U.S. agency revenue climbed a solid 7.9% in 2011. Agency stocks soared to post-recession highs in March. Omnicom's John Wren scored a 43% pay increase.
The agency business, in short, is humming along even as the economy struggles through low-grade growth.
All agency disciplines grew last year as the business continued its post-recession recovery. But performance varied sharply by sector and, naturally, the star performer was digital.
Revenue for U.S. digital-specialty agencies -- digital pure plays -- rocketed 17.1%, right in line with a 17.4% growth in digital-media employment.
Media agencies' revenue jumped 11.4%, slightly ahead of the sector's 10.2% employment growth.
Ad agencies' revenue rose a more muted 4.7%, vs. 3.9% job growth. Public relations grew 5.3%; PR staffing edged up 2.7%.
Double-digit digital growth is not a surprise. Media-agency revenue and job growth reflects the success agencies have had in building revenue through media planning, analytics, digital offerings and other services, allowing the sector to outpace meager growth in media spending. (Publicis Groupe 's ZenithOptimedia estimates that U.S. major-media spending grew just 1.6% in 2011, and forecasts 3.6% for this year.)
Total 2011 U.S. revenue for marketing-communications agencies (advertising, media, digital, marketing services, health care, public relations) rose 7.9%, to $33.2 billion, according to Ad Age 's Agency Report 2012, which tracked performance of more than 900 U.S. agencies.
The increase topped the 7.7% growth of 2010, when agencies were recovering from the brutal recession of December 2007 through June 2009.
Though the recession officially ended nearly three years ago, the job market is still recovering. U.S. advertising and marketing-services firms (ad agencies, media agencies and other disciplines) have added 48,400 jobs since staffing hit its low point in February 2010. Employment stands at 51,200 jobs below its all-time high in November 2007, a month before the recession began.
Agency revenue growth has outpaced staff growth during this recovery; agencies and agency companies have been successful at generating more revenue per employee.
Interpublic Group of Cos., for example, last year increased U.S. revenue by 4.8%, while its year-end staffing remained essentially unchanged from 2010.
The four largest agency companies -- WPP, Omnicom Group, Publicis, Interpublic -- boosted worldwide employment last year by 8.1%, or 21,000 jobs. That's nearly double the 11,000 jobs they added in 2010 and close to the 22 ,000 jobs they cut in recessionary 2009. (See AdAge.com/adjobs.)