Edelman, the large independent PR agency, celebrates its 60th anniversary this year, and CEO Richard Edelman — whose father founded the agency — agreed to answer a few questions about the milestone while he waited for a plane at JFK airport in New York.
The agency has 65 offices globally, and more than 4,500 employees. Its biggest clients are Unilever, Starbucks, Microsoft, Pfizer, Johnson & Johnson, HP, and Samsung. Edelman booked $637 million in fees for the fiscal year ending June 30.
BI: You've done a lot of crisis management for a lot of companies that, for want of a better phrase, have done a lot of bad things. I'm thinking of Walmart and Penn State, post-Sandusky. And you've been critiqued for it. Why do you take those clients?
RE: This is different from the law. Not every client deserves representation. We take on clients that we feel have a story to tell and also that want to make change. In many cases, companies use the crisis moments to pivot to do better. We like to be part of that. In the next phase, PR is not about calling you up and pitching a story, it's advising the client on what to do and then figuring out how to communicate that.
At Penn State, we're working on it right now. The goal is reputation rebuilding, to position Penn State as what it is: the leading public university in the U.S. It should get credit for what it's doing in academics and its new approach to sports at the campus.
BI: You've been a proponent of social media and especially blogging, but you ran into trouble in 2006 when it was discovered that Edelman was running a non-transparent blog about Walmart. [A couple blogged their way across America, parking their RV in Walmart parking lots. But the blog didn't note that Edelman and Walmart was behind it.] How did that change things?
To me it was just reinforcing that this was a very important avenue and opportunity. I didn't blame anybody in the company. I blamed myself for not having educated people properly on how to do it. Second, I used it as an opportunity to tell people there's a right way and a wrong way.
BI: The transparency issue also came up with VNRs in the mid 2000s [Edelman produced video new releases for the government that looked like real news reports, but they weren't clearly labeled as PR material]. Why do you think PR agencies make these mistakes?
RE: I think PR people are caught in this mindset of "control of the message." There's a lot more freedom if you give up control. If you allow people to say things that are genuine and admit mistakes and get on.
BI: If you had to point to one achievement since you took over as CEO in 1996, what would it be?
RE: In 2008, when the world came to an end, we didn't make any personnel cutbacks. In the last four years we've grown by 50%, which is amazing. I'm incredibly proud of the work we've done with Starbucks on their reputation turnaround, and the work with Walmart, and their move to become a trusted company in the last four or five years, and finally the emergence of Samsung.
BI: Your father founded the company. You have two siblings at Edelman. Did you ever not want to work there?
RE: I always said I'd go into consumer products. I had a job lined up as an assistant brand manager at Playtex, at age 23, all lined up. But my father had an offer to be acquired by DDB in 1978. He said, I'd really like you to come into the business for a year.
BI: How do you retain upper management talent in a family company where executives may feel that because their name isn't Edelman, they've got little chance of ever running the place?
RE: We pay out 40% of our pretax profit every year in bonus and long-term compensation. I give them a lot of operating room so they're as entrepreneurial as they can be without owning the company. And also the money's quite good.'
BI: Publicly traded networks get clear goals and numbers to meet, and CEOs lose their jobs if they don't meet them. You have the luxury of having room to maneuver. How do you use it?
RE: We can hire people ahead of business. We hired a fantastic woman named Cindy Tian in China. She had been at WPP. I just said do it. If China makes a half percent less, I don't care.
Now we're having some bumps in Russia. I said do the right thing. Hire the right people. If we lose half a million I don't care. Ultimately the goal has to be to provide quality service to Starbucks in Russia.
BI: Why do you remain independent? Why not just cash out and sell to one of the large agency holding companies?
RE: Business strategy. We actually believe the PR business has the potential to compete with digital and advertising, and we don't want to be encumbered by being in a holding company where we'd compete with those businesses. In Publicis [a large French agency holding company that owns MSLGroup] PR is a minnow. On the Volkswagen account, our digital business is as large as our PR business, so we're making headway into businesses that aren't PR.
BI Do you think about succession?
RE: I've named a COO, Matt Harrington, he's just turned 50. He's been at Edelman for 20 years.
BI: Have you ever thought about retiring?
RE: I love what I do. I really do. I don't find myself administering. I just like to work on clients.
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- Penn State
- Richard Edelman