NO ONE COULD accuse the promotions industry of standing still.
There are several new names among the top of the PROMO 100 this year, seeded among the mainstays. Witness the agencies that have jumped (not grown) into the spotlight on the merits of their work — Civic Entertainment Group, Eric Mower & Associates, Velocity Sports & Entertainment. Add in the agencies that seem to spring from nowhere — ePrize, The Marketing Arm, Mr. Youth — whose growth propels their ascent.
Then look at the extreme makeovers — Momentum Worldwide, Aspen Marketing Group, Arc Worldwide — that put new faces even at the helm of familiar shops.
The ranking has gotten almost volatile, with more changes from year to year than ever before. We attribute that to two factors: Our emphasis on quality of campaign work — which can vary widely from year to year — and the meteoric growth of a handful of agencies, big and small.
Seventeen agencies showed triple-digit growth in net revenues from 2002 to 2004 — five of them among the 50 biggest agencies. Fifty-six agencies showed double-digit growth. In fact, seven of the 10 biggest agencies (net revenues of $91 million to $365 million) showed double-digit growth, ranging from 10% to 35%.
Financials have always been slippery — the PROMO 100 has a long history of agency execs accusing their competitors of fudging revenue reports — but this year we have more estimated data than ever before. Credit the Sarbanes-Oxley Act, now in its third year of limiting financial data from publicly held companies. Our formula measures net revenues, two-year growth, and quality of work, in equal portions (See How We Did It, p. 43). This year, for the first time, we had to use three years of revenue estimates to calculate our two-year growth estimates for the 21 agencies that are part of publicly held networks. That means the net revenue figures and the two-year growth numbers are estimates, not verified data — and that’s two-thirds of our formula. This fact reinforces our belief that the rankings should reflect quality of work as much as financials. The proof, after all, is in the pudding.
Four agencies are new to the Top 10 this year:
ePrize rose to No. 3 from No. 12 with strong two-year growth (289%, to $14.2 million) and campaign work beyond its core competency of online games, including a road trip and online effort for Gap and an online and in-market summer event for Tanqueray gin.
Aspen Marketing Group jumps to No. 4 from No. 52 with decent two-year growth (66%, to $59.4 million), an impressive turnaround after some stumbles in 2002-03 integrating acquired agencies.
The Marketing Arm springs onto the ranking at No. 6 with the fastest two-year growth rate (770%), driven mostly by acquisition. Parent Omnicom Group bulked up the sports marketing shop by folding in three other agencies (USM&P, Davie-Brown and Millsport) and forming Promo Link under The Marketing Arm.
Civic Entertainment Group, our Agency of the Year, rose to No. 10 from No. 21 last year, thanks to stellar creative that took top marks among all agencies this year (see story on p. 28). Growth was strong (64%) on the small revenue base that topped $3 million in 2004.
All Over the Map
Agencies in the New York City-Connecticut corridor are faring especially well, demonstrating solid growth and strong campaign work. Connecticut has long been a promotions hub; New York is a popular event-marketing center, from Central Park concerts and Times Square p.r. pranks to pop-up stores that garner national attention.
Business is good elsewhere, too. Midwest shops ePrize and GMR made our top five. Chicago is home to Aspen Marketing Group, Draft, Promotion Group Central, Arc Worldwide’s headquarters, The Marketing Store and 141 Worldwide’s base (New York operates separately). The Marketing Arm and TracyLocke hail from Dallas, despite TracyLocke’s strong presence in its Wilton, CT, office. AMP and Arnold Brand Promotions anchor Boston’s community, and Virginia is home to PowerPact and RedPeg Marketing (formerly Momentum Marketing). While only two Top 25 agencies are based in California (Seismicom and EMAK, formerly Equity Marketing), there are 13 California shops on our list. Most of the big networks maintain at least one California office.
Five agencies fell out of the Top 10 this year:
AMP, our 2004 Agency of the Year, fell from No. 2 to No. 18 with mid-range two-year growth (25%) and 24th place for campaign work.
PowerPact fell from No. 4 to No 14, with modest two-year growth (67%) and lower marks for its campaign work (No. 15 this year, down from No. 5 in 2004).
EastWest Creative fell from No. 6 to No. 32, with slow two-year growth, given its revenue base (20%, to $14.8 million) and lackluster campaign work compared to its No. 1-ranked work in the 2004 listing.
Draft slipped from No. 7 to No. 12; its large revenue base (a chart-topping $365 million) kept its two-year growth rate relatively low (20%).
Arnold Brand Promotions dropped from No. 8 to No. 30 with a middling two-year growth rate (21%) and less-impressive campaign work than its 2004 showing, where it ranked second for quality of work.
All across the chart, most of the agencies that fell in the rankings slipped on quality of work. Some didn’t show us their results; others didn’t have permission from clients to present their best work. Much of the work reviewed was solid, block and tackle stuff, but was limited in scope or imagination. It begs a few questions: Are marketers squelching creativity? Are agencies too understaffed — or under-trained — to brainstorm beyond the basics?
Agencies overall are showcasing more trade show, business-to-business and employee-audience work. Velocity handled FedEx’s Most Reliable Player b-to-b effort and the Olympic Hopefuls program that touted Home Depot staffers competing in the 2004 Games. 141 Worldwide handled Boeing’s presence at the Farnborough (Germany) Air Show. Wunderman handled Microsoft’s Windows Mobile b-to-b pitch to decision makers at the top 25 mobile-operators worldwide. Five other agencies sent trade show work; two sent campaigns they’d run for clients’ staff (one was a company picnic). Are agencies picking up these assignments to compensate for a slowdown in consumer work, or are marketers genuinely putting more into their trade, staff and b-to-b promotions?
The latter, because of consumer marketing clutter and a general push towards integrated marketing, says Tom Hansen, senior VP-executive creative director at Wunderman. “If you’ve got a message and limited dollars, it makes sense to say the same thing to various audiences. Clients used to have five or six agencies and in-house divisions handling different parts. Now they’re comfortable putting the hammer on one or two of their mainline agencies and saying, ‘Make this resonate with everybody,’ including retailers, the sales force and employees.”
Agencies with events, promotions and meetings expertise court those integrated projects, says 141 Worldwide President Jay Farrell. When consumer marketing budgets shrank, shops began “more outreach to spread the [promotion marketing] gospel to these areas,” Farrell says.
Meanwhile, packaged goods veterans now in b-to-b jobs bring a consumer marketing mentality, he adds: “That has clients rethinking how they do business.”
|2005 Rank||AGENCY||2004 U.S. Net Revenues||2-Year Growth %|
|$20 MILLION AND UP|
|4||Bensussen Deutsch & Assoc.||137,000,000||35|
|5||Jack Morton Worldwide*||114,330,000||9|
|6||The Integer Group*||100,000,000||4|
|11||Aspen Marketing Group||59,371,116||66|
|12||Marketing Drive Worldwide*||59,000,000||-31|
|16||Alloy (AMP Agency)||52,384,000||25|
|19||141 Worldwide *||45,200,000||8|
|20||The Marketing Store||42,586,000||22|
|22||Alcone Marketing Group*||39,500,000||25|
|23||CoActive Marketing Group||33,500,000||43|
|25||J. Brown Agency*||31,165,000||8|
|27||The Spark Agency||29,762,000||13|
|28||Arnold Brand Promotions*||29,500,000||21|
|34||Eric Mower & Associates||23,370,740||24|
|36||Colangelo Synergy Marketing||21,646,562||17|
|$7 TO $19 MILLION|
|36||Saatchi & Saatch X||18,768,134||80%|
|39||Relay Sponsorship & Event*||14,300,000||186|
|41||Velocity Sports & Entertainment||13,739,000||94|
|43||Noble World Communications||12,895,194||19|
|44||The GEM Group||12,695,483||0|
|51||Promotion Group Central||9,592,890||359%|
|53||Pierce Promotions & Event Mgmt*||9,050,000||51|
|54||The Guild Group||9,010,000||-18|
|56||Active Marketing Group||8,081,000||258|
|$3 TO $7 MILLION|
|62||Don Jagoda Associates||5,711,687||-12|
|64||Harwood Marketing Group||5,442,668||46|
|66||Renegade Marketing Group||5,193,950||11|
|67||TSE Sports & Entertainment||4,861,500||87|
|73||Tipton & Maglione||3,345,000||-14|
|74||Promote It International||3,200,000||184|
|75||Civic Entertainment Group||3,175,877||349|
|76||The A Team||3,145,000||31|
|77||The Regan Group||3,042,532||16|
|78||Marketing Connections Group||3,020,949||-62|
|$1.5 TO $3 MILLION|
|80||Concept One Communications||2,766,000||68|
|87||Vertical Marketing Network||2,140,336||37|
|88||Roundhouse Mktg & Promotions||1,849,604||-13|
|91||Makai Events & Promotions||1,805,457||47|
|92||Brand Fuel Promotions*||1,800,000||52|
|93||Centra Mktg & Communications||1,752,051||83|
|UP TO $1.4 MILLION|
|97||LeadDog Marketing Group||1,321,644||485|
|99||Grand Central Marketing||874,799||93|
|100||Nine Two (formerly tkmw)||684,239||39|
|*Indicates a PROMO estimate for revenue and two-year growth|
|RANK||AGENCY||2004 U.S. REVENUE||2002 U.S. REVENUE||2-YR % GROWTH|
|1||The Marketing Arm*||45,675,000||5,250,000||770.0%|
|3||LeadDog Marketing Group, Inc.||1,321,644||225,982||484.8|
|4||Mr. Youth LLC||1,425,560||266,470||434.9|
|5||Promotion Group Central, Inc.||9,592,890||2,089,758||359.0|
|6||Civic Entertainment Group||3,175,877||706,783||349.3|
|9||Active Marketing Group||8,081,000||2,258,000||257.8|
|10||Relay Sponsorship & Event Management*||14,300,000||5,000,000||186.0|
|11||Promote It International||3,200,000||1,125,485||184.3|
|15||Pro Motion, Inc.||4,060,213||1,637,176||148.0|
|16||Marketing Werks, Inc.||4,223,602||1,976,130||113.7|
|18||Velocity Sports & Entertainment, LLC||13,739,000||7,092,000||93.7|
|19||Grand Central Marketing, Inc.||874,799||453,525||92.9|
|20||TSE Sports & Entertainment||4,861,500||2,600,000||86.9|
|22||Centra Marketing & Communications, LLC||1,752,051||960,000||82.5|
|23||Saatchi & Saatchi X*||18,768,134||10,413,248||80|
|23||Eventive Marketing, Inc.||6,198,000||3,492,000||77.5|
|25||Concept One Communications||2,766,000||1,644,686||68.2|
|*Indicates a PROMO estimate for revenue and two-year growth|
|1||Civic Entertainment Group||Save Our History (The History Channel)|
|2||Eric Mower & Associates||Learn with Friends (Fisher Price, for Wal-Mart Stores)|
|3||Arc Worldwide||Say Hello to Ted (United Airlines)|
|4||Colangelo Synergy Marketing||Guinness St. Patrick’s Day (Guinness & Co.)|
|5||Momentum Worldwide||Unexpected Summer (Coca-Cola Co.)|
|6||Marden-Kane||Camp eBay (eBay)|
|6||Mr. Youth||Pink launch (Victoria’s Secret)|
|8||Velocity Sports & Entertainment||FedEx Most Reliable Player (FedEx)|
|9||Grand Central Marketing||Speed in the City (NASCAR)|
|10||141 Worldwide||84 Lumber Classic (84 Lumber)|
|10||EMAK Worldwide||Spider-Man 2 (Burger King)|
|10||GMR Marketing||Axe Dark Party (Unilever)|
|13||Marketing Store||McDonald’s Monopoly Best Chance 2.0 (McDonald’s Corp.)|
|14||TracyLocke||Pepsi iTunes (Pepsi-Cola Co.)|
|15||PowerPact||Don’t Just Cook, Create (Tone Brothers’ Spice Islands)|
|16||EastWest Creative||Tu Musica, Tu Pasion (Tecate)|
|16||Octagon||NASCAR Nextel Cup (Nextel Communications)|
|16||Seismicom||Samsung Vans Warped Tour (Samsung)|
|16||Zipatoni||Taste It All (Miller Brewing Co.)|
|20||CoActive Marketing Group||Xtreme Nutrition (Fresh Express)|
|21||ePrize||How Do You (The Gap)|
|21||National Tour||The Nextel Experience (Nextel Communications)|
|21||Noble World Communications||Start Healthy (Gerber Baby Products)|
|24||AMP Agency||mtvU Campus VJ Search (MTV Networks)|
|24||Arnold Brand Promotions||Tyson and USA Gymnastics (Tyson Co.)|
|24||Draft||24/24. Milk Your Diet. Lose Weight! (MilkPEP)|
|24||IMC||Dentyne Yahoo IMVironments (Cadbury Adams USA)|
|24||Wunderman||Catch Me if You Can (American Institute of CPAs)|
How We Did It
PROMO 100 rank is based on three equally weighted factors: U.S. net revenues, two-year growth, and quality of campaign work.
U.S. Net Revenues
Agencies report their U.S. net revenues for the most recent three years, as verified by an outside auditor or a copy of the agency’s tax return. “Net revenues” are the same as “gross profits” as reported on tax filings; they do not equal total billings, which often include pass-through expenses. Agencies report billings and revenues, but only net revenue data impacts rankings.
PROMO uses U.S.-only net revenues and not worldwide figures, in order to more accurately compare U.S. agencies. A few agencies (Momentum, 141 and DVC) have significant business overseas (see chart on p. 44).
This year, 22 agencies did not provide verifiable revenue data. For most, their parent companies — the four publicly held agency networks — forbade it, citing the 2003 Sarbanes-Oxley Act governing financial disclosures. PROMO estimated these agencies’ net revenues using our estimates from 2002 and 2003 and factoring in account wins/losses, acquisitions and spending fluctuations among current clients.
This is the third year that PROMO has had to estimate revenue for these agencies, so the revenue and two-year growth data come with this caveat: These numbers are not verifiable. All estimates are marked with an asterisk.
PROMO calculates agencies’ growth from 2002 net revenues to 2004, then rank shops based on that two-year growth rate. This is a more even-handed measurement than one-year growth, since a single big project or new-business win can skyrocket a shop to the top of the growth charts.
Agencies submit case studies of three campaigns from 2004. Each PROMO editor rates each campaign on a scale of 1 to 5, based on strategy (and its applicability to the brand), execution, creativity, scope of the work (both breadth of disciplines and number of markets) and — crucial to any promotion — results.
Results are often confidential; they are used only for scoring and are not reported in PROMO.
Agencies that show strong results for a range of clients using a mix of disciplines tend to score highest. Agencies with limited work (all for a single client, or in few markets, or with a narrow range of disciplines, such as sampling or online sweeps only) score lower.
The Final Tally
Scores for U.S. net revenue, two-year growth and campaign work are added together as equal parts of an agency’s total final score. To set the Top 25 ranking, PROMO’s editors also consider recent account wins and losses; industry awards; management stability; average length of service with clients and agency-of-record status; and breadth of marketing services.
While they don’t impact scores, we also include per-employee revenue figures in the ranking (beginning on p. 46). The Marketing Agencies Association Worldwide (MAA) estimates that the average net revenue per employee at a U.S. promotion agency was $120,000 in 2004, down 4% from $125,300 in 2003. That decline could be due to a variation in the number of agencies in MAA’s annual survey. But “times are tougher on agencies, and clients are demanding more from their agency,” says Strottman International CEO Ken Strottman, who leads MAA’s research. MAA suggests that a 25% margin above or below that benchmark is within the “reasonable range” of revenue productivity per employee. Results outside this range may be questionably high or inefficiently low, per MAA.
|The Marketing Store||101,307,000|
|The GEM Group||28,207,663|
|Velocity Sports & Entertainment||14,395,000|
|*Indicates a PROMO estimate|
UNDER THE RADAR
Six agencies lay low this year, some with explanations. Other reasons shops may decline to enter: a bad year (or more) of business; past rankings brought no leads and too many sales calls; missed PROMO’s deadline
Carlson Marketing Group
did not enter; no client permission to share work
did not enter; in quiet period of acquisition negotiations
did not enter
did not enter
did not enter
did not enter