Public relations in private hands



As a public relations man, Richard Edelman certainly manages to put a good spin on working for a family business.

The American, 56, is president and chief executive of Edelman, the public relations firm started by his father in 1952.

Mr Edelman Jr joined the business 33 years ago, and it is the only full-time job he has ever had. His father, 90, is still chairman and his brother, sister and daughter all hold positions in the company.

It seems there was no doubt Richard Edelman would join the family firm, where he has made a career working with heavyweights such as Microsoft, Kraft and Walmart.

Yet he insists it was never a foregone conclusion he would pursue the "dark art", as it is considered by some, of public relations (PR).

In fact, Mr Edelman's snap decision to join his father's firm cost him his university girlfriend - not to mention a career surrounded by lingerie models.

"I was all set to go work for Playtex, the guys who make bras. I figured at 23 it was the line of business to be in," says Mr Edelman.

"So I was all set to go and work in Stamford [Playtex HQ, in Connecticut], and my Dad called and said 'you know, I really think you should give PR a year and see what happens'. So here I am, 33 years later."

Thoughts of lingerie models aside, the young Mr Edelman faced more tangible problems and was in his final weeks at Harvard Business School.

"I was going to go to Europe with my then girlfriend, and my Dad called me the week before … After finishing my exams on Friday, I was in the office on Monday. I had two days to pack my apartment, get my stuff to Chicago and start work. That's a real family business," he says.

And so, dreams of the demi cup, cantilever suspension and the Champs-Elysee led instead to the "windy city", not to mention one rather disgruntled young confidante. "She became an ex-girlfriend. To say that she was livid and speechless is right."

In his 33 years working at Edelman, it has grown from a Chicago company with US$6 million (Dh22m) worth of work to the world's largest independent PR company, with revenues of $532m and operations in 54 markets.

The firm has a growing presence in Abu Dhabi, which it hopes to make a hub for operations in Africa, a continent it has yet to tap. In the UAE, it works with its key client Mubadala Development, along with other businesses including Research In Motion, the Canadian makers of the BlackBerry. Mubadala is a strategic investment company owned by the Abu Dhabi Government.

Mr Edelman acknowledges that in the Middle East and other markets the public relations industry suffers from an image problem, but says that is improving.

"PR used to just be 'here's the press release, go get it out'," he says. "The big change is that the chief communications officer reports to the CEO. That's happened here [in the Gulf], and that's good."

Establishing its $4.8m business in the UAE has been a long road. In 2004, Edelman signed an affiliate agreement with Asda'a Public Relations, which is based in Dubai and now known as Asda'a Burson-Marsteller, to cover the Middle East and North Africa.

This agreement ended when WPP acquired The Holding Group, the parent company of Asda'a.

"In a way, it was the best thing that ever happened to us, because we've got a $4m business of our own," says Mr Edelman.

Much of Edelman's worldwide growth has been similarly organic, and the company is known to have fought for its independence in a market defined by consolidation, with holding companies such as WPP snapping up an ever-larger number of PR and advertising firms. Like most PR firms, Edelman is keen to talk-up its credentials in digital media. The company claims to have been the "first to hire bloggers and other digital media experts in highly-visible senior roles". Mr Edelman writes a regular blog called 6am, which reflects his habit of rising early. "I'm a very mid-western kid," he says. "I go to sleep by 10.30pm, because I can't stay up later. It's kind of pathetic. I'm not the greatest host."

Of course, the growth of the company, and its forays into digital media, have not always been easy. In 2006, Mr Edelman was forced to issue an apology for the agency's role in creating a blog for Walmart that did not properly disclose its origins or funding. Yet the controversy did not derail the firm's ambitions in digital media, which makes up a growing part of its operations.

"We're the only independent of the top-10 firms, we're not part of an ad-holding company, and so therefore we define PR as a very broad set of things, from consulting, digital, classic PR, to events."

He attributes some of Edelman's growth to it being independent, and family run - and there is no sign of that changing anytime soon.

Mr Edelman's father, Daniel, still keeps close tabs on the business. "He's still chairman, and I have to call him every day. [He asks:] 'How is the business, how are our numbers in the Middle East?' Every day."

Mr Edelman describes his father as being "tough" - like many other figures in his life. He names the energetic former US president Teddy Roosevelt as his hero. His wife is also a strong character. "Her nickname is 'the general'," says Mr Edelman. "She's quite straight about things."

His self-proclaimed role is one of "chief diplomat" alongside these imposing characters. "I like strong people around me - I like to have a bit of scrumming," he says.

A colleague agrees Mr Edelman is different to his father. "His dad was really stern in the way he managed the business," says the colleague, who did not wish to be named. While Mr Edelman does not have the sternness of his father, he inherited some of his "no-nonsense" discipline and straight-talking, he says. "You don't have to read the tea leaves."

Other members of the Edelman clan also feature prominently within the business.

Richard's brother Johnis president of the Edelman Foundation and covers corporate responsibility for the business, while his sister Renee works in technology PR for clients such as EMC Corporation.

His eldest daughter Margot accompanied him on a recent trip to the UAE, where, among various business meetings, the two found time to go dune-bashing and scale the Burj Khalifa. She is attending Harvard Business School in autumn, and has worked in Edelman offices in Chicago, New York and Shanghai. She is currently at the firm's London office, working with clients such as Shell and Diageo.

Colleagues appear to value the family nature of the firm. "I do feel like I'm part of the family business, and that's important for all the staff," says Iain Twine, the general manager for Edelman UAE.

Being family run also helped the business survive the recession, Mr Edelman says.

"The fact that we're private, independent, means that we don't have to be short-term orientated in making a margin. We are very much entrepreneurial, go-for-it, opportunistic … We move, and do it," he says.

"My family has taken nothing out of the business. We have all our assets in the family business," he says. "The top 80 or 90 people in the company all have stock in the company … they own just about 20 per cent of the business. And so they have the same orientation as the family: people take yellow taxis to the airport, they don't get big white cars."

Yet one competitor says Mr Edelman's softly-softly approach cannot last forever. "They've come to a phase when they have to do something fairly dramatic, or they'll just stagnate," says the executive, who wished to remain anonymous.

Plus, there is inevitable change on the horizon, given Mr Edelman's father is of an advanced age. "When that leadership changes, there will be challenges in the firm," says the executive.

As it stands, Mr Edelman makes a good case for his family businesses. Yet the question remains: could he have defied his father's calling 33 year ago?

"Do you 'know' my father? The answer is no," says Mr Edelman. "He made a compelling case: he said 'look, I'll give you two weeks of vacation in December'. And I said 'what am I going to do with the girl?' And he said 'figure it out - I always did'. He's just a tough old guy."

And will he be similarly tough on his children? One doubts it, although there is an indisputable desire to keep the Edelman name alive in the business.

"Long after I'm gone, I hope my kids will keep things moving in the same direction," he says.

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
What drives subscription retailing?

Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.

The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.

The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.

The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.

UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.

That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.

Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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