From The Editor

Compiling the annual Adweek Agency Report Cards issue feels like a marathon. We crunch numbers, fight over reels, debate the merits of hirings and firings, weigh shops’ strengths and weaknesses. We analyze. Write. Edit. Then do it all again. And again.

The result, though, is what we think is the most comprehensive and reputable evaluation of ad agency performance available.

This 18th installment of report cards will no doubt bring smiles at Deutsch, Goodby and Ogilvy, who tallied well-earned As. Others won’t rush to order reprints. Instead, they’ll come calling.

While our phone lines are open, we want to explain ahead of time how we arrive at the grades. Financial performance, creativity and management savvy are the basic indicators. A key measure in gauging business results is revenue growth. A high-percentage growth rate is more impressive from a large outfit than a small one. Our formula accounts for this.

Ideally, the best financial measure is profitability. That information, however, is often a closely guarded secret. But there’s a reasonable proxy. Since, in the typical ad shop, 55-65% of revenue goes out through payroll, companies with the leaner staffs relative to revenue-the most revenue per employee-are likely the more profitable. So, revenue per staffer is strongly considered.

Finally, we examine the relationship between billings and revenue as a way of approximating the share of clients’ ad outlays that shows up on the agency’s top line.

It should come as no surprise, then, that TBWA\Chiat\Day, with just a 9% boost in revenue, earns a “B” in numbers. The shop has the best revenue/staff ratio in the business. Likewise, with a revenue boost of 33%, Publicis USA-the second-highest revenue gainer of the 32 agencies examined-also gets a “B.”

Keep in mind, too, that we judge regional agencies against their geographic peers and national shops against their own kind. For 2000, the average revenue gains in the regions were as follows: East 17.5%; Midwest 8%; New England 16.6%; Southeast 14%; Southwest 28%; and West 19%. The average for national agencies was 12%.

We also debut our Media Agency Report Cards this year, focusing on the top U.S. 10 media shops ranked by billings. Grades are based on the same criteria used for ad agencies, with one obvious difference: We grade on media planning and buying ability, not creative.

As always, we look forward to your comments