As the economy bounced back in 2004 and marketers increased their ad budgets, agencies benefited in many ways: They saw their own revenue increase, they hired more staff, they opened new offices and they rolled out more campaigns than in the previous few years.Top Agencies 2005 Chart (PDF)
Almost all of the agencies submitting entries for this year's Top Agencies Special Report showed revenue gains, mostly in the 10% to 20% range. By contrast, the majority of agencies reported flat or single-digit revenue growth for 2003, and many reported decreasing revenue in the years during the recession.
With the growth came a new emphasis on proving ROI on marketing campaigns and working closely with clients to determine the best use of their marketing dollars in a still recovering economy.
To achieve these goals, the top agencies began offering more strategic services, including launching new strategy and consulting departments, implementing new work processes and adding key talent.
"There was a significant trend for agencies to form strategic partnerships with their clients," said Tom Stein, president-CEO of Stein Rogan + Partners, the winner of the small agency category.
"In 2004, clients were looking to us to really work with them on a branding basis-not necessarily launching multimillion-dollar brand campaigns but understanding how to optimize the client's brand proposition against all of its constituencies."
For example, in 2004 Stein Rogan picked up new client Video Monitoring Service, a provider of news, advertising and data services to marketers.
"They were perceived as the leader in the category but expensive in a commodity business," Stein said.
Research: Go `upstream'
Using primary research methodologies, the agency recognized a need for the client to go "upstream" in its services, and repositioned VMS as a leader in providing integrated media intelligence services. Stein Rogan developed the brand positioning and created an integrated marketing communications campaign to support it.
Now, the agency is working with VMS as a partner in developing new products and services organized around integrated media intelligence.
The agency's efforts to establish strategic partnerships is paying off; in 2004, its revenue increased 27.5% over 2003.
BBDO, the winner in the large agency category, also placed an increased emphasis on strategic insight last year. It launched a new creative methodology called InciteWork, a multistep process it uses to understand the core drivers of its clients' business objectives.
The agency uses qualitative and quantitative research, such as observational studies of clients' target audiences and how they conduct business, in addition to traditional focus groups.
"We are trying to really understand the inner workings of our clients' businesses," said John Osborn, president-CEO of BBDO New York.
"As marketers continue to get pressure, it is our job to relieve the pressure and make sure our work delivers. Without a close partnership, we wouldn't have the opportunity to do great work."
BBDO picked up several new b-to-b accounts in 2004, including E-Trade Financial, GlaxoSmithKline and Schering-Plough Corp., totaling an estimated $400 million.
The Ogilvy Group, runner-up in the large agency category, also beefed up its strategic planning and consulting services in 2004.
Ogilvy & Mather New York named Colin Mitchell as chief strategic officer to lead the agency's strategic planning services. The agency also created a new unit, Ogilvy Planning Syndicate, which provides specialized research, planning and consulting.
OgilvyOne, the direct and interactive agency within the Ogilvy Group, hired a new head of account planning and named a new general manager for OgilvyOne Consulting.
"We are bringing the best of Ogilvy & Mather and OgilvyOne together to enable great partnerships with clients," said Bill Gray, president of Ogilvy & Mather, New York. "It's not just 360-degree brand idea creativity, but determining how to find the most valuable customers and prospects and optimize the communications spending."
The focus is paying off for Ogilvy as well. It added new clients including Yahoo!, Delta Air Lines and Time Warner Cable in 2004.
Another trend among agencies last year was the development of brand "experiences" designed to create more involvement and emotional response from customers.
In the interactive agency category, top agencies created interactive Web sites, online ads, sponsorships, e-mail and rich media to develop brand experiences online.
AKQA, the winner in the interactive agency category, created a compelling Web site for the launch of the palmOne Treo 600 smart phone that lets users interact with product features online.
Agency.com, the runner-up in the interactive agency category, did extensive research with client Hewlett-Packard Co.'s business customers to understand how they used the Internet to shop for products. The result was a redesigned b-to-b portal that provided an integrated customer experience, including researching, shopping and managing accounts.