Edelman

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Edelman

200 East Randolph Drive, 63rd Floor
Chicago, Illinois 60601
U.S.A.
Telephone: (312) 240-3000
Fax: (312) 240-2900
Web site: http://www.edelman.com

Private Company
Incorporated: 1952 as Daniel Edelman Public Relations
Employees: 1,900
Sales: $220 million (2003 est.)
NAIC: 541820 Public Relations Agencies

Edelman, formerly known as Edelman Public Relations Worldwide, is counted among the world's leading public relations firms and is the largest to remain an independent private company. Its founder, Daniel J. Edelman, is regarded as the father of the public relations industry as well as one of its most innovative practitioners. From one office in Chicago, the firm evolved into a global entity, with outposts in 38 cities across the globe. Some 40 percent of Edelman's business is outside the U.S. Edelman's business is divided into several specialized practices, including public affairs, financial communications, consumer marketing, healthcare, and technology. Edelman's clients include many major corporations, such as Schering-Plough, United Parcel Service, Microsoft, Kraft, and Starbucks. The firm has crafted many key campaigns that have worked alongside of or in addition to advertising to alert consumers about products or problems. Edelman has promoted the sport of bowling, California wines, and landing rights for the Concorde supersonic jet. He also helped raise donations for the Vietnam Veterans Memorial, among many other projects. The private firm is headed by Richard Edelman, son of the founder.

Establishing an Industry in the 1950s

Daniel J. Edelman was born in Brooklyn, New York, in 1920. His father was a lawyer. The young Edelman showed a precocious interest in writing and communication skills. He claims to have written his first memo when he was five. At that age, Edelman was sick with the mumps and quarantined to a room off the kitchen in his family's home. So he typed notes to his mother, telling her what he wanted to eat. He produced a neighborhood newspaper when he was a little older and had moved with his family to Manhattan. Edelman graduated from high school at 15 and then enrolled at Columbia University. After he graduated, he took classes at Columbia's esteemed School of Journalism. He also worked as a reporter for a newspaper in Poughkeepsie, New York.

Edelman was drafted by the Army to serve in World War II. He took training as a communications specialist and was assigned to analyze German propaganda. After the war, Edelman returned to New York and began working as a news writer for the television network CBS. Through family connections, he found another job as a publicist for a small record company called Musicraft. Musicraft had several jazz stars under contract, including Duke Ellington and Dizzie Gillespie, as well as singer Mel Torme. The hair care company Toni sponsored a weekly radio spot for Torme. This gave Edelman the idea for a PR gimmick that led to the launching of his career. He packaged a Torme record to look like one of Toni's products and took it to disc jockeys at various radio stations. The gambit wowed radio men, who then talked up Toni. Subsequently, someone from Toni Co. contacted Edelman and got him a job working at the company's own public relations outfit.

Edelman's work for Toni set a precedent for the public relations industry. The company transferred him to its office in Chicago in 1949, where he continued working to promote Toni's home permanent wave kits. The home permanent kits threatened the salon industry, which was afraid its customers would stop frequenting beauty shops if they could do advanced processes for themselves. The bad feeling generated by beauty professionals had led to legislation that would have banned the home products or required a warning labeling the contents as poison. Edelman countered this mistrust and bad feeling with a road show highlighting the "Toni twins." Toni was already using twins in its magazine advertising. The campaign tag line was "Which twin has the Toni?" One woman had a professional salon permanent, the other the do-it-yourself job. Edelman took the Toni Twins beyond the magazine spread, hiring six sets of twins to travel to 75 cities across the country so that consumers could see them up close. Edelman arranged for the twins to meet local dignitaries and engendered tremendous positive media coverage for the Toni home permanent. At the same time, Edelman successfully advocated for the packaging to carry a seal of safety rather than a warning label. Toni products sold well, and this kind of road show became a staple of public relations campaigns.

In 1952, Edelman decided he was ready to go into business for himself. When he told his boss of his plans, he was immediately fired. Edelman's boss soon repented his hasty treatment of the young man and allowed him to take the Toni account with him. Edelman opened Daniel Edelman Public Relations in October 1952. Beginning with a staff of three, the small company had little trouble finding clients in the booming postwar period. Many companies were introducing new kinds of consumer goods, and Edelman helped introduce these to the public. One early client was Sara Lee Co., whose signature product was frozen baked goods. Edelman worked to get coverage of Sara Lee products in leading women's magazines. He also helped place a story on the company in the leading daily business newspaper the Wall Street Journal. This story ran under the confident headline, "Sara Lee Builds Baking Bonanza on Heaping Slices of Quality." This kind of media coverage led to wide consumer acceptance of Sara Lee products. Edelman also worked with the lemon juice substitute ReaLemon in the 1950s. Like frozen desserts, ReaLemon was a new kind of convenience food that consumers were not sure they trusted. Edelman established the brand with home cooks and also got the food industry to try ReaLemon in various products.

By 1960, the firm had about 25 accounts. Around that time, some of Edelman's employees banded together and started their own public relations agency. To counteract this move, Daniel Edelman visited every company on his client roster, persuading them not to switch to the new firm. All the clients stayed, and the Edelman agency went on to do more signal work in the 1960s.

Edelman Public Relations took on the country of Finland as a client in 1962. Finnish international relations were suffering because of the perception in the United States that Finland was a satellite of the Soviet Union. Edelman founded the Finnfacts Institute to give out information about the country and sponsored Finland tours for VIPs and the media. The campaign began to open U.S. markets to Finnish goods and companies. In 1966, Edelman began promoting California wines for the California Wine Institute. The domestic product did not have much of a reputation at that time, but Edelman worked to generate media coverage of the industry, getting articles in women's magazines as well as a spot on television's "Tonight Show." Consumption of California wines grew 70 percent through the 1960s. In 1969, Edelman began promoting the sport of bowling for the National Bowling Council. Edelman emphasized the fitness aspect of the sport, setting up a so-called "Bowl-A-Shape" tournament with former winners of the Miss America contest as participants. The company claimed 11 million people tried bowling over the 12 months of the National Bowling Council campaign.

Expanding beyond Chicago in the 1960s and 1970s

Edelman established an office in New York City in 1960, and another branch in Los Angeles in 1967. The next year, the firm opened a London office. Daniel Edelman had not expected to make his company an international player, but he met the right person at the right time. Toni had been bought by the Gillette Co., the world's leading manufacturer of shaving products, and Gillette did substantial business in England. While visiting the British Toni plant, Edelman met Michael Morley, who was a colleague of the head of public relations for Toni in the United Kingdom. Morley and Edelman hit it off, and after a single conversation the two men set up a British branch of Edelman Public Relations. Morley brought a strong British client base to the London office. He also oversaw Edelman's subsequent international expansion, including the opening of a branch in Frankfurt, Germany, in 1970. In 1972, the company opened two offices in Canada, one in Montreal and one in Toronto.

While most of Edelman's international expansion occurred in the late 1980s and after, especially as its operations moved into Asia, the firm had handled several cross-border accounts as early as the 1970s. One was its campaign to allow the Concorde jet landing rights in the United States. The Concorde was a super-fast jet built by British and French interests and operated by British Airways and Air France. The United States had abandoned its own project to build an "SST," or supersonic transport, and allowing the Concorde to land became a contentious issue. When the advanced plane was finally ready for flights to the United States in 1976, it was permitted to land only at Dulles Airport, near Washington, D.C., where the Secretary of Transportation had jurisdiction. Other airports had banned the Concorde. Edelman's Michael Morley coordinated a campaign—run out of the company's London and Seattle offices—to change the public's perception of the Concorde. Edelman's work helped beat back six attempts by Congress to ban the plane, and the Concorde won general landing rights in the United States in 1977. Edelman handled another international issue in 1979, the promotion of African groundnut oils. The African Groundnut Council represented six African nations that depended on exports of the oils. Edelman's educational campaign successfully raised demand for the oils in Europe.

Company Perspectives:

Our Mission: To provide public relations counsel and strategic communications services that enable our clients to build strong relationships and to influence attitudes and behaviors in a complex world. We undertake our mission through Convergence by integrating specialist knowledge of practices and industries, local market understanding, proprietary methodology, and breakthrough creativity. We are dedicated to building long-term, rewarding partnerships that add value to our clients and our people. Our clients are leaders in their fields who are initiating change and seeking new solutions.

Breaking Ground in the 1980s

By 1979, Edelman was an established international public relations firm with billings of around $6 million. Much of the public was more familiar with the work of advertising agencies than public relations firms. Edelman's clients often worked in tandem with advertising agencies, but Edelman's slant was quite distinct. A good example is Edelman's work for Con-Agra's Butterball turkey brand. Butterball's brand managers believed its sales were held back because American cooks had doubts about how to prepare a turkey. Rather than focusing on the brand name, as an advertiser might do, Edelman took on the underlying problem, and in 1981 established the Butterball "Turkey Talk Line." This was a toll-free telephone line consumers could use to find answers to questions about how to thaw a turkey, how to know if it was done, and so on. This was a unique approach to building sales for Butterball. It not only raised consumer confidence in the brand, but the talk line itself got media coverage, thus heightening Butterball's profile.

Edelman also broke new ground in the 1980s with its work for the broadcast network CBS. General William C. Westmoreland sued the network for libel after CBS aired a documentary in 1982 that claimed the general had misrepresented enemy troop strength in Vietnam in order to make it seem that the war was going better than it was. Edelman provided public relations to CBS in what is considered the first example of "litigation PR." An Edelman vice-president, John Scanlon, sat with the press corps each day of the trial. He provided documents to reporters, congratulated writers who covered the trial in a way favorable to CBS, and generally promulgated CBS's point of view. It was an extremely high-profile case, stirring up controversy about media bias and freedom of speech, as well as resurrecting unsettled issues of the Vietnam War itself. Immediately after the court heard testimony that damaged Westmoreland's case, the general dropped the suit. At that point, CBS and Westmoreland issued a joint statement saying that the case really needed to be decided in the court of public opinion. CBS had essentially won in that court already, due in part to Edelman's assiduous work. Litigation PR became a commonplace of highly publicized trials after this pioneering effort.

Edelman managed another significant example of crisis management in the 1980s when it worked with the H.J. Heinz company to bolster the image of its Starkist tuna brand. The late 1980s saw increasing media coverage of tuna fishing practices that ensnared and killed dolphins. Edelman helped Heinz find alternative fishing methods that did not endanger dolphins. It then made sure the public knew about it. Edelman managed Starkist's "Dolphin Safe" labeling effort, and by 1989 more than 80 percent of U.S. consumers were aware of the changes Starkist had made.

Continued International Expansion in the 1990s

In the late 1980s, Edelman began moving more strongly into international markets. At first, the company's overseas outposts were often the logical extension of U.S. offices working for global clients. Meanwhile, its competitors had pointedly bolstered their international business, buying up PR firms in other countries. Edelman's large competitors, Hill & Knowlton and Burson-Marstellar, had substantially more international clout than Edelman. Edelman caught up, however, when it acquired or opened PR shops in Europe and Asia, as well as expanding into more cities in the United States. Edelman had five international outposts in 1981. Over the next ten years, the company opened offices in Kuala Lampur, Beijing, Hong Kong, Sydney, Paris, and Singapore. This expansion continued over the 1990s. The company moved into Mexico City in 1994 and Sao Paulo, Brazil, and Buenos Aires, Argentina, in 1997. Edelman further bolstered its European presence in the 1990s with new offices in Frankfurt and Hamburg, Germany, and offices in Madrid and Brussels. By the early 2000s, Edelman was the fifth-largest public relations firm in Europe, with clients in all major national markets and European revenues of $45 million. Edelman moved into more Asian markets with new outposts in Seoul, Shanghai, and Taipei in the 1990s, enabling the company to help its domestic clients work in unfamiliar Asian territory. In 1997, Edelman worked for the Vidal Sassoon hair care company, putting on shows and conducting classes for Chinese stylists. Vidal Sassoon soon became a leading brand in the Chinese market.

In the United States, Edelman opened offices in more cities. It opened a Silicon Valley branch in 1992, putting it at the center of new technology developments. It also opened a branch in Sacramento, California, in 1994. Edelman went into the South in the 1990s, with a new branch in Atlanta, Georgia, in 1994 and a Miami, Florida, office in 1998. The company opened a Seattle, Washington, office in 1999. Edelman was also quick to see the potential of the Internet and in 1995 became the first public relations firm to operate a Web site. Over the next few years, the company put together Web-based PR projects for more than 300 clients.

Key Dates:

1952:: The company is founded as Daniel Edelman Public Relations.
1966:: Edelman promotes California wine for California Wine Institute.
1968:: The company's first overseas office opens in London.
1977:: Edelman helps secure landing rights for Concorde.
1983:: The company pioneers litigation public relations in the case of Westmoreland vs. CBS.
1995:: Edelman becomes the first major public relations firm with a home page on the Internet.
2002:: The company's name is shortened from Edelman Public Relations Worldwide to Edelman.

During the 1990s, many public relations firms bought up competitors, creating an industry of huge international companies. The biggest players in the industry by 2000 were Omnicom Group, the Interpublic Group, and WPP Group. Burson-Marsteller and Hill & Knowlton, long-time competitors of each other and of Edelman, were both now owned by London-based WPP. WPP and Omnicom had revenues of around $700 million by 2000, and Interpublic brought in over $400 million. Edelman's revenue was $172 million for 1999 and around $210 for 2000, making it about half the size of Interpublic and less than a third the size of the other big two in the worldwide public relations industry. Daniel Edelman retired as chief executive in 1996, passing that job on to his son Richard. Two other Edelman children, John and Renee, also held high posts at the company. Daniel Edelman remained chairman of the board. In 1997, the company announced that it had considered offers from two competitors who wished to buy it. Daniel Edelman made it clear that he was opposed to selling the company, which gained revenue nicely in the late 1990s. By 2000, Edelman was the only independently owned public relations firm in the industry's top ten names worldwide.

New Challenges in the 2000s

Edelman saw its revenues rise through the boom years of the late 1990s. However, the early 2000s were a time of many difficulties for Edelman and for corporate America in general. The stock market had risen dramatically throughout the 1990s but contracted considerably in 2000. Especially hard-hit was the technology industry. Edelman had been at the forefront of the so-called dot-com boom, with an office in Silicon Valley and many high-tech clients. As the stock market collapsed, a wave of companies revealed either accounting misstatements, fraud, or executive malfeasance. These financial scandals hurt investors, who were then wary of returning to the stock market. Then the terrorist attacks in New York and Washington, D.C., on September 11, 2001 seemed to open a new and uncertain chapter in American history. In an article he wrote for The Strategist (Fall 2002), Daniel Edelman described these events as a "triple blow" that left PR executives "caught in a quagmire." Edelman saw the early 2000s as the most difficult time for the public relations industry since he founded his company 50 years earlier.

The company acknowledged that its billings fell in the early 2000s, but since Edelman was an independent firm it was not under as much pressure as some of its competitors to keep up profit levels. This difficult period brought some challenging assignments to the PR outfit. Edelman's client Cantor Fitzergerald was one of the companies most severely affected by the September 11 terrorist attacks after 700 of its employees died in the World Trade Center that day. Edelman took on the job of communicating with family members of those among Cantor Fitzgerald's employees who had been killed, as well as setting up a counseling center and a relief fund. Edelman also worked with the Red Cross in the aftermath of the attacks. The Red Cross raised more than $560 million after September 11 but was then criticized in the press when it revealed that not all of that money was earmarked for families of victims. The Red Cross hired Edelman to help explain what the relief agency had already accomplished and how its funds would be used.

In celebration of its 50th anniversary in 2002, the company changed its name. It had been doing business as Edelman Public Relations Worldwide, and it shortened that to simply Edelman. In 2003, the company set up a unit called First & 42nd to deal with issues of corporate social responsibility. Edelman had much experience dealing with issues of corporate citizenship, such as its campaign for Starkist tuna. With so many companies suffering tarnished reputations because of financial scandal, Edelman felt it needed to create a specialized business devoted to these issues. Banana grower Chiquita Brands had already been using Edelman for several years to publicize its environmental work.

In the early 2000s, two-thirds of Edelman's work was still in consumer marketing. It helped Microsoft enter the computer games market in 2001, for example, promoting enthusiasm for the company's Xbox. Edelman had also developed several other major business areas. It worked with the healthcare industry, which was an increasingly complex and beleaguered market. In addition, Edelman ran a new division for financial communications. This sector grew by almost 40 percent in the few years after its founding in 1999. The company also operated a public affairs practice, principally out of its Seattle office. Edelman expected to grow more in international markets over the 2000s. The company also reiterated that it was not interested in selling but would remain a private firm.