Edelman Company Profile

Edelman: Introduction

• Industry Area
• Overview
• Market share and importance
• History and strategy
• Resistance

Industry Area

Edelman is one of the largest PR firms in the world and the only major multinational to remain independent of conglomerate giants like the WPP, Omnicom and Interpublic groups. The company was founded by Daniel Edelman, who is considered a key figure in establishing the public relation industry, and is now run by his son Richard Edelman.

Overview

No stranger to controversy, Edelman has provided public relations services to the likes of British American Tobacco, Shell, Walmart, AstraZeneca, Microsoft and E.ON, and has often led the industry in developing innovative ways to clean up corporate image and control public opinion. Having pioneered litigation PR, environmental PR, the use of third-party front groups and areas of crisis and issues management, the company has more recently developed practices in corporate social responsibility, greenwash as well as the use of the internet, social media and blogging. One of the most notorious examples in this regard was setting up a fake blog, or ‘flog’, called Walmarting Across America (see below).

Amongst the most controversial aspects of Edelman’s history is its work for various tobacco companies in the 1970s, ’80s and ’90s. Documents released under the Master Settlement Agreement revealed how the company played a key role in preventing effective legislation against the tobacco industry and manipulating public opinion on tobacco and its effects on health (see below for more details).

Edelman claims to champion ‘ethical’ standards within the industry and encourage ‘honest’ and ‘open’ communications. However, an examination of the company’s practices shows this to be just more spin and deceit from the world of PR.

Edelman’s clients have included some of the most notorious companies around the world, including Shell, Walmart, Microsoft, Starbucks, Burger King, Pepsico, Astrazeneca, E.ON, Unilever, HP and Kraft.[1]

Market share

Edelman is the world’s largest independent PR firm, with over 3,200 employees in 51 offices worldwide. In 2010, it had global revenues of $532m, up from $448m in 2009.[2]

Although the majority of its business is in the US, 40% is from elsewhere. The company is currently planning to expand further into Middle Eastern and African markets from its office in Abu Dhabi.[3]

History

Edelman was incorporated as Daniel Edelman Public Relations in 1952. Daniel Edelman is considered a key figure in establishing the public relations industry. Initially working as a communications analyst studying German propaganda during the Second World War, he then worked as a publicist for a small record company, where he developed a highly successful gimmick for marketing home hair care products.[4]

When it started, Daniel Edelman Public Relations only had a staff of three working from their office in Chicago. Nonetheless, many modern public relations techniques were pioneered by Edelman. For example, one of the companies early clients, Sara Lee, successfully established its range of new convenience consumer products after Edelman arranged coverage of Sara Lee products in leading women’s magazines and newspapers.[5]

In 1962, the company took on the state of Finland as a

client. At the time the Finnish government was concerned about the perception in the United States that it was politically tied to the Soviet Union. Edelman established the Finnfacts Institute, which disseminated favourable information about Finland, resulting in the opening of US markets.[ibid]

With continuing success in the US and several high profile clients, the company expanded internationally during the 70s, 80s and 90s and was, by the early 2000s, the fifth-largest public relations firm in Europe. Edelman also gained significant experience in crisis management, including what is regarded as the first example of “litigation PR”, while working for CBS.

The news network was being sued for libel over a Vietnam documentary aired in 1982. Edelman’s work involved providing material and developing relationships with key members of the press reporting on the case.[6] The company also established environmental PR with ‘Dolphin-Safe Tuna’ for StarKist in 1991, a company that had been suffering due to public concern over fishing methods.[ibid]

During the 1990s, many PR firms were bought up by international conglomerates. Burson-Marsteller and Hill & Knowlton, two of Edelman’s main rivals, were bought up by the London-based WPP group, which, along with the Omnicom Group and the Interpublic Group, became the biggest players in the industry. In 1996, Daniel Edelman’s son, Richard, became the chief executive of the company. By 2000, Edelman was the only independent company among the world’s top ten PR firms.

Like other companies in the industry, Edelman suffered from the dotcom crash and, in 2002, it changed its name to simply Edelman and began to branch out into corporate social responsibility and public affairs (lobbying). Today, it is the world’s largest independent PR firm, with an annual turnover of 188 million euros.

Involvement with the tobacco industry

Edelman has engaged in some extremely unethical practices, as revelations about its work for the tobacco industry demonstrate. The company played a key role in preventing effective legislation and manipulating public opinion on tobacco and its effects on health.

In 1998, the Tobacco Master Settlement Agreement[7] forced tobacco companies in the US to make public previously secret documents. Included in these was a document submitted in 1977 by Edelman founder and chairman Daniel J. Edelman to tobacco company R.J. Reynolds proposing that the industry “conduct a more aggressive public relations position to seek to reverse the current momentum [of] a general public agreement that cigarette smoking is a health hazard and that efforts to control it further are in the public interest.”[8]

Further documents reveal how Edelman assisted transnational tobacco companies “to slow, to stop, to reverse the growing belief that smoking is harmful to the nonsmoker,” encouraging clients to “break out of the tried and true principles of Public Relations – 101 and massage some truly creative ideas.”[9]

As late as the mid-1990s, Edelman was helping Philip Morris fight smoking bans[10] and helping generate positive media coverage for Marlboro’s products.[11]

Flogging and astroturfing

Being the first major PR company with its own website, Edelman was also early to embrace the use of blogging and social media that has now become standard practice within the industry. Richard Edelman, the company’s president and CEO, writes his own blog, ‘6 a.m.'[12], on developments within the company and the wider PR world. and author of In his book Deadly Spin, industry whistleblower Wendell Potter, is critical of Edelman and its hollow position on ethical standards. Utilising his blog, Richard Edelman responds to the criticism:

“Inaccurate representations of the PR industry — such as yours — “not so much for public relations as for public deception” — feed misconceptions of what we do. PR firms and their clients are dedicated to the long-term success of their business which is only achieved by honest and accurate communications, and that is the only approach tolerated at our firm.”[13]

He goes on to say:

“The reality is that today, thanks to robust mainstream and social media, there is immediate damage extracted to the reputation and the license-to-operate of any company, brand or PR firm folly enough to distort the truth.”

As Potter pointed out in his reply, this is pretty rich from a company that actively participated in deceiving the public over the health impacts of tobacco smoke.[14] However, it is typical of Edelman’s approach to PR, touting the importance of ethical practices whilst, at the same time, employing the very tactics it claims are so damaging to the industry’s reputation.

In reality, of course, social media and blogging provide additional platforms for PR companies to disseminate their messages and shape public opinion. In March 2006, the New York Times and Wall Street Journal revealed how Edelman had been using bloggers to comment favourably about its client Wal-Mart, with BusinessWeek.com later showing how the apparently independent blog Wallmarting Across America was, in fact, an Edelman paid-for fake blog, also known as a ‘flog’.[15] Once uncovered, the story of the fake Walmart blog rapidly spread across the blogging community and mainstream news, causing much embarrassment for Walmart and Edelman and becoming a case study in astroturfing (the now widely employed tactic of carrying out activities designed to give the appearance of a grassroots movement in order to promote a political or corporate agenda). Richard Edelman admitted “failing to be transparent about the identity of the bloggers.” Yet, in the same statement, he also claimed that “Our commitment is to openness and engagement because trust is not negotiable.“[16]

Each January, Edelman publishes a report called the Edelman Annual Trust Barometer[17], which surveys trust ratings in countries around the world. The report tracks public trust of business, governments and the media and highlights the key areas to focus on in order to build confidence. Whilst the report is ostensibly about ways of increasing credibility through open communications and dispelling misconceptions, it mainly serves to inform PR practitioners about ways in which public perceptions of government and corporate activities can be controlled.