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Public Relations & Public Affairs

Howard Paster

Public Relations & Public Affairs Overview
Report by Howard Paster

Executive vice-president
WPP Public Relations & Public Affairs

WPP's Public Relations & Public Affairs (PR&PA) businesses had a stellar year in 2007, with strong performances across the sector. While numbers do not tell the story of the great effort of thousands of professionals in dozens of countries, nor the accomplishments on behalf of hundreds of clients, the numbers do help illuminate the collective achievement of those individuals and their operating companies on behalf of our clients.

On a like-for-like basis, PR&PA revenue grew by 8.2%, making it the fastest-growing of the four WPP reporting sectors on that basis. Constant currency growth was 12.6%. On the same basis, the PR&PA businesses achieved a 16.5% margin, a year-on-year improvement of 1.5 margin points; and again the highest among the four WPP reporting sectors. The effect of this performance was for PR&PA to account for 10.5% of WPP revenue, but fully 11.7% of profit on a constant currency basis.

This degree of success, with the margin improving by 1% or more for the fourth consecutive year, could only have been achieved with significant progress across the spectrum of PR&PA businesses.

The three largest businesses in the category – Burson-Marsteller, Hill & Knowlton and Ogilvy Public Relations – all made excellent progress in 2007. B-M continued operating from strength in the US, while rebounding in Europe. It benefitted from good years at its BKSH, Direct Impact and Penn, Schoen & Berland subsidiaries. Hill & Knowlton has maintained its broad leadership in Europe, and showed special growth in Canada, the Middle East and Asia. Ogilvy did well in all regions, while sustaining its leadership in China.

Its results were enhanced by the distinguished success of Ogilvy Government Relations (which was known as the Federalist Group when it was acquired in 2005).

Our other networks – Cohn & Wolfe and GCI – also ended 2007 with impressive results. Cohn & Wolfe was able to again deliver the highest margin among the WPP PR networks. GCI, which came to the Group in the Grey transaction, did well while working very closely with Cohn & Wolfe.

As has been the case for several years, certain of the smaller members of the Group made significantly high contributions to our success. Finsbury, a leading financial communications firm in London; Robinson Lerer & Montgomery, the New York-based corporate communications specialist; Quinn Gillespie in Washington; Public Strategies (PSI), the Austin, Texas headquartered PR&PA firm; and Dewey Square Group (DSG) of Boston – the latter two, PSI and DSG, both finishing their first full year in the Group – all had very strong years. Buchanan launched a potentially important joint venture with JWT in the Middle East.

The achievements across the sector reflect, one must acknowledge, strong business conditions benefiting the industry generally. But if a rising tide lifts all boats, it is also true that the WPP companies did much more than benefit from industry conditions. They retained existing clients at a very high rate, they won new business consistently, they continued to work closely with WPP's excellent internal talent team to recruit dozens of distinguished PR&PA professionals, and they took advantage of every opportunity to cooperate with other WPP operating companies.

Understanding and moving aggressively to build strong digital offers for their clients, continuing to strengthen their capabilities in the keys areas of technology and pharmaceuticals, pursuing the WPP policy of investing and growing in emerging markets were just some of the ways these companies achieved their success.

While the glow of the 2007 performance lingers, we are all mindful that we will be tested again in 2008. No one can know in the first part of the year how the economic slowdown in the US will affect the PR&PA business there and around the globe. In Washington, DC, where WPP has the finest portfolio of public affairs business in any group, we know a Presidential election year puts on a damper on government affairs work. The stress in the capital markets could affect our distinguished financial communications firms which benefit from major transactions and IPOs.

So there are challenges ahead. Yet I have a high degree of confidence our PR&PA firms are as well situated to address those challenges as any in the business.