more smoothly and take on its family culture, according to Richard.

“First you’ve got to find someone who is an entrepreneur, who wants to stick around,” he says. “We don’t buy firms from people who want to retire. We want someone who is active and aggressive.… It’s not just their clients or how much money they make. In fact, it starts with their culture.”

That was the case with Jackie Cooper Public Relations, a London firm that had built a huge book of business in the consumer products industry. Edelman acquired JCPR in 2004 because it filled a business niche but also, more important, because Richard, who was named CEO in 1997, liked the founders’ style.

“When Richard bought the company, he had a really healthy respect for what the company he was acquiring stood for in terms of equity and profile,” says Jackie Cooper, the firm’s co-founder. “He had a hugely successful business in the U.K., but consumer wasn’t one of the strengths. He recognized that he could acquire us and immediately acquire a consumer business in terms of having a roster of clients and revenue that was consumer-driven. But he also realized that he would buy a brand that would shine in terms of being part of the Edelman stable and have resonance in the U.K.”

Many of the companies acquired by Edelman over the years started out as Edelman affiliates, giving the parent company a good idea of how they operated and whether they would work as well if they were inside the Edelman tent.

Once it makes an acquisition, Edelman puts a senior staffer in the new firm to serve as a bridge between the two companies and foster what Richard calls “an acculturation process.” Importantly, say those at the companies Edelman has bought, the parent firm does not try to force that process. Though account managers for larger clients will visit the international offices, especially at the beginning, to check in on those clients’ accounts there, Edelman tries to let the cultural integration happen somewhat organically.

“The thing about Richard is that he gives you the space to fly,” Cooper says. “That’s not just as leaders of the business. I see him do it throughout the various levels of the business. It doesn’t really matter what level you’re at. In fact, be careful what you volunteer for, because he’ll just turn around and say, ‘Go on, then, off you go.’”

As Cooper notes, hierarchy is not as important at Edelman as it is at many firms. The company sends junior-level staffers to its acquired offices for yearly training. Every month it presents an issue one of its larger clients has faced; each office is asked to brainstorm solutions and present them on a firm-wide conference call.

“Training matters for us,” Richard says. “We’re not trying to change in a revolutionary way how [an acquired] firm operates, but over a period of time—and sometimes it takes two or three years—the firm gradually comes together.”

The result is a blend of Edelman culture and the acquired firms’ own styles. R&PM:Edelman, a Mumbai, India, firm that Edelman acquired in 2004, has “a culture [and] strong values of our own,” says Roger C.B. Pareira, its CEO and managing director. Edelman has not tried to alter them, Pareira says.

Pareira’s firm had been partially owned by Burson-Marsteller in the 1990s, but differing outlooks on how business should be done led him to sever the relationship five years ago. When Edelman came calling, Pareira was receptive to what he saw as shared values. For example, if Edelman proposes representing a client, but R&PM already has a competitor in its book of business, the parent company will back off.

“To Burson it was a business, not a value system,” he says. “Edelman operates as much better professionals. They’ve been respecting us right through.”

There have been challenges along the way. Some of the newly acquired companies simply don’t perform as well as Edelman had projected, in which case it sends in senior-level reinforcements to right the ship. From a cultural perspective, despite all the vetting it does, occasionally Edelman will acquire a firm headed by someone either unable or unwilling to understand what drives the company. Those people don’t stick around, the Edelmans say.

“We’re very entrepreneurial; we’re not necessarily going to focus on the money first,” Richard says. “We love marketing; we love creative ideas. We’re very much opportunistic and we don’t have a big strategic plan, and we don’t necessarily follow a business-school structure for how one grows a business. We do some things just because we’re entrepreneurial.”

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Both father and son cite Edelman’s status as a family-owned business as a major factor in the firm’s ability to expand so effectively in wildly divergent areas around the globe. (Richard’s sister, Renee Edelman, works in technology PR for the company, while their brother, John, runs its global human resources division.) Because its competitors are public, Dan says, their goals for profit margins approach 20%; Edelman, according to Richard, seeks about a 12% margin. That allows it to choose firms to acquire based not on their revenues but on their -cultures.

And, they say, it allows Edelman to focus on the work itself. The firm is less concerned with billable hours, opting instead to emphasize results. And it encourages its employees to, as the company website notes, lead “a culturally rich and rewarding life outside of work,” including “spending time with family … giving back to your community … [and] taking the time to learn about the world around you and your place in it.”

Examples cited by Richard include offering a leave of one month for a firm-paid “fantasy vacation” and donating 2% of its pre-tax income to do pro bono work for non-profits, such as flying eight associates to African villages to witness the efforts of Camfed, a non-governmental organization that educates young women, and better tell the organization’s story in home markets.

“Our ownership and our approach absolutely are central to our proposition, which is, ‘We can give you the biggest possible box for PR,’ he says. “In a world of complexity, where you’ve got all kinds of stakeholders, NGOs [non-governmental organizations] and activist employees, and communities who are involved, it’s not just consumers or regulators that are siloed groups. You need a firm like ours that can manage across all those, and is smart about digital, and understands social responsibility, and is global, and can give you more service than our competitors because we’re private and, frankly, we can have more senior people on your business.”

Richard and Dan Edelman aren’t the only ones to notice how their family ties illuminate their business.

“Even though Edelman is a multimillion-dollar business, Richard still, [even] being at the helm, makes constant references to his father, who founded the business, which means that you have this entrepreneurial, almost slightly maverick imagination matching with the need to deliver really professional business,” Cooper says. “You felt very at home being acquired by Edelman compared to, from what I know, the experience of being acquired by a business that would have had to answer to the stock exchange, because the craft still really matters.”

Thomas W. Durso is a freelance writer based in Glenside, Pa.