Prophet: German office leads European growth
October 29, 2012
Maybe the still robust German economy will tug Greece, Spain and Italy out of economic morass. The German satellite office of San Francisco-based Prophet has tugged the brand and marketing consulting company’s revenue higher this year. Much of Prophet’s recent growth lies in Europe, according to Michael Dunn, CEO and chairman. Two of Prophet’s largest early customers were in Europe: energy giant BP and banking behemoth UBS.
In 2002, non-U.S. business accounted for 40 percent of Prophet’s revenue. From 2003 to 2009, non-U.S. revenue shrank to 15 percent. Prophet needed global growth to maintain credibility with global clients. In 2011 Prophet acquired a strategic marketing firm in Berlin — Noshokaty, Döring & Thun, which had clients including Allianz, Deutsche Telekom, General Motors Europe, Deutsche Postbank, Sony and Volkswagen. The company had revenues of about 800,000 euros and 18 people. Since then, the German office’s revenue has quintupled to nearly four million euros — about $5 million.
“This year our European business will double,” Dunn said. Prophet is exploring a new acquisition that would increase European employees from 65 to 100. Prophet has offices worldwide: Berlin; London; Zurich; Chicago; New York; Atlanta; and Richmond, Va. Prophet doubled 2009 revenue of about $44 million to $85 million in 2011. The company will grow to about $100 million in 2012, up nearly 18 percent.
Overall, Prophet has about 300 employees. In September, Prophet acquired Material Group, a digital design firm with 45 people in Chicago. Prophet already had an outpost in Chicago; the two will merge.
Prophet has had mammoth corporate clients: Visa; United Health Care; T. Rowe Price; Harrah’s; UBS; J.P. Morgan Chase; Cisco Systems; Hewlett Packard; Williams-Sonoma; Staples; General Electric; General Motors; Philips; Hyatt; Kellogg’s; Target; Best Buy; Caterpillar and Monsanto. The company started doing market research in 1992 then morphed into Prophet in 1999. The key shift: Dunn took marketing from David Aaker, professor emeritus at the University of California, Berkeley’s Haas School of Business. Aaker, 74, who earned a Ph.D. at Stanford, writes about branding strategy and serves as vice chairman of Prophet.
“His global reputation became clear,” Dunn said. “He could get a call from the vice chairman of Toyota or CEO of MasterCard to ask a branding question.” Dunn built Prophet on the strength of Aaker’s reputation. “I pulled the deal together and we were off and running.”
He had led fast growth in sales and marketing for systems integration and custom software companies. Prophet dug deeper into clients’ businesses, consulting beyond strategy to implementation for greater revenue. Dunn pushes consultants to help clients design new experiences for customers “to bring the brand to life,” especially digitally.
T-Mobile USA, a Bellevue, Wash.-based wireless wing of Bonn-based Deutsche Telekom, with 32 million customers, hired Prophet in 2012, said Andrew Sherrard, senior vice president of segment marketing. In 2011, AT&T’s proposed merger with T-Mobile failed when the government filed an antitrust lawsuit. Prophet’s job: crank up T-Mobile’s position and strengthen the brand. Prophet did consumer focus groups, quantitative analysis and product innovation. “We expect the big impact will be next year,” Sherrard said.
T. Rowe Price, which manages investment funds, hired Prophet in 2001 to develop brand strategy, then again in 2008, said Meredith Callanan, vice president of corporate marketing and communications. The company had low brand awareness among financial advisers to wealth individuals. “We never targeted financial advisers,” Callanan said, but “this audience is important to us.”