Digital agencies made strides in 2008, although the slowing economy cramped their expansion in the last half of the year. After notching 23 percent growth in 2007, the agencies profiled in this year's report averaged 15 percent growth. The number is expected to drop again in 2009 as agencies with financial and automotive accounts can bet on spending being slashed.

 This year, we cut the number of shops receiving report cards from 10 to 8, selecting shops based on their size and market presence. No two agencies are alike, but we aimed to include U.S.-based shops that operate in the same competitive set for large advertisers needing a digital shop. Two notes: We only evaluated interactive specialists, shops with over half of their revenue derived from digital. And, digital shops were graded on global performance.

Here's how we arrived at our grades. With the help of Alan Gottesman, managing director of West End Consulting, we evaluated the numbers primarily on global revenue percentage gain (taking into account the size of the shop), revenue/staff ratio and how well a shop did at accelerating revenue growth faster than staff expansion. Creative: We evaluated the agencies on creativity, originality and strategy. We gave extra points for powerful marketing ideas.

Emerging Media: This category includes social networks, mobile and smart use of technology tools. Management: We rated how well executives ran their agencies, whether by starting new practice areas, shifting positioning, making key hires or securing big accounts.

The final grade is an average of these four marks.

AKQA: B+

DIGITAS: B-

MRM: B-

OGILVY: C-

ORGANIC: C

RAZORFISH: C+

R/GA: A-

TRIBAL DDB: B-



AKQA

Numbers B+
Revenue up 22% to $121 million. Won: Gap, Heineken, Unilever Oral Care. No losses.
 
Creative B+
AKQA rightly brags about the breadth of its work. For Xbox, it created an alternate reality game for Gears of War 2. The complex effort involving hidden clues online is now almost rote for a game release. From a tech angle, AKQA impressed with Nike PhotoID that lets European consumers customize sneakers using colors found in their own photos. Shows global might with wide-ranging McDonald's ARG "The Lost Ring," promoting the Olympics. With more than 100 countries participating, AKQA showed a global brand the power of nontraditional digital marketing, fueling the participation of over 3 million people.

Emerging media B+
AKQA is an interesting hybrid -- an ad agency at its core with a heavy dose of software development. With eco:Drive, AKQA London took the concept of Nike+ to link Fiat with sustainability. The software lets users record driving data and upload it to analyze their carbon footprint. The cartoonish site distracts from the power of the system, but shows how branded apps build loyalty. The shop's mobile efforts zeroed in on the iPhone. A Target Gift Globe app lets users shake their phone and get gift suggestions. It got buzz but was a one-trick pony, not a true utility. AKQA focused on Facebook in the social realm, running two campaigns that blurred creativity with media placement. The Visa Business Network took the novel approach of awarding small-business owners with Facebook ad credits.

Management B+
AKQA CEO Tom Bedecarre has shop successfully in ad and tech worlds, ready to combine creative prowess and software and analytics expertise to move into a lead agency role. Media, analytics strengthened with Scott Linzer hired from Universal McCann to lead AKQA Search. The shop followed in rival R/GA's footsteps with the launch of AKQA Film, a U.K. video production facility it plans to move stateside this year. AKQA lost Mauro Cavelletti (group cd, San Francisco) and Jim Moffatt (director of integration, London). The Amsterdam outpost, opened in 2007, snared Heineken. Shanghai was busy with Olympics projects for Visa and McDonald's.

Comments
AKQA is poised to grow with megabrands Visa, Coke and McDonald's as clients rebalance marketing with emphasis on digital channels. 2007 acquisition of SearchRev added savvy in proving the return on its efforts at time when marketers are extra tightfisted.

FINAL GRADE: B+



DIGITAS

Numbers C
Revenue up 19% to $370 million. Won: AOL, Comcast, DeVry, HomeAway. No losses.

Creative B
Digitas offers workmanlike creative, combining smart strategy with solid, if unspectacular, execution. It clicks on all cylinders with its Starburst "Share Something Juicy" effort. The Web site is typical fare, but it's redeemed with a solid strategy that enlists independent creators. The brand stays a respectful distance from funny videos on Starburst's YouTube channel and has a great integration with digital animated series Nite Fite. The power of distribution was also put to use with its second installment of The Smart Show for Holiday Inn Express. The Web site is a jumble of polls, blogs, syndicated content, discounts and offbeat videos, but creative distribution strategy redeems the effort. That paid off with 6.5 million views of the show.

Emerging media B
Digitas has notched successes in social media and the move to distributed content online. For the second year, the shop showed the Member's Project for American Express is a true platform idea that taps into the power of community by letting AmEx cardholders suggest and vote on philanthropic projects. The idea, combined with social tools, created an army of AmEx brand advocates and reached nearly 2 million people. On the tech front, Digitas worked to make banner ads more relevant and effective through dynamic construction. It created a promotional platform for Delta that serves a customized fare offer in display ad units based on several variables.

Management C+
Digitas U.S. CEO Laura Lang took over the global role in June from longtime CEO David Kenny, who moved to lead Publicis Groupe's VivaKi. She has diversified the company's client base, particularly through Digitas Health. Digitas felt the sting of cutbacks at AmEx but held its own with General Motors due to the carmaker's desire to move more marketing dollars online. The opening of branded entertainment unit The Third Act put Digitas front and center in a hot area. Added outposts in six markets for a footprint in 16 countries.

Comments
Trouble is looming as General Motors is sure to slash spending and consumer spending likely won't rebound in 2009 to buoy AmEx. The relaunch of Converse.com, expected in the second quarter, will be a good test of whether Digitas can deliver the creativity and performance combo it promises.

FINAL GRADE: B-



MRM WORLDWIDE

Numbers A
Revenue up 32% to $330 million, restated to account for acquisition of Sweden's Starsky and McCann Worldgroup office consolidations. Won: General Motors digital production contract, Diageo's Crown Royal and Captain Morgan, Educational Testing Services, Intel's Classmate PC. Lost: Nestle Beverages.

Creative C
MRM wants to retain its CRM and direct heritage while upping creative cred. It's a hit-and-miss affair. To talk to young recruits, MRM smartly gave GoArmy.com a videogame feel, inviting potential soldiers to explore a fictional animated Army base. But Ashtonscoolpix.com is a run-of-the-mill campaign microsite featuring the user-generated content conceit of participants seemingly uploading photos to Kutcher's Nikon camera. A GM Canada site for Pontiac G8 offers a shallow Flash animation movie trailer that simply leads users to the site's car configurator and dealer locator areas.

Emerging media C+
MRM bested Publicis Groupe's Prodigious unit to build a worldwide digital production unit for GM. It might not be the stuff of Cannes, but for cash-strapped GM, taking the cost of local sites from $2 million to $200,000 is a top priority. MRM's efforts in social media can be schizophrenic. The regrettable "I'm Talkathon" for Microsoft created a fictional character to blog about instant messaging without sleeping to raise money for social causes through Microsoft's marketing schtick for its IM client. Fictional characters doing fictional stunts are passé and manufactured conversation isn't the same as the real thing. MRM redeems itself with "Straight From Iraq," a U.S. Army Web video series that links the public with soldiers to put a human face on a deeply unpopular war. That's real conversation.

Management B
CEO Reuben Hendell made progress on a few fronts. He solidified relationship with Intel as sibling traditional shop McCann Erickson's was on the rocks. Intel shifted more work to MRM and awarded it a hefty year-end bonus. The creation of MRM Supply was a canny move to cater to the needs of GM during a time of wrenching change. Hendell tapped Oren Frank from McCann Worldgroup Israel to serve as global chief creative officer, but the shop is far from being known for its creative firepower.

Comments
The shop is a quiet performer, focused on the heavy lifting of analytics-focused marketing without the sizzle of great creative. Like any agency with an automaker as its largest client, MRM is at risk.

FINAL GRADE: B-



OGILVYINTERACTIVE

Numbers D
Revenue up 5% to $445 million. Won: British Airways, Sears, Stolichnaya, Seagate. No losses.

Creative C
Agency fuses art and science with mixed results. The Dove channel, done through a partnership with Microsoft, leaves much to be desired. Community and tools are an afterthought in this ho-hum microsite riddled with product descriptions that feels like a shrine to all things Dove. Similarly, a Vaseline campaign microsite goes through the send-to-a-friend motions with sweepstakes thrown into the mix. The Prescribe the Nation site has a matching luggage feel to offline work done by BBH. The bright spot comes from Canada with the oddball Diamond Shreddies effort in which Ogilvy "reinvented" the brand by tilting the Shreddies square into a diamond. A series of smart videos and online buzz made the Shreddies work a winner.

Emerging media C+
Like most agencies, OgilvyInteractive is trying to figure out social media. It's established some bona fides. For Lenovo, it showed benefits of electronics giant's products by putting them in the hands of athletes at the Summer Olympics to blog for a Lenovo site. The "Voices of the Olympic Games" program generated 1,500 postings by 100 athletes. But, social media can bite back. Ogilvy hooked Nestle up with up-and-coming Facebook app Duck, Duck Goose. The integration reached hundreds of thousands of the target demo, but the malfunctioning widget got panned with dozens of users turning the Nestle-sponsored app page into a complaint forum. On the tech side, Neo@Ogilvy is on firm ground. The TEM Control dashboard feeds of various data-like ad-serving information, site analytics and search clicks-to provide a better handle of campaign performance.

Management C
N.A. chief digital officer Jean-Philippe Maheu finished first full year at the helm with mixed results. Shop didn't lose clients but suffered spending cutbacks from AmEx and IBM. Maheu made a down payment on bringing emerging media to the forefront with the launch of digital innovation labs in five cities worldwide. Ogilvy straddles the direct world of Wunderman and experiential realm of R/GA.

Comments
In a lackluster year for parent Ogivly Worldwide, shop held steady, expanding business with Kraft and Nestlé. The challenge: make OgilvyInteractive a strong, stand-alone brand.

FINAL GRADE: C-



ORGANIC

Numbers D
Revenue up 3% to $118 million. Won: Juniper, Countrywide Financial. Lost: Estée Lauder, Fox Business. Big increases in spending from Bank of America were offset by a steep drop in spending from Chrysler.

Creative C
Creative output is mixed. Organic shows tech savvy with the MyEq Web application that enhances Equinox health club experience by letting members sign up for classes, exercise bikes and track fitness goals. But the multiple-choice NFL Trivia Game's connection to Bank of America on digital billboards in New York and Dallas is tenuous. And, its consumer benefit is dubious. In Jeep/Cherokee Extreme, the site is second fiddle to TV and print work from traditional partners. Sony PlayStation's LittleBigWorkshop is more promising, taking the core aspect of the game and embedding it into the site experience.

Emerging media B
Organic has long had a pulse on social media as an early believer in the power of distributed content. The America's Cheers Bank of America site for the Olympics took an interesting twist on the event microsite by incorporating YouTube, Flickr, texting and a Facebook application. The shop is betting its analytics roots -- founder Jonathan Nelson had previously formed an analytics company -- will pay off by stitching together digital insights with marketing mix. It developed a program for Chrysler that took data inputs from the Web, dealer networks and macro-economic indicators to help the automaker change its marketing spend. The unsexy work led to big savings for the automaker.

Management C
Organic's longtime CEO Mark Kingdon left in May to join Second Life maker Linden Lab as CEO. He has still not been replaced. COO Marita Scarfi has steered the shop through choppy waters, but parent Omnicom is still weighing whether to bring in a new leader. Scarfi has grown the Bank of America business to offset Chrysler's decline, but needs to add long-term assignments to stable of projects.

Comments
Organic has played a tough hand well. Chrysler's business, along with all of the domestic car industry, cratered last year. Like other auto companies, its future is far from assured. The jury is out on how nationalization would affect Bank of America's marketing. The shop's refocus on its analytics heritage is its ticket to weather the storm.

FINAL GRADE: C



RAZORFISH

Numbers C
Revenue up 11% to $408 million. Won: Travel Channel, University of Phoenix, Southwest Airlines. Lost: Jägermeister, National City Bank, Deutsche Bank. Hit by cuts in auto, financial.

Creative C+
Razorfish CEO Clark Kokich admitted the shop's focus on usability and design doesn't fit the classic definition of great creative. Razorfish attempts to combine its techie side with its marketing know-how to build digital experiences that drive business. Results are mediocre. Razorfish worked for Levi's to increase women's connection of the brand with fashion. It created a community site for Project Runway viewers to submit and vote on designs for Levi's to produce. The price point for women's jeans during the campaign increased 40%. Razorfish tried to pull off a similar trick for Intel by getting designers to appreciate the chip maker's Core i7 processors. The idea of getting designers to use the equipment in competitions is promising, but the small numbers of videos viewed and few mentions online make the push a miss.

Emerging media B
When it sticks to its tech roots, Razorfish fares quite well. It got an early crack at using Microsoft Surface technology to create touch-screen displays for AT&T stores. The tabletop display lets users navigate by touch to compare phone and calling plan features. Razorfish developed Edge, an analytics platform for clients to sort through the myriad data thrown off in digital channels. It hopes to translate that tech muscle into the more touchy-feely world of social media. Razorfish created a strong following for Victoria's Secret on Facebook, integrating events and gifting features to push the brand.

Management C+
Razorfish is a work in progress. The agency, an accumulation of over 12 shops, tried to brand itself a single agency by shedding Avenue A from its moniker. It took a break from its international expansion push to focus on bringing more offerings to clients. Kokich wants to encroach on R/GA and AKQA's domain and use digital media to extend client businesses. That's a smart move at a time when the type of multimillion dollar Web builds Razorfish specializes in get delayed by the shaky economy.

Comments
Still in question is how the agency fits into Microsoft. For now, the tech giant is unlikely to unload Razorfish. There are few takers at a price level commensurate with the $6 billion Microsoft shelled out for Razorfish parent company aQuantive.

FINAL GRADE: C+



R/GA

Numbers A-
Revenue up 20% to $126 million; second highest revenue-to-staff ratio. Won: Hewlett-Packard, Mars, Assurant Health, Dr Pepper/Snapple, HBO, Zain. Lost: Subaru.

Creative A
R/GA differentiated itself with its work on brand platforms underpinned by technology. R/GA North America CCO Nick Law and his team expanded the Nike+ running system with addition of The Human Race, a worldwide 10-kilometer contest in which 780,000+ people participated. NikePlus.com allowed visitors to join challenges. The Nokia "Urbanista Diaries" campaign grew into a product: Nokia viNe, a mobile social tool for users to tag daily activities with photos and music. R/GA showed through-the-line chops with Nokia "Open to Anything" campaign for Nseries and Nike Sparq campaign. Web work remained best in class, with  slick new sites for Barnes & Noble and L'Oreal Paris.

Emerging media B+
R/GA's digital thinking doesn't stop at the computer, having embraced mobile, in-store and out-of-home as essential components of digital lifestyle. Nike Sparq's 60 training videos can be mixed online to create customized training programs, available for download to mobile devices. Nike Ballers Network is a Facebook application that doubles as an on-the-go mobile extension. R/GA-designed kiosks are now in 3,000 Verizon stores as a sales aid, melding e-commerce with the physical store.

Management A
R/GA continued to grow at an impressive clip. CEO Bob Greenberg bolstered shop by extending into brand design and digital advertising with new offerings. Began a brand design practice led by the respected Marc Shillum from TBWA. R/GA followed up on its London expansion in 2007 by opening in rival AKQA's backyard in San Francisco. It then hired away Mauro Cavalletti as ecd there. Also poached AKQA exec Jim Moffatt to head London outpost. San Francisco gained anchor client with addition of HP. London grew to 47 people, and R/GA's digital studio now has 30 people and its own outside clients.

Comments
Early bet made by Greenberg on technology and utility as the backbone in building brands is paying off. R/GA now needs to secure footing in the flashier end of narrative storytelling following the hasty departure of JWT creative Robert Rasmussen for BBH after less than a year at R/GA. (Related: "R/GA, Adweek's 2008 Digital Agency of the Year")

FINAL GRADE: A-



TRIBAL DDB

Numbers B-
Revenue up 18% to $236 million. Won: Wrigley, McAfee, Sunpower, Sallie Mae. No losses.

Creative B
Tribal has designs on breaking out of Web ghetto of microsites and digital extensions of offline campaigns. It has made progress but is not yet a creative equal of general shops. Tribal took footage of Paul Potts, an unheralded mobile phone salesman and amateur opera singer, singing Nessun Dorma on Britain's Got Talent and turned it into a moving TV commercial and YouTube hit showing that emotional connections and technology can bring the world together. Nokia Productions is a smart twist on the user-generated content conceit. It collects mobile phone shot video from users for assembly by a Spike Lee-made film. The "Manalogues" follow-up to its rightfully acclaimed Philips Bodygroom "Shave Everywhere" viral falls flat with B-level comedian Bryan Callen doing a Catskills routine about hair removal. So does Pepsi recycling effort, with overdone animation and shallow advergame.

Emerging media C
Tribal is unlikely to wow with the latest technology innovations. Instead, it turns to technology and emerging media to inform big ideas and then spread them. Shop hit a home run with "Cheer for China," a half-year campaign that used social networking tools to tap into Chinese national pride. Participation was staggering. Other work in social media is run of the mill like the Project Red and Mountain Dew "Uncapped" Facebook profiles.

Management B-
Tribal suffered a blow midyear with exit of longtime CEO Matt Freeman. Omnicom moved to fill void with a seasoned management team, led by Paul Gunning, who took over the CEO role from president of Tribal in the U.S. By all accounts, the agency has continued operating without a glitch, as Gunning lieutenants Liz Ross and Stephen Beringer have assumed added responsibilities. Tribal made real its push to assume lead agency assignments with the McAfee, SunPower and Sallie Mae wins. As some old-line interactive agencies appear lost in finding an identity, Tribal has settled into its role as an ideas-led interactive expert that can handle through-the-line work.

Comments
Tribal has a foot in the door, boasting more lead agency assignments than any major digital outfit. Time will tell if it's up to the task as it breaks through-the-line work this spring for McAfee and campaigns later in the year for SunPower and Sallie Mae.

FINAL GRADE: B-