MDC Partners

Profile from the 2007 Agency Report

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11 MDC Partners
Revenue ($ in millions)20062005% chg
Worldwide$423.7$363.416.6
U.S$355.9$305.216.6
Non-U.S.$67.8$58.116.6
Employees20062005% chg
Worldwide4,9944,05523.2
Offices20062005% chg
Worldwide30NANA
U.S.19NANA
Non-U.S.11NANA
Notes: In November 2006, MDC sold its Secured Products International Group (a printer of postage stamps, tickets, cards and labels) to H.I.G. Capital, a private-equity firm, for about $27 million. That sale completed MDC's transformation into a marketing-communications company.

The price tag was a fraction of Secure Products' 2005 revenue ($80.1 million). (MDC's 2006 and revised 2005 revenue figures on this page exclude Secure Products' revenue.) Secure Products in 2005 accounted for 647 of MDC's 4,055 employees; factoring out Secure Products, MDC had 3,408 employees in 2005.

MDC in March 2007 forecast full-year 2007 revenue of $490-$500 million, up 16%-18%.

MDC breaks its marketing-communications business into three segments:

Strategic Marketing Services: Firms offering "a full integrated complement of marketing communication and consulting services, including advertising and media, direct marketing, public relations, corporate communications, market research, corporate identity and branding, interactive marketing and sales promotion." Agencies: Allard Johnson (advertising and integrated communications); ACLC (advertising and integrated communications); Colle & McVoy (ad agency); Crispin Porter & Bogusky (ad agency); Fletcher Martin (integrated communications); Kirshenbaum Bond & Partners (ad agency); Mono Advertising (ad agency and branding); VitroRobertson (ad agency); Zig (ad agency); Zyman Group (marketing consultancy). Employees: 1,438. Revenue in 2006: $241.5 million, up 18.4% or $37.6 million (reflecting organic growth of $22.4 million, $11.7 million in revenue relating to the 2005 acquisition of a majority stake in Zyman Group and $2.1 million relating to changes in accounting for Zig and Mono).

Customer Relationship Management: The segment, consisting of Indiana-based CRM firm Accent Marketing Services, provides marketing services including "design, development and implementation of a complete customer service and direct marketing initiative intended to acquire, retain and develop each client's customer base. This is accomplished primarily through sophisticated database management and analytical services and through customer care services using eight domestic and two foreign-based customer contact facilities to regional, national and global clients." Employees: 2,982. Revenue in 2006: $84.9 million, up 26.3%, "due primarily to higher volumes from existing clients in part as a result of the opening of three additional customer care centers during 2006 offset by the closure of one customer care center."

Specialized Communication Services: Marketing services firms typically hired "to provide a single or a few specific marketing services to regional, national and global clients. The services they provide include advertising, sales promotion, direct marketing, media relations, design and branding, research, interactive and corporate communications. Agencies: Accumark Communications (corporate communications); Banjo (entertainment marketing); Bratskeir (marketing and PR); Bruce Mau Design (branding); Bryan Mills Group (financial communications); Chinnici Direct (direct); Computer Composition (pre-press services); Hello Design (design); Henderson Bas (interactive); Integrated Healthcare Communications (healthcare); Ito Partnership (branding); Yamamoto Moss Mackenzie (branding); Margeotes Fertitta Powell (ad agency); Northstar Research Partners (research); Onbrand (branding); Pro-Image (publishing services); Source Marketing (promotions and events); TargetCom (corporate communications, direct, database); Veritas Communications (corporate communications). Employees: 537. Revenue in 2006: $97.3 million, up $5.1 million or 5.5% from 2005.

In addition to the previously noted employees, MDC reported a corporate staff with 37 employees in 2006.

One of the company's ad agencies, Margeotes Fertitta Powell (MFP), ended its run as a standalone shop in April 2007. MDC that month folded MFP, New York, into Kirshenbaum Bond, New York, and also backed a new agency, dubbed We Are Gigantic, set up by MFP's chief creative officer, Neil Powell.

MDC did a series of small deals in 2006: In early February 2006, it purchased the rest (12.3%) of Source Marketing for $2.3 million. Later that month, Source issued a 15% stake to management, leaving MDC with 85% of Source. Management bought another 5% in late 2006, leaving MDC with 80% of Source. In July 2006, MDC boosted its ownership in Accent Marketing 4.3% to 93.7%.

In November 2006, MDC's Zig bought 65% of Hadrian's Wall Advertising LLC, a creative shop, for $550,000. In addition, MDC bought another 0.2% of Zig for $18,000 and MDC Stock Appreciation Rights valued at $104,000, giving MDC majority ownership of 50.1%. MDC purchased an additional 20% of Northstar Research Partners, MDC's main research agency, for $3.4 million cash in November 2006; that gave MDC a 70.1% stake.

MDC's Bryan Mills Group in February 2007 bought 100% of Iradesso Communications Corp., a Canadian financial communications firm, for $300,000 cash and an 11.85% stake in Bryan Mills valued at about $700,000. At year end 2006, MDC owned 71.2% of Bryan Mills. MDC as of year-end 2006 owned 49% of Crispin Porter; under an agreement, MDC could increase that stake to 60% in 2007, up to 77% in 2008, up to 94% in 2010 and up to 100% in 2012.

In 2006, MDC consolidated financial reporting for three firms (Accumark, Mono, Zig). MDC previously had used the equity method of accounting for its stakes in those firms, meaning it reported a share of income equal to its ownership stake. MDC as of year-end 2006 was consolidating the results of all agencies except two for which it still used the equity method: Cliff Freeman (19.9% stake) and Fuse (20%).

MDC's top clients in 2006 included Sprint and two key Crispin Porter clients, Volkswagen of America and Burger King. Sprint accounted for about 15.5% of revenue. No client accounted for 10% or more of revenue in 2005. In 2004, Sprint, via a vendor relationship with IBM, represented about 13% of MDC revenue.

MDC's ten largest clients (by revenue) accounted for 39%, 35% and 34% of 2006, 2005 and 2004 revenue, respectively.
Top executive: Miles S. Nadal, chmn & CEO
Headquarters: MDC Partners / 45 Hazelton Ave., Toronto, Ont. M5R 2E3 / Phone: (416) 960-9000 / Fax: (416) 960-9555
U.S. Headquarters: 950 Third Ave. 5th Fl., New York, N.Y. 10014 / Phone: (646) 429-1800 / URL: www.mdc-partners.com

An asterisk (*) indicates figures are Ad Age estimates.

Traditional agencies
Cliff Freeman & Partners*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$12.0$14.0-14.3
Offices20062005% chg
U.S.110.0
Notes: Cliff Freeman & Partners, a traditional ad agency, sold a 19.9% stake to MDC in March 2004; MDC had an option to buy the rest in 2007. The agency's sellers had a chance for additional pay after two years if the agency met earnings targets, but MDC said in its March 2006 10-K: "Based on current earnings levels, the additional consideration is nil." MDC added in its March 2007 10-K: "Based on current earnings levels, no additional compensation is expected to be paid." MDC in fourth quarter 2006 recorded an impairment charge of $800,000 on its investment in the agency. The agency, founded in 1987 as a subsidiary of Saatchi & Saatchi, in 1999 was sold to Cliff Freeman, agency chairman-chief creative officer, among others. Jeff McClelland became the agency's first CEO in November 2005.
Top executive: Cliff Freeman, chmn & chief creative officer; Jeff McClelland, CEO
Headquarters: Cliff Freeman & Partners / 375 Hudson St., New York, N.Y. 10014 / Phone: (212) 463-3200 / Fax: (212) 463-3225 / URL: www.clifffreeman.com


Crispin Porter & Bogusky*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$86.4$54.757.9
Employees20062005% chg
Worldwide59837858.2
U.S.59037656.9
Non-U.S. 8 2 300.0
Offices20062005% chg
U.S.3250.0
Notes: Crispin Porter & Bogusky is a full-service agency based in Miami. MDC reported Crispin Porter's revenue at $86.4 million in 2006, up a stunning 58% from revenue of $54.7 million in 2005, as the agency's operating income climbed to $15.1 million from $11.4 million. MDC fully consolidated Crispin Porter in its financials as of September 2004 even though it only owns a 49% stake. The departure of Volkswagen of America's director of brand innovation, Kerri Martin, who left the marketer in January 2007 after a 20-month stint, did not have an immediate impact on the high-profile VW business at Crispin, to whom she directed the $350 million account from Havas' Arnold. Crispin Porter in March 2007 abruptly resigned the Miller Brewing Co. account, ending a troubled relationship. Shortly after the agency walked, a Miller insider said that if Crispin had stayed on, it was "inevitable" that the brewer would have begun a review on its mainstay Lite brand within a month. Crispin Porter in 2006 opened a branch in Boulder, Colo., shifting a large part of its creative operations from Miami. MDC has an option to extend its ownership in Crispin to 60% in 2007.
Top executive: Charles K. Porter, chmn
Headquarters: Crispin Porter & Bogusky / 3390 Mary St., Miami, Fla. 33133 / Phone: (305) 859-2070 / Fax: (305) 854-3419 / URL: www.cpbgroup.com


Fletcher Martin
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$8.0$8.00.0
Employees20062005% chg
U.S.70700.0
Offices20062005% chg
U.S.110.0
Notes: Fletcher Martin is a traditional agency with sequences in business-to-business and financial services. It is 85% owned by MDC. MDC has an option to acquire the rest of the agency in 2007.
Top executive: Andy Fletcher, pres & CEO
Headquarters: Fletcher Martin / 303 Peachtree Center Ave., Ste. 625, Atlanta, Ga. 30303 / Phone: (404) 221-1188 / Fax: (404) 223-1136 / URL: www.fletchermartin.com


Kirshenbaum Bond & Partners*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$50.2$47.45.9
Employees20062005% chg
U.S.25121317.8
Offices20062005% chg
U.S.12-50.0
Notes: Kirshenbaum Bond & Partners is set to gain a few key clients of MDC sibling Margeotes Fertitta Powell with the imminent dissolving of MFP into Kirshenbaum. MFP's Neil Powell, chief creative officer, launched his own agency under the auspices of MDC and was expected to claim some of the MFP client list as well. Client defections have hurt MFP in recent years, particularly the losses of Godiva Chocolates, SunCom, McGraw-Hill and Regent (Radisson hotels) in 2006. Only a few members of MFP's staff will joing KB&P. CEO George Fertitta is leaving the agency he helped found in 1973. KB&P made a major management change in 2006, naming Aaron Reitkopf in August 2006 as group president, a new post, from president, occurring shortly after Rob Feakins left the agency as executive creative director and vice chairman at mid-year to become president, chief creative officer for Publicis USA in New York. Kirshenbaum Bond, founded in 1987, is 60% owned by MDC Partners, which has an option to buy up to 100% of the shop in 2008. Kirshenbaum Bond is based in New York and operates interactive unit Dotglu, PR agency Lime, and media specialist shop Media Kitchen. Kirshenbaum Bond closed its San Francisco service office effective July 31, 2006. (In its March 2007 10-K, MDC reported a charge to operations of $2.6 million for lease termination and leasehold writeoffs related to an agency that "closed an office on the West Coast" in August 2006.) Media Kitchen revenue, estimated at $10 million, is not included in the Kirshenbaum Bond total. In 2006, Kirshenbaum Bond started WhiteSpace, specializing in marketing strategy. In March 2006, Lime bought Jericho Communications, New York.
Top executive: Jon Bond & Richard Kirshenbaum, co-chmn
Headquarters: Kirshenbaum Bond & Partners / 160 Varick St., New York, N.Y. 10013 / Phone: (212) 633-0080 / Fax: (212) 633-1711 / URL: www.kb.com


Mono
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$3.5NANA
Employees20062005% chg
U.S.20NANA
Offices20062005% chg
U.S.110.0
Notes: Mono was founded in February 2004 by ex- Carmichael Lynch executive James Scott, and two former Fallon staffers, Michael Hart and Chris Lange. The agency is 49.9% owned by MDC.
Top executive: James Scott, mg ptnr & co-founder
Headquarters: Mono / 2902 Garfield Ave. S, Minneapolis, Minn. 55408 / Phone: (612) 822-4135 / Fax: (612) 822-4136 / URL: www.mono-1.com


VitroRobertson*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$6.4$6.40.0
Employees20062005% chg
U.S.74NANA
Offices20062005% chg
U.S.1NANA
Notes: VitroRobertson, 68% owned by MDC, is a traditional agency. MDC, which bought its stake in July 2004 for $7.6 million, has an option to gain full ownership in 2011. The 2005 revenue estimate is revised.
Top executive: John Vitro & John Robertson, ptnrs & co-creative dirs
Headquarters: VitroRobertson / 625 Broadway, 4th Fl., San Diego, Calif. 92101-5403 / Phone: (619) 234-0408 / Fax: (619) 234-4015 / URL: www.vitrorobertson.com


Yamamoto Moss Mackenzie
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$8.1$5.157.1
Employees20062005% chg
U.S.542892.9
Offices20062005% chg
U.S.110.0
Notes: Yamamoto Moss Mackenzie is the result of the merging of Yamamoto-Moss and Mackenzie, two Minneapolis agencies that together market themselves as a brand agency, involved in logo design, naming, positioning, packaging, environmental design and identity systems. YM was acquired in October 2006. MacKenzie, founded in 1997 and part of MDC since 2000, brought to the merger a specialization in financial services, healthcare, technology and retail. Yamamoto-Moss, founded in 1979 by principals Hideki Yamamoto and Miranda Moss, added a design-oriented specialty that focuses on creative, branding and strategy to the merged unit. Yamamoto Moss Mackenzie in April 2007 hired J. Mark Jones as chief operating officer, a new post. He had been head of U.S. operations for Alea Group Holdings Ltd.
Top executive: Andrew Mackenzie, pres & CEO
Headquarters: Yamamoto Moss Mackenzie / 505 N. Hwy. 169, Waterford Park, Ste. 350, Minneapolis, Minn. 55441 / Phone: (763) 417-7300 / Fax: (763) 417-7301 / URL: www.mackenziemarketing.com


Integrated marketing agencies
Accent Marketing Services
Agency totals
Revenue ($ in millions)20062005% chg
Worldwide$84.9$67.326.3
U.S.$71.1$67.35.8
Non-U.S.$13.7NANA
Employees20062005% chg
Worldwide2,9121,90452.9
U.S.2,5961,90036.6
Non-U.S. 316 4 NA
Offices20062005% chg
Worldwide121020.0
U.S.10825.0
Non-U.S.220.0
Notes: Accent Marketing Services is an integrated marketing agency involved in CRM. Accent Marketing largely is a customer services company handling in-bound customer services by offering back-in support for clients like Sprint, among the clients for which it manages loyalty projects, retention efforts and customer billings queries. MDC boosted its ownership to 93.7% in 2006 by buying an additional 4.3% of the agency. It has an option to extend that ownership to 99.5% this year.
Top executive: Kevin Foley, pres
Headquarters: Accent Marketing Services / 400 Missouri Ave., Ste. 107, Jeffersonville, Ind. 47130 / Phone: (812) 206-6200 / Fax: (812) 206-6201 / URL: www.accentonline.com

Henderson Bas
Notes: Henderson Bas is largely an interactive agency with a direct marketing component. In April 2002 it consolidated its operations into its Toronto office, eliminating its Portland, Ore., shop. It is 65% owned by MDC, which has an option to increase that percentage to 100% by the end of 2007.
Top executive: Dawna Henderson, pres & mg ptnr
Headquarters: Henderson Bas / 479 Wellington St. W., Toronto, Ont. M5V 1E7 / Phone: (416) 977-6660 / Fax: (416) 977-2226 / URL: www.theniceagency.com


Source Marketing
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$14.1$15.0-6.0
Employees20062005% chg
U.S.524223.8
Offices20062005% chg
U.S.3250.0
Notes: Source Marketing is an integrated marketing agency specializing in trade marketing, local and field programming and trade/co-marketing among its promotional services. The agency opened an office in San Francisco in early 2006. MDC as of April 2007 owned 80% of Source.
Top executive: Derek Correia, CEO
Headquarters: Source Marketing / 15 Ketchum St., Westport, Conn. 06880 / Phone: (203) 291-4000 / Fax: (203) 291-4011 / URL: www.source-marketing.com


TargetCom*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$4.0NANA
Employees20062005% chg
U.S.25250.0
Offices20062005% chg
U.S.110.0
Notes: TargetCom is an integrated marketing agency specializing in direct marketing. It became part of MDC in 2000 and is fully owned by MDC.
Top executive: Nora Ligurotis, pres
Headquarters: TargetCom / 444 N. Michigan Ave., 27th Fl., Chicago, Ill. 60611 / Phone: (312) 822-1100 / Fax: (312) 822-9628 / URL: www.targetcom.com


Zyman Group*
Agency totals
Revenue ($ in millions)20062005% chg
U.S.$46.4$60.5-23.3
Offices20062005% chg
U.S.5NANA
Non-U.S.2NANA
Notes: Zyman Group, a marketing consultancy run by one-time Coca-Cola Co. executive Sergio Zyman, became part of MDC in 2005 when the holding company bought 62% of the firm for $64.6 million. Zyman could have received an additional payout up to $12 million if Zyman met "specified financial targets" for the 12 month periods ending June 2006 and June 2007. But Zyman failed to meet required targets for the 12 months ended June 2006, and "based on Zyman Group's expected performance for the twelve months ended June 30, 2007, such financial targets are not expected to be met," MDC said in its March 2007 10-K. Zyman had its headquarters in Atlanta and, as of March 2007, "offices or satellites" in Chicago, London, Miami, Minneapolis, Mexico City and New York. Zyman in March 2007 named Gary Bassell, a former chairman-CEO of Hispanic shop Bravo Group, as managing principal and co-lead of Zyman's multicultural practice, based in Miami. MDC can increase its stake in Zyman up to 67.6% in 2008 and up to 93.2% in 2013.
Top executive: Sergio Zyman, chmn
Headquarters: Zyman Group / 950 East Paces Ferry Rd. NE Ste. 3300, Atlanta, Ga. 30326 / Phone: (404) 682-5400 / Fax: / URL: www.zyman.com


Media specialist agencies
Media Kitchen*
Notes: Media Kitchen began as the unbundled media unit of Kirshenbaum Bond but is increasingly becoming a media-neutral company involved in brand strategy. Barry Lowenthal became managing partner and president of Media Kitchen in January 2006, replacing Paul Woolmington. Mr. Woolmington left in December 2005 to co-run the new agency, Naked in New York, with M.T. Carney. Mr. Lowenthal had previously been media director of Bartle Bogle Hegarty.
Top executive: Barry Lowenthal, mg ptnr & pres
Headquarters: Media Kitchen / 160 Varrick St., 4th Fl., New York, N.Y. 10013 / Phone: (646) 336-9400 / Fax: (646) 336-6627 / URL: www.mediakitchen.tv

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