Overview: Extreme Makeover

Posted on June 1, 2005 by Chief Marketer Staff

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.

Newcomers

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.

Slippage

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.”

Rank by Revenue
2005 Rank	AGENCY	2004 U.S. Net Revenues	2-Year Growth %
$20 MILLION AND UP
1	Draft *	$365,430,000	20%
2	Digitas, Inc.	245,000,000	23
3	Wunderman *	194,476,560	10
4	Bensussen Deutsch & Assoc.	137,000,000	35
5	Jack Morton Worldwide*	114,330,000	9
6	The Integer Group*	100,000,000	4
7	Arc Worldwide*	98,000,000	7
8	TracyLocke*	96,000,000	27
9	GMR Marketing*	91,300,000	29
10	Momentum Worldwide*	81,000,000	43
11	Aspen Marketing Group	59,371,116	66
12	Marketing Drive Worldwide*	59,000,000	-31
13	Publicis Dialog*	55,384,000	63
14	Hawkeye Communications*	53,400,000	-14
15	Ryan Partnership	52,554,000	21
16	Alloy (AMP Agency)	52,384,000	25
17	DVC Worldwide*	50,150,000	6
18	Marketing Arm*	45,675,000	770
19	141 Worldwide *	45,200,000	8
20	The Marketing Store	42,586,000	22
21	EMAK Worldwide	40,185,000	9
22	Alcone Marketing Group*	39,500,000	25
23	CoActive Marketing Group	33,500,000	43
24	Summit Marketing	32,834,931	2
25	J. Brown Agency*	31,165,000	8
26	Gage	30,914,000	-31
27	The Spark Agency	29,762,000	13
28	Arnold Brand Promotions*	29,500,000	21
29	Zipatoni*	28,000,000	1
30	Mars Advertising	27,100,000	14
31	Jack Nadel	26,888,000	33
32	Octagon*	26,733,192	45
33	PromoWorks	23,563,000	323
34	Eric Mower & Associates	23,370,740	24
35	Marden-Kane	21,862,502	5
36	Colangelo Synergy Marketing	21,646,562	17
$7 TO $19 MILLION
36	Saatchi & Saatch X	18,768,134	80%
37	National Tour	$17,500,000	40
38	EastWest Creative	14,751,779	20
39	Relay Sponsorship & Event*	14,300,000	186
40	ePrize	14,223,048	289
41	Velocity Sports & Entertainment	13,739,000	94
42	Malone Advertising	13,029,319	77
43	Noble World Communications	12,895,194	19
44	The GEM Group	12,695,483	0
45	BDS Marketing	11,250,742	-12
46	Source Marketing	10,760,000	31
47	PowerPact	10,568,167	67
49	Mastermind Marketing	9,910,000	19
50	Strottman International	9,909,000	49
51	Promotion Group Central	9,592,890	359%
52	BFG Communications	9,311,429	160
53	Pierce Promotions & Event Mgmt*	9,050,000	51
54	The Guild Group	9,010,000	-18
55	Media Logic	8,787,330	11
56	Active Marketing Group	8,081,000	258
57	RedPeg Marketing	7,733,075	151
58	Campaigners	7,658,391	58
$3 TO $7 MILLION
59	PriceWeber Marketing	$6,644,000	-6%
60	Big Communications	6,555,455	685
61	Shumsky	6,500,000	8
62	Eventive Marketing	6,198,000	77
62	Don Jagoda Associates	5,711,687	-12
63	Cramer-Krasselt Company	5,548,000	40
64	Harwood Marketing Group	5,442,668	46
65	Latitude	5,300,000	47
66	Renegade Marketing Group	5,193,950	11
67	TSE Sports & Entertainment	4,861,500	87
68	Seismicom	4,579,908	99
70	Marketing Werks	4,223,602	114
71	Marlin Entertainment	4,135,000	83
72	Pro Motion	4,060,213	148
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
79	Ventura Associates	$2,902,000	9%
80	Concept One Communications	2,766,000	68
81	B.A.R.C. Communications	2,627,276	-10
82	Next Marketing	2,600,000	-11
83	Three Wide	2,410,766	11
84	Firehouse	2,376,000	149
85	IMC	2,264,862	-23
86	Penn Garritano	2,150,997	40
87	Vertical Marketing Network	2,140,336	37
88	Roundhouse Mktg & Promotions	1,849,604	-13
89	Ott Communications	1,837,327	-50
90	Marketing Edge	1,828,532	54
91	Makai Events & Promotions	1,805,457	47
92	Brand Fuel Promotions*	1,800,000	52
93	Centra Mktg & Communications	1,752,051	83
94	Mr. Youth	1,425,560	435
UP TO $1.4 MILLION
95	Marketing Lab	$1,357,130	67%
96	Object 9	1,351,141	39
97	LeadDog Marketing Group	1,321,644	485
98	Alpha Marketing	910,491	30
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 by 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%
2	Big Communications	6,555,455	874,534	649.5
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
7	PromoWorks	23,563,000	5,576,960	322.5
8	ePrize, LLC	14,223,048	3,660,810	288.5
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
12	BFG Communications	9,311,429	3,587,114	159.5
13	RedPeg Marketing	7,733,075	3,079,136	151.1
14	Firehouse, Inc.	2,376,000	956,000	148.5
15	Pro Motion, Inc.	4,060,213	1,637,176	148.0
16	Marketing Werks, Inc.	4,223,602	1,976,130	113.7
17	Seismicom	4,579,908	2,297,983	99.3
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
21	Marlin Entertainment	4,135,000	2,260,000	82.9
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
23	Malone Advertising	13,029,319	7,350,000	77.3
25	Concept One Communications	2,766,000	1,644,686	68.2
*Indicates a PROMO estimate for revenue and two-year growth

Rank by Campaign Work
RANK	AGENCY	REPRESENTATIVE CAMPAIGN
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.

Two-year Growth

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.

Campaign Work

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.

FYI: Productivity

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.

Worldwide Net Revenue
Octagon*	$117,000,000
The Marketing Store	101,307,000
DVC Worldwide	94,545,100
Ryan Partnership	54,983,000
EMAK Worldwide	53,723,000
The GEM Group	28,207,663
ePrize	14,223,048
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

Javelin
did not enter; in quiet period of acquisition negotiations

WatersMolitor
did not enter

Wencel/Hess
did not enter

SJI Promotions
did not enter

Modem Media
did not enter