Manchester will be the network's fourth office - PHD Compass is already established in Leeds, London and the West Midlands - and becomes the regional hub outside London.
Blakeman, who joins PHD Compass as a managing partner, was the European director of strategy for Unilever at Initiative Media.
The news ends years of speculation about PHD's intentions in Manchester.
PHD's chief executive, David Pattison, confirmed: "We've had our eye on Manchester for a while and with Steve on board, PHD Compass will offer a strong proposition in the market."
The managing partner Andrew Diamond, who runs the PHD Compass office in Leeds, will support Blakeman in building up the Manchester hub. Both will report to PHD Compass' managing director, Mark Girling, who is based in London.
Girling added: "This is an important step in our development and we're confident Manchester will contribute to our growth and success."