Not surprisingly, given the recession, average revenue growth across media shops in 2008 was 21 percent lower than the previous year. Surprisingly, 10 of the 14 shops graded managed to generate double-digit growth in 2008 with an average revenue gain of 11 percent. (That compares with 14 percent average growth in 2007 and 13 percent in 2006.) What's astounding is that all the agencies posted U.S. growth in 2008. The highest, at 22 percent, came from Interpublic Group's Initiative, Adweek's U.S. Media Agency of the Year, which earned the only solid A overall grade.
Top shops drove revenue with new business wins throughout the year, or from late 2007 wins that kicked in last year. (Media spending figures come from Nielsen Monitor-Plus and Adweek reports.) Revenue gains for others came from organic growth and diversified services, an increasingly important growth driver. At 2 percent, Omnicom's PHD had the worst revenue growth, hampered by troubles at client Chrysler. Carat, which lost key auto, movie studio and pharmaceutical accounts, managed to squeeze out a 5 percent revenue gain.
Seven agencies received final grades in the B range. Most of the Planning and Buying grades are in the A range, a reflection that the shops have parity with respect to those price-of-entry functions.
The Numbers grades were based on performance in several areas, the most important and heavily weighted being year-to-year revenue change. Revenue-to-staff ratio and year-to-year improvement in revenue-to-staff ratio are also factors taken into consideration. Revenue-to-staff ratio is considered a rough guide to profitability, given that the main expense of agencies is personnel. Alan Gottesman, managing director of West End Consulting, devised the formula and calculated the numbers for us.
CARAT: C
HORIZON: A-
INITIATIVE: A
MEDIACOM: A-
MEDIAEDGE:CIA: B+
MEDIAVEST: B+
MINDSHARE: B
MPG C+
OMD A-
OPTIMEDIA: B
PHD: C+
STARCOM: B+
UNIVERSAL MCCANN: B+
ZENITH: B+
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