Edelman Reports 3.7% Revenue Decline In 2023

(MENAFN- PRovoke) NEW YORK -
Edelman's US revenues plunged 9.1% in 2023, dragging global earnings at the world's biggest PR firm down by 3.7% to $1 after what global CEO Richard Edelman described as "a difficult year for the industry."

The results underscore a tougher environment for the global PR industry, after Edelman grew 12.8% in 2022 to become the world's first $1 billion PR agency. Omnicom had previously reported a slight decline in PR revenues for 2023, while both IPG
and WPP have reported modest increases for the year.

Edelman's first calendar year revenue decline since 2020, and only its second since the global financial crisis 15 years ago, saw US revenues drop to $639m, compared to $704m in 2022. Canada was also down 2.3% to $32m.

Edelman was quick to point out that the firm had grown by 19% since 2020, but acknowledged difficulties in the US, saying "technology and healthcare are our two biggest practice areas and we substantial budget cuts in both areas, and in financial services." Some of those cuts were offsets by increases in food and beverage and energy.

Edelman also pointed to growth among the firm's largest clients, which set them apart. "Our top 30 clients were fine, and our top 100 clients grew by 6%. I think it shows the value of those relationships where we are the lead agency, and not just the lead PR agency. For clients where we are creating large, global campaigns, we saw good growth."

The North American contraction was partially offset by a stronger showing in EMEA, up 7.1% to $229m. Asia-Pacific grew 1.7% on a like-for-like basis, but currency fluctuations meant reported USD revenue of $103m in 2023, compared to $104m one year earlier. LatAm grew by almost 30% to $35m.

In terms of specific offices, Dallas/Houston and Miami were the only bright spots in the US, up 7% and 17.7%, respectively. In EMEA, Belgium grew 33.7% (in part because of the acquisition of Landmark Public Affairs ), while the Middle East was up 23.7%. Ireland (+19.3%) and Germany (+6.7%) also submitted strong performances.

In Asia-Pacific, Korea led growth (+23.5%) while India (+18%) and Singapore (+7%) also delivered topline expansion. LatAm was led by Colombia (+45.9%) and Brazil, up 32.5%.

Asked about China, where many western PR firms continue to experience difficulties, he said: "China is 2% of our business globally. There have been challenges because of the geopolitical situation, so right now China is not the growth driver in Asia. It's a growth element but not the growth driver. We're seeing a lot more inward investment from US companies that we are outgoing business."

Edelman's global headcount, meanwhile, was down to 6,116 from 6,433 in 2022. Edelman conceded that the most difficult decision of the year had been the reduction in force that occurred in June and said, "We had staffed up in 2022 to meet demand, and that
turned out to be a mistake. We need to do a better job of managing the business, and that's on me."

There was notable turnover in Edelman's leadership over the past year, including a new US CEO in Kirsty Graham, while Ed Williams was promoted to international president. Other key appointments included new leaders in EMEA, Canada, New York and California. But Edelman said he was extremely confident in the new team and its ability to restore the firm to growth.

"The tech sector is more confident, I think, going into 2024, with so much activity around AI and so many communications challenges as a result." The elections occurring around the world, he said, could be a mixed blessing: "They create uncertainty, which might make companies hesitate, but at the same time they will need advice about how they should prepare for a Starmer government in the UK or a Trump administration in the US, and what those changes might mean for issues like DEI, for example."

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