The news: PR firm Edelman laid off 330 staffers (5% of its workforce) this week, citing an 8% decline in revenues for the year.
- Edelman framed the move as part of a broad restructuring: Several firms under its umbrella, like food and beverage boutique Edible and customer experience company Revere, will be shut down in the layoffs.
PR headwinds: Edelman’s restructuring and layoffs come as the company has lost major clients including Adobe and Dairy Management, which was a customer for two decades. But CEO Richard Edelman said the moves also reflect a need to meet demand from clients for both communications and marketing services.
- “The two things we were trying to build in the last years are the advisory business … and the marketing side of the business, to compete with ad agencies and digital firms,” Edelman told Axios. The company has hired 200 creative employees in Colombia to meet demand and could pursue similar moves in India.
- The Big Four advertising agencies like Omnicom have also worked to diversify their offerings to serve as a one-stop shop for various client needs.
Our take: A revealing business change is the amount of revenues Edelman generates from “top” clients. Edelman said the company gets just under half (45%) of its revenues from its top 30 clients, while revenues from the top 160 clients have grown from 65% in 2023 to 75% this year.
- The increased reliance on smaller-billing clients is happening across the ad industry. Top-of-funnel brands with significant recognition have the pick of the lot among ad and PR agencies, which can sometimes lead to significant drops in revenues when they shift around—as they did with Adobe and others.
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Snap has reported a similar dynamic. CEO Evan Spiegel said in September that the company was looking to simplify its platform and rely less on top-of-funnel brands.