Building a large independent PR agency (featuring Ronn Torossian)

Leveraging organic growth and acquisitions to create a thriving business
Ronn Torossian

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Ronn Torossian has built one of the largest independent PR agencies in the U.S., and in this episode he shares some of the lessons he has learned along the way. A prolific content creator, Ronn frequently writes and speaks about issues facing the industry, and he is passionate about finding ways to improve modern public relations.

Ronn’s agency, 5WPR, recently announced that they were looking for small agencies to acquire. He explains exactly what he’s looking for and why he wants to supplement his firm’s already strong organic growth.

Resources

About Ronn Torossian

Ronn Torossian is the founder and CEO of 5W Public Relations, one of the 15 largest independently owned PR firms in the United States. With over 20 years of experience crafting and executing powerful narratives, Torossian is one of America’s most prolific and well-respected Public Relations professionals.

Since founding 5WPR in 2003, he has led the company’s growth, overseeing more than 175 professionals in the company’s headquarters in the iconic Helmsley Building in Manhattan. With clients spanning corporate, technology, consumer and crisis, in addition to digital marketing and public affairs capabilities, 5WPR is regularly recognized as an industry leader and has been named “PR Agency of the Year” by the American Business Awards on multiple occasions.

Transcript

CHIP: Hello, and welcome. I am your host, Chip Griffin, and my guest today is Ronn Torossian, the Founder and CEO of 5WPR. Welcome to the show, Ronn.

RONN: Thanks for having me.

CHIP: It is great to have you. You are in addition to being the Founder of one of the largest independently owned PR firms in the U.S., you are also a prolific content producer. You are out sharing your views and ideas on the PR industry quite regularly and have lots of insights. I know this is going to be a great conversation.

RONN: Let’s hope so. Thanks so much.

CHIP: Perhaps you could just share a little bit about 5WPR and a little bit of the founding story to give our listeners some background before we jump in?

RONN: Sure. Today, 5WPR is one of the 10 largest privately PR firms in the United States. We’re about 180, 190 people, headquartered in the heart of Manhattan. I founded the agency 16 years ago out of one room. We’re a mixture of things, but we’re about 50% B2C, 50% B2B. We’re a straight across the board consumer, technology, healthcare, corporate communications, crisis, and a wide variety of other things, full service, PR, and marketing digital agency.

CHIP: What drove you to found an agency?

RONN: I’m still trying to figure it out.

CHIP: Some [crosstalk 00:01:24] days you probably wonder more than others I would imagine, if it’s like any other business.

RONN: Yeah, exactly right. Like any other business owner, like any other entrepreneur, half the day we need a shrink to examine our life decisions. I’m teasing. I love what I do. It’s really great. I started 5WPR out of a desire to really just do great work for clients. I believed and still believe that there’s wide opportunities for communications companies who want to take chances for their clients, who want to take chances to think big and to deliver big.

RONN: That’s what we’re trying to do and that’s what we do day in and day out here. That’s why I founded the agency, that’s why why we continue to do great work for our clients is to really just focus on making sure that we product results, making sure that we produce really hard work, really hard-hitting thoughts for our clients across the board. That’s what drives us here every day.

CHIP: You’ve had a lot of success. You’ve managed to, as I mentioned earlier, grow into one of the largest independently owned firms, but you’re not satisfied with that growth. You are still looking to go beyond that, and I know just recently you put out a call saying that you were looking to acquire smaller consultancies to grow your own agency. I’m curious, have you grown by acquisition before? Why are you looking to grow by acquisition as opposed to organically?

RONN: Well, I think we’re looking to grow organically as well as through acquisition.

CHIP: Sure.

RONN: In 2016, we laid out a plan as a $25 million agency to double in size over the next five years and it has become a $50 million agency by the end of 2020. I think we ought to come a little bit short of that, so we’re going to end this year at about $40 million. We’ll probably end next year at about 47, 48. All of that growth has been organic. One of the reasons we are now in discussions with a number of smaller agencies and we hope to make an acquisition over the next few months is because we know how hard this business is to run. We know how hard it is to build an agency from scratch.

RONN: We know how hard it is to… Everything from accounts receivable to keeping a client to procurement to a variety of everything. We’re looking at a number of agencies out there that have skill sets that we think we can rather help them to develop. We’re talking to a consumer agency now with really good consumer media work but doesn’t do their digital work. We have really strong digital capabilities here. We’re looking at a number of different agencies that can help us to grow. Whether it’s market by market or sector by sector, we touch a variety of different things and we think we can grow also the acquisitions. We’re talking to a number of… Our sweet spot is agencies that are under $5 million, the agencies we’re looking to acquire and we’re discussing with a number of different agencies throughout the United States.

CHIP: It would be fair to say, then, that these acquisitions aren’t simply looking to grow top-line revenue, but you’re looking to either expand your reach, your footprint, or your capabilities as well in the process?

RONN: Yeah, we’re privately owned, so we don’t necessarily need to. We don’t have stockholders driving us to, “You need to grow, you need to grow, you need to grow.” We grow because we’re entrepreneurs. We grow because we want to grow, and any acquisition which we make will be something that will be an add-on that will help us to complement the work that we do. It’ll be an add-on that an agency now has work being done for their clients that we think we can add on top of it. Those are the acquisitions that we’re looking at.

CHIP: Obviously since you and I first got in the agency game decades ago, this is now a sector that has a lot of larger holding companies that own a lot of the pieces of the pie. We were talking about you being one of the largest independent firms. How do you see the dynamic between the independent firms and the holding company firms today?

RONN: I think I wouldn’t want to own a humongous billion-dollar… I think the holding companies today have a lot of difficulty. I think [crosstalk 00:05:29]-

CHIP: Clearly.

RONN: That agencies… I’m sorry, companies today that we see are looking for nimble agencies, I think it’s a great time to own an independent agency. I see a lot of really smart independent agencies and it’s not a surprise to me that all of these holding companies keep consolidating their different agencies. I can’t even keep track of the names, the number of agencies that keep combining and keep consolidating. I don’t know which one of them still exists and which one doesn’t. Not to say that they’re all in trouble, but I think it’s a really difficult time for holding companies. You look at their earnings reports. They keep coming out.

RONN: It doesn’t surprise me that they’re in trouble. I think you’ll continue to see a lot of change. I think the day… I think there are many companies who want nimble, resourceful, creative opportunities and I think independent agencies are… Selfishly, I think independent agencies have very strong ability to do great work and to grow and to be nimble and to deliver today what clients are really looking for.

CHIP: As you alluded to before, I think with most holding companies being publicly traded, it creates that dynamic where you’re constantly searching for revenue, not necessarily making the smartest long-term business decision as an independent can do.

RONN: Of course, we can move much quicker. I think the reality is that we can move much faster by virtue of who we are and by virtue of our entrepreneurial nature. I think there’s other smart agencies out there who are some of our peers who can also do that. I think some of the folks that you’ve had on your show recently, Sean Cassidy from DKC and Matt Rizzetta and others. These are smart guys who have great agencies who are also people that I think move quickly, are smart and do great work for their clients. I’d much rather be in their shoes than in some of these large hella big companies’ shoes.

CHIP: As you think about being nimble and you start to look ahead and sort of look around the corner, what do you see ahead for either your agency or the industry? What trends do you think are going to drive the business of PR agencies?

RONN: Well, I think public relations today is ultimately about storytelling. At its core, at 5W we view ourselves as really good storytellers. I’ve long said that PR is a mix of a variety of different things, so it’s a mix of journalism, psychology, storytelling, and at the end of the day, what we do is I think that we at 5W enable clients to use our platform to tell their story. Now, that story for some people might be influencers. That story for some people might be digital. That story for some people might be viral content.

RONN: It really depends in terms of what the client is looking for, but I think that today public relations is very much a mix of journalism, psychology, and lawyering. It’s about storytelling. I think that that trend will continue when it comes to looking at, what do brands look for from an agency? They look for agencies to deliver them communications results. Now, platforms continue to change, but I think the desire to tell your story very much remains the same.

CHIP: What do you think the impact of the blurring of the lines between the different agency disciplines, PR, marketing, advertising? What effect is that having? You periodically get people saying, “Well, we shouldn’t call this PR anymore”, or you’ve got people saying, “Well, there should be a brighter line between the different kinds of agencies.” That’s really going away, right? Most PR agencies are involved in what would traditionally be considered marketing, and certainly most are involved, at least to some degree, in paid advertising, even if it’s just online. How do you see that dynamic? What do you think the relevance of that is?

RONN: I’ll never forget. I got thrown out of a class in college for arguing with a professor in journalism class because I told him that journalists were biased. I’ll never forget it. He threw me out. He said to me that he wasn’t biased. I told him in front of the whole class, “Do you love your kids more than the other guy’s kids? Well, you’re biased if you love your children more than somebody else’s children.” Now, today, of course, we all accept that whether it’s Fox News or CNN, The New York Times, or Wall Street Journal, everybody has biases. You have biases, I have biases. I confess here to loving my children more than I love anybody else’s children. That’s a bias.

RONN: The question you ask about, should PR be this? Should PR be that? The reality is is that those of us who earn a living doing this thing realize we don’t have a choice but to do paid. We realize that we don’t have a choice but to work in marketing. That’s what clients are looking for and that’s what clients need, and I think the media landscape has completely changed. I think the media world has completely changed. The digital world has completely changed, and so ignoring those realities are like saying, “I’m going to use a fax machine and I’m not going to use an iPhone.” I don’t know how long you’re going to stay in business these days if you want to use a fax machine. I think you can stay in the old times, you can just deal with the reality of what today looks like. The reality is is that if you want to be in business, you need to do those things.

CHIP: The other thing that some of the evolution has brought to us as far as more technology is the explosion of data and analytics. How do you see that both from the perspective of 5W but also more industry wide? Are you seeing analytics becoming increasingly important? What is your vision for how to leverage analytics effectively within your own firm?

RONN: We have an analytics passport which we’ve created here. All of our client programs are delivered. All of our client programs here require analytics and data and I think that’ll only continue. Again, whether it’s something like SEO, whether it’s measurement in analytics, I think that big data, AI, KPIs, these are things that are here to stay. We constantly spend time… We have proprietary data dashboards for clients with relevant and impactful KPIs. We are continually striving to exceed expectations in terms of evaluating and measuring media impacts, new media strategies, all of these sorts of things. AI and machine learning, these things are here to stay and that’s the reality of the business that we’re in today.

CHIP: As you look at the success that you’ve had, what do you think has fueled that success? Clearly, you’ve done a great job for clients, but are there decisions that you made along the way that you think really helped accelerate that growth? Maybe some risks that you took that really paid off?

RONN: I made [inaudible 00:12:24] the other day… We’re in year 16 in business. The other day I was here until, I don’t know, 9:30 at night, and I looked up and I was like, “Oh my God, I’m tired. It’s 9:30.” I have to tell you, the first four or five years in business, I must have worked 80 hours a week. Now, I’m 45 and I started the agency, I was 28 or so. I worked many, many, many years 70, 80, 90 hours a week and I think, to be frank, it’s one of the reasons our business grew. I think as an entrepreneur, forget just in the PR industry, entrepreneurs have to put in long hours.

RONN: The reality is that Michael Jordan wasn’t just the best basketball player. He was the first guy in and the last one out, and I think that that’s how I built this agency to start with. Today, the agency is a different animal. Today, we have bigger clients, we’re more established, but we’re very much entrepreneurial. People here really work their butts off to really do amazing, different client work. The biggest reason we’ve grown is because we do great work for clients. That’s it. Our best form of marketing, our best form of new business, the best thing that we do here day in day out is do great work for clients. That’s it. That’s really the secret to success I believe in this industry.

CHIP: As you’re looking to acquire potentially other agencies, what advice would you give folks to make themselves ready to be sold to whether it’s to 5W or to someone like you? What are you looking for when you’re evaluating a business?

RONN: I think PR firms, marketing firms that want to sell first need to realize that profits matter. I think the threshold of 15% margin is something that all agencies should seek to hit. Make sure that your books are in order. Make sure that you’re getting paid value for the work that you do. I’m always happy to speak to any entrepreneur in this industry who wants to. Any agency owner who wants to reach out to me, whether they want to sell or not, I’m happy to speak to them about the ins and outs of running this as a business.

RONN: We do a really good job of understanding the dynamics, the economics of what can we charge in the service industry. I think there’s some that aren’t great at it that I think could be better at it. I wish that there were more people… I wish that the advocacy organizations in this industry did a better job of describing the value of PR for clients. I wish the PR industry had a better voice for agencies and agency owners to get out there and talk. That’s why I’ve very grateful for what you do. I think it’s great to understand peer-to-peer learning and understanding how to build a better business in the agency world, which isn’t easy.

RONN: I’m a member of a number of different organizations where I’m able to learn from different entrepreneurs from different business owners about things that it takes to run a better business. I think those people out there who run the agencies should make sure that they’re running profitable businesses. Make sure that they’re focusing on winning good business and doing great work. A lot of things that go into this. Whether it’s about people skills and making your people happy or whether it’s about doing great work, there’s a number of different variables that go into this business and our business where our best assets go home every day at six o’clock.

CHIP: Well, as you know, there’s a lot of non-glamorous things to running a good business. Agencies do succeed based on the service they’re providing to clients, but there’s a lot of behind the scenes stuff, the talent management, the financial management, all of these things that go into making sure that you’re running a thriving firm. I think that that’s one of the central components to building a strong business and not just a good agency.

RONN: I would absolutely agree with you. It’s not just about agencies, it’s about business as you said. Absolutely agree.

CHIP: One of the things that I often tell people is that, particularly in the consulting that I do now, I tend to be able to teach people more from my failures than from my successes. Success can sometimes be accidental. Failure can be, too, but often you get lessons out of failure. Are there any failures that you’ve had over the last 16 years that you’ve learned from that would be worth sharing with other agency leaders?

RONN: Isn’t this like a 20, 25-minute discussion? I mean, I obviously have [crosstalk 00:16:51]-

CHIP: Well, it’s funny. I just started making a list of all of my failures as an agency leader over the years because I’m working on a project for that. I’ve gotten up over a hundred so far, so…

RONN: Exactly. I can give you thousands. I make mistakes every day. I think there’s a lot of things that I could say. What I’ll confess to here is to tell you that you have one mouth and two ears for a reason. You should learn how to listen. I think learning how to listen is a very important characteristic for a leader. Learning how to sometimes be humble is a very important thing that I’ve learned through the years. Not growing too quickly. You really learn from your mistakes.

RONN: As you get older, you learn it and you see… Thank God I have two daughters, but my teenage daughter, she knows everything about everything and she’s very bright and she’s a great kid. Like for those of us who are parents, we see our children making mistakes that we know that they’re going to make, but as a parent sometimes you’ve got to allow them to make it. As a business owner, it’s the same thing. You make mistakes along the way and you learn from them. Thankfully at 5W, we continue to grow, we continue to thrive, and I’m sure I’ll make many more mistakes, but I also damn well guarantee we’re going to continue to do great work and we’ll continue to grow this company.

CHIP: Well, I think that is the key. It’s to learn from them, not just keep repeating the same ones over and over again and also to continue to evolve. I know the leader that I was when I first became CEO of a company when I was 23, 24 is very different than… Back then, believe me, I thought I knew everything. There was my you know what didn’t stink and I knew all the answers. Now, I look back and just laugh at myself at that age because clearly I didn’t know that. I don’t even know that stuff today.

RONN: I would absolutely agree.

CHIP: Is there any advice that you would give yourself back as 28-year-old Ronn before you got started that would have helped you in those early days?

RONN: Advice I would give to myself is I think pay a lot of attention to your management, to your staff. I think for a bunch of years we didn’t spend enough time motivating and cultivating staff. We do a great job of it now. I think that that’s really important. I think you should remember that in business it’s about a marathon, not a sprint. That’s something that I think is really important advice to give to myself. Always keep an eye on your bottom line. Stay focused on that. What else would I say to myself? Great questions. I think, again, the ability to learn how to listen. Don’t just make decisions for the first person you speak to, to listen, and constantly read. I read a few books a week. Constantly reading. Always reading.

CHIP: I want to go back to something you were talking about a couple of minutes ago and that’s the industry advocating for itself. I’m curious, are there specific things that you think the agency community could be doing better in that regard? What’s the answer to that? I don’t disagree with you that it is something that is needed. I don’t have the answer so I’m curious what your vision is and how that works. In particular, you’re obviously part of the New York agency community, which is obviously the ground zero if you will, probably wrong term, it’s the hub of PR agency life in the United States. How much do you see other independents working together for industry goals versus seeing each other as the competition?

RONN: Well, look, I think I’d probably give a different answer today than I would have 10 years ago. There’s a number of agencies here in New York that I think very highly of and I have a good relationship with, and there’s some that we don’t know as well. I think that the more that the public relations communications digital media influential world grows, the better it is for all of us. I think there’s just tremendous opportunity. It’s a great, great, great time to be an independent agency. I really do. I think it’s a great time to work at an independent agency, I think it’s a great time to own an independent agency, but I think that generally the more being spent on PR, I believe the better it is that it benefits all of us who work in the agency world.

CHIP: I would absolutely agree with that. Now, as we bring in this episode to a close, is there anything that I didn’t ask you that I should have? Or something you’d like to touch on?

RONN: No, I’d just like to thank you. As I said earlier at the outset of this, I appreciate you for speaking to agency owners and to give us a platform to learn from, to speak to, and I wish that there was more of it. I think it’s vital what you do and I wish there were more people out there who talk about the ins and outs of what it is to own an agency. I want to thank you for what you do and that’s really it. Thank you.

CHIP: Well, thank you, and I appreciate you taking the time to share your story as well because I think one of the real values and one of the reasons why I do this podcast is so that owners particularly of emerging firms can see that the challenges they’re facing are the same ones that you and others have faced along the way. There is light at the end of the tunnel, if you will.

RONN: It doesn’t get any easier, though. It really [crosstalk 00:22:19]-

CHIP: No [crosstalk 00:22:19]-

RONN: The end of the tunnel, but I got to tell you, so Richard Edelman is somebody I admire greatly and I think very highly of him. He owns what will hopefully be the world’s first billion-dollar PR agency. I hope he gets there, but I email him a few times a year. Usually it takes him about three minutes to get back to me. His scale of what he’s building is much, much, much larger than mine, but he sits with his iPhone in his hand and he is proactive with his clients. It’s a damn difficult business that all of us chose, but we love it and I think there’s a lot of smart people out there and I hope those good agencies, all of us out there continue to grow and do great work for clients.

CHIP: Well, that’s great. Ronn, is someone wants to find out more about you or 5WPR, where should they go?

RONN: 5wpr.com, www.5wpr.com. Our phone number is 212-999-5585, and follow us on Instagram and on Facebook and on LinkedIn and all those other good things. We’re always hiring and always looking for smart PR professionals.

CHIP: Excellent. Well, Ronn, I really appreciate the time you’ve taken today. For listeners, I’ll have that link in the show notes that you won’t have to write it down if you’re listening in your car or on the treadmill. Again, I really appreciate your time today and I appreciate everyone listening. My guest has been Ronn Torossian, 5WPR Founder and CEO.