It’s All About the Work

We’ve given a 10-year tune-up to the PROMO 100.

“Try to rank promotion marketing agencies by ad-industry standards and, more often than not, you’ll come up with the equivalent of a New York City parade: something vastly more important to those taking part in it than to those who are looking on.”

Those words, from PROMO co-founder Kerry E. Smith, were used in 1993 to introduce our annual agency ranking, which employed a unique formula based on total revenues, two-year revenue growth, and agency age “while calling attention to agency strengths, capabilities, and accomplishments and identifying key agency accounts,” continued that initial explanation.

We’ve held to that basic formula for the last nine years. This year, we decided to bring those strengths, capabilities, accomplishments, and relationships more prominently into the selection process. First and foremost, we’ve added a work-quality factor to the formula while eliminating agency age.

This year’s entrants will be required to present three campaigns from 2001 they consider to best exemplify the agency’s talents, capabilities, and record of success. The campaigns will be judged by PROMO’s editors based on quality of strategy, concept, execution, and results. That will give each agency a quality “score” that can be ranked in numerical order — in the same way that total net revenues and two-year growth are “scored” to produce rankings.

Those factors — quality of work, total net revenues, and two-year revenue growth — will be added together to determine the final ranking, with each factor given equal weight. We’ll use that ranking to select the 100 agencies to be featured on the list. But then we’ll examine such other factors as new-business wins, account retention, industry awards, and client feedback (based on conversations held throughout the year and calls made specifically for this purpose) to determine the top 25.

Here’s Why

The goal of the PROMO 100 has always been to present a list of the best agencies in the U.S., a resource brand marketers could use to identify potential shops for future work (and agency executives could use to compare their performance). Two realities of the current business climate have hampered that effort.

The first is the presence of industry consolidators, which have risen steadily in the ranks through acquisitions rather than organic growth. Thus, the financial means to accumulate resources — which doesn’t necessarily make for better service capabilities — has become an unfair advantage; while small agencies have been able to keep pace through rapid organic growth, mid-sized shops have lost a competitive edge in the ranking. (Take a look throught a recent PROMO 100 and you’ll see the point illustrated.)

Second, we’ve seen in recent years that revenue growth isn’t necessarily an accurate barometer of agency capabilities anymore. The call for economies of scale has led many clients to drop smaller agencies from rosters in recent years; but a small shop shouldn’t necessarily be discounted because its largest account was lost due to non-work issues.

We’ve heard from a number of agencies since we first announced the new formula in February. While nearly all have applauded the addition of work quality into the mix, some have expressed concern about the elimination of agency age.

We certainly agree that the age of a company is an important fact in assessing its stability (and we’ll continue to feature ages in our agency profiles). We acknowledge a big difference between a three-year-old shop with a half-dozen employees and a 10-year-old agency with 30 staffers. The disparity isn’t as great between, say, that 10-year-old agency and a 45-year-old competitor. The age factor was making a clear distinction between the latter, however, and little between the former.

Consolidation was a major consideration here, too. Mergers and acquisitions have made it difficult in some cases to even distinguish between what truly is an experienced, veteran agency and one that simply bought a decades-old business (without even retaining the principals).

We’re confident that this new formula offers a more level playing field for agencies of all sizes to be judged not only on financial performance but also on their abilities to provide clients with successful promotion marketing campaigns.

It is all about the work, isn’t it?