Fight Club

By any measure, 2000 marked the beginning of a golden age for media specialists.

Shops competed for a huge pile of billings gold at least $6 billion-plus worth. Mega-mergers morphed the landscape a dynamic highlighted on the seller side by the AOL-Time Warner marriage. Advertising holding companies also continued to mate, spawning media networks with unprecedented reach. And media-agency executives took the lead in building models to deal with it all.

Media has arrived with a vengeance and with it Adweek’s Media Agency Report Cards, in which we grade the performance of the 10 largest U.S. media agencies, ranked by billings. To make the cut, shops needed 2000 billings of more than $3 billion. That left out some big names, in particular MediaCom (No. 11) and Carat (No. 12), both of which claimed billings of just under $3 billion.

While the Top 10 are diverse in structure and approach, all belong to global ad holding companies. Ironically, the media game in the U.S. resembles pro soccer elsewhere in the world. There’s a dominant group and a host of smaller competitors who, given the right managers, players and new-business streaks, can enter the top tier. Below them are regional shops that play at a level far removed from the top league.

One shop of note last year below Top 10 was Horizon Media. The independent’s focus on smaller clients paid off handsomely, as billings grew 22 percent to $740 million from 22 wins most of which billed $20 million or less. By year’s end, it was poised to expand in U.S. markets and abroad.

Our evaluations of the Top 10 media shops are based on several criteria, including financial results, new-business activity, quality of work and management performance. There are also more intangible factors, such as organizational initiatives, support (or lack of it) from holding company parents, relationships with creative siblings, etc.

When not provided to us, revenue was estimated based on an agency’s predominant client relationship. Shops that do mostly buying received revenue numbers based on 1.2-2.5 percent commissions on billings. Revenue for those with mostly buying and planning assignments was estimated based on 2.5-4.5 percent of billings, to account for additional revenue like planning fees.

We had several unique challenges. To begin with, we had no real benchmarks. Universal McCann, MindShare, OMD, Initiative Media North America and the structure in which Starcom and MediaVest operate didn’t really exist until last year figuratively in some cases; literally in others.

Secondly, unlike creative, where ability varies greatly from shop to shop, every media agency in the Top 10 has the critical mass to plan and buy competitively. The line between good and not so good is considerably blurred.

Nevertheless, it is, as they say, a good beginning. And as remarkable as 2000 was for media agencies, 2001 figures to be just as historic. Clearly, making the grade in media will continue to be a fast-moving target.

We remain committed to improving our report every year. We expect no shortage of opinions on this first set of cards, and we welcome your comments.