PROMO 100 Jeopardy!

In compiling the PROMO 100 each year, we collect a copious amount of information that isn’t used to determine the rankings and, therefore, never makes it into our June issue (although much of it is used to determine the agencies that receive special editorial attention).

Last year, we presented some of that data for the first time to provide a few benchmarking tools for the industry (keeping most of the analysis in aggregate form to respect the proprietary nature of the information). We decided to do it again this year.

PROMO’s editors had planned on updating last year’s overview by using a format akin to The Weakest Link. But in light of the current economic situation, we ultimately decided that a return to a hybrid of Jeopardy! (answer first) and Who Wants To Be A Millionaire? (multiple choice) would be more appropriate.

1
Answer: 23,919

Question:

A. How many brand logos does the average NASCAR vehicle carry?

B. How many “turn-key online promotional solutions” were introduced in 2000?

C. How many tie-in partners did Dr. Seuss’ How the Grinch Stole Christmas have?

D. How many total employees did PROMO 100 agencies have in 2000?

The correct response: D. Headcount among the PROMO 100 rose to 23,919 this year, a 6.9-percent increase over last year’s 22,369.

That growth is a far cry from the 130-percent jump in total employees posted in the prior two-year period, and reflects a few trends:

— The new agencies on the 2001 PROMO 100 did not include any massive networks as in years’ past, when the debut of such huge shops as DraftWorldwide (in 1999) and Bounty SCA (in 2000) helped spike totals. The largest newcomer in 2001 was Summit Marketing, which has 415 staffers.

— Agency acquisitions slowed in the second half of 2000, so the ranks of the industry’s largest consolidators didn’t swell as much as in previous years.

— Organic growth also slowed, as agencies saw traditional clients begin bracing for the economic downturn and the potential for new Internet clients all but disappear. Layoffs at many of the biggest shops in the first half of 2001 suggest the total could drop for the first time ever in 2002.

Thus, the average staff size among PROMO 100 shops was 239. Eliminating the agency networks with 500 or more staffers (there were nine this year) provides a more realistic average of 105.

Impiric (now Wunderman) again had the greatest headcount at 4,217 globally (Draft had 3,680). PMC and Cohen-Friedberg were the smallest, with four employees each.

2
Answer: $10.9 billion

Question:

A. How much endorsement money did Britney Spears, Christina Aquilera, ‘N Sync, and the Backstreet Boys earn in 2000?

B. How much in unpaid invoices have defunct dot-coms left agencies with?

C. What was the total value of online sweepstakes prize pools last year?

D. What were the total billings for the PROMO 100?

The correct response: D. Total billings were $10.9 billion in 2000, which represents an eight-percent increase over the previous year. The 10 largest PROMO 100 agencies accounted for 69 percent of the total.

Comparing that figure with the list’s total net revenues of $2.73 billion produces a lackluster net revenues-to-billings ratio of 25 percent — the same as last year. But eliminating the agencies with the five lowest ratios (which ranged from 1.0 percent to 12.6 percent) and the five highest (including three that reported no pass-through expenses) provides a more respectable 43.5 percent average, roughly equal to 2000 and in line with traditional industry stats.

3
Answer: 37 percent

Question:

A. How much will the answer to question 1 decline in 2001?

B. How much will the answer to question 2 decline in 2001?

C. How many PROMO 100 agencies will post poor financial results in 2001?

D. What percentage of 2000 revenues came from retainer agreements?

The correct response: D. The average among PROMO 100 shops actually dipped one percentage point compared with last year, as more agencies with few or no retainer agreements qualified for the rankings. Still, most shops reported an increase in retainer-based fees in 2000.

While 15 agencies bucked the trend toward deeper ties with clients by operating solely on a project basis (which doesn’t necessarily prohibit agency-of-record status), 38 reported that more than half of their revenues came through retainer contracts. Only one claimed to work exclusively on retainer.

The correct response: D. About 40 percent of net-revenue growth among agencies was attributed to business from new clients this year, representing roughly $120 million. In 2000, new clients contributed an estimated $210 million to agency coffers. Current conditions in the marketplace suggest that the total could slide again in 2001, although promotion shops are certainly hoping it doesn’t: In a survey conducted in January 2001, 74 percent of agency executives said they expected growth to come from new clients.

4
Answer: 40

Question:

A. What percentage of U.S trucking traffic now constitutes branded tractor-trailers?

B. What percentage of the U.S. population is now employed as field-execution staff?

C. What percentage of new software releases provide “CRM solutions”?

D. What percentage of net-revenue growth came from new-client business in 2000?

The correct response: Unilever was the client identified most times for the second year in a row, thanks to acquisitions that brought Ben & Jerry’s and Bestfoods brands into the fold.

5
Final Jeopardy Answer:

This well-known company was the most-mentioned client among agencies this year.

The consumer packaged goods industry’s largest players were the names most-often cited among the 1,362 clients listed on PROMO 100 entry forms. In addition to Unilever, Coca-Cola, Kraft Foods, United Distillers & Vintners, Procter & Gamble, Nabisco, PepsiCo and Nestlé USA all worked with 10 or more shops in 2000.

Industry consolidation should make the upper ranks even more top-heavy next year, as the brand portfolios of General Mills and Pillsbury, Kraft and Nabisco, Keebler and Kellogg, Pepsi and Quaker Oats, Nestlé and Ralston-Purina, and United Distillers & Vintners and Seagram’s unite.

The only outsider to crash the CPG party this year was technology giant Microsoft Corp., which employed 11 agencies. Technology brands were prevalent again this year, along with financial services companies, pharmaceutical houses, cable TV networks, and colleges. The number of retailer clients increased substantially this year.

Speaking of dot-coms: Only 31 were listed as clients for 2000, compared with 87 in 2000.

PROMO’s favorite client: the Government of Dubai (courtesy of The Phelps Group).

HEY, BIG SPENDERS

Companies that employed the most PROMO 100 agencies in 2000.