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Advertisers are asking for more "marketing" help, whether it's targeted marketing or a sales clincher at the cheese counter.

This need is sending them increasingly to marketing services agencies, evidenced in this Agency Report by revenue growth of multiple-service specialty shops.

The two components of marketing services for this report -- direct response and sales promotion -- grew a respective 19.5% to $1.6 billion and 14.7% to $1.3 billion in U.S. revenue. Ad agencies advanced 11.9% to about $10 billion.


Carlson Marketing Group solidified its lead in the marketing services ranking. The Minneapolis-based company grew 14% to about $221.1 million in U.S. gross income; its returns split 72/23 sales promotion to direct. Gross income is an agency term for revenue.

Gage Marketing Group, an independent spinoff agency from Carlson, continued as a bridesmaid with $130.9 million, up 6.9%, and a split of 65/35 promotion to direct. For third, Rapp Collins Worldwide slipped past Wunderman Cato Johnson, both New York, buttressed by a 21.1% growth in revenue to Wunderman's flat 0.9% uptick.

On a worldwide basis, Carlson drew on international expansion during the year, upping its overall gross income to $285.2 million. The direct component of marketing services -- the home of database management services -- is the side that drives international expansion.


Financial data on marketing services reported are amended and clarified by interviews, with reference to known standards and benchmarks for the industry.

One such standard, established by Association of Promotion Marketing Agencies in 1997, benchmarks average revenue per employee of a sales promotion agency at $109,916, with a 30% plus or minus variance. Advertising Age's own revenue-head count average for the 13 promotion agencies in the largest 100 U.S. agency brands (see chart on Page S-4) is $111,515, down 6.6%. The 13 direct-response agencies in the same ranking have a comparable $122,880 revenue-head count, up 10.7%.

Averages, however, don't fully account for the service add-ons affecting this industry, where the sum of marketing services no longer is just the sum of promotion and direct-marketing subsets. These two are featured in the Agency Report because of their strong media component, a common denominator with the ad agency universe.


The demand for marketing services to broaden the range of services continually sends these agencies into new arenas.

"We don't buy media as a standard service," reports Gage's Geoff Gage, VP-corporate communications. "But we do if that's what our client needs."

Much of the industry is shifting, broadening, blending, coming together in a seamless whole of marketing functions.

"Today we need to be qualified to solve the client's problem," explains James Mack, president of Frankel & Co., Chicago, "to offer a broad solution, not just advertising, direct, sports, or promotion. In the past 10 years, our industry has moved to total marketing from single disciplines."

From the direct side of marketing services, Rapp Collins Worldwide Chairman-CEO Steven Dapper says what his agency continues to bring to the client is the "ability to look at focused targets. That gives the direct approach accountability.

"Lost, though, has been the responsibility for brand marketing," says Mr. Dapper, noting that in the '50s, '60s and '70s, ad agencies were the stewards of the brand, but this has moved more and more into the realm of business and marketing consultants. "All agencies in marketing need to recapture that, and with the new database technology we can develop even better customer-based targeted models to sell brands one-to-one," he says.


During the last year, the dynamic to bring more focused service to clients has hit like a meteor at many ad and marketing services agencies, both domestic and international. And it has proved to some that buying such services is quicker than developing them internally.

Snyder Communications, Bethesda, Md., a relatively unknown public agency that got its start in database marketing and product sampling, in 1998 slipped into the market to first acquire Barry Blau & Partners, a Wilton, Conn., direct shop, and then full-service ad agency Arnold Communications, Boston, and Paris-based pharmaceutical marketing services company, Publimed Promotions.

Snyder is not covered in this report because all purchase activity has occurred only in the past several months.

McCann-Erickson's take on holistic servicing of clients is McCann-Erickson World Group -- its new configuration organized to focus on specialties, from direct, promotion, healthcare, to design and PR, etc., that would circle the globe.


Draft Worldwide, Chicago, this once solely direct marketer, is collecting marketing services shops under a widening roof.

In a series of acquisitions, Draft Worldwide transformed itself in 1997 into a full-service marketing organization by adding ad agency Adler Boschetto Peebles & Partners; sales promotion house D.L. Blair Inc.; and, through a purchase by parent Interpublic Group of Cos., promotion unit Lee Hill Inc. and MCA Marketing.

Some insiders see the buying frenzy as potentially counterproductive, at least in the short-term. "Other companies are making major acquisitions to get the variety of services we offer, but that doesn't operate as one big machine, driven by solutions the client needs. This doesn't give them the ability to integrate the work into the total job they're doing for the client," says Mr. Gage.

Ever-evolving, the marketing industry still is moved by the energy of diversity of its clients and new technologies like the Internet.

Direct marketer Bronner Slosberg Humphrey, Boston, uses the Internet for brand building, not to sell package goods, in the case of the Kraft Kitchen and Dove Spa sites it has created.

"We believe the Internet plus the sales force plus events all work together to create brand loyalty," says CEO David Kenny.

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