Other rankings include the top 25 U.S. independent agencies by worldwide revenue, the top 15 independent U.S. healthcare agencies, leading U.S. multicultural agencies (Hispanic, African-American and Asian-American), a listing of the world's independent agency networks by revenue, and rankings by marketing services disciplines-direct marketing, sales promotion and interactive.
Ad agency rankings are based on revenue-the sum of commissions on media billings, markup on materials and services, and agency fees-and marketing services shops on revenue equivalency, gross profit (sales less cost of sales). Most agencies submit revenue and other data on an Ad Age questionnaire, posted online at AdvertisingAge.com/arq.
However, publicly held marketing organizations and their agencies in large part did not supply revenue for their various ad agency and marketing service brands, citing the Sarbanes-Oxley Act. The act, passed by Congress in 2002, is designed to tighten rules on disclosure and make the books more transparent. Ad Age estimated revenue for their agencies.
Ad Age applies a 75%-rule to determine agency type. In pulling the rankings, the editors first determine if an agency is traditional or marketing services. It cannot be both for the purposes of the ranking.
A shop is identified as marketing services by the revenue percentage generated by three key disciplines-direct marketing, sales promotion and interactive. If the sum of these three accounts form 75% or more of the agency's revenue, the agency is considered a marketing services shop and it is ranked by its total revenue stream, which may or may not be the sum of these parts.
There also are separate rankings for each of these disciplines by an agency's returns from each (Page S-15).
However, in these discipline rankings all agencies, traditional or marketing services, can be ranked. Breakouts by discipline are becoming harder for agencies to determine now that the lines are blurring between the many marketing services offerings. Where Ad Age estimates those breakouts, it runs those estimates by the agencies.
An agency receives a "traditional" qualifier if the sum of the three key marketing services disciplines is not more than 75% of the agency's total. In this case, the agency appears in the agency brand ranking at 100% of itself.
The only exception is a shop identified as healthcare-one in which healthcare revenue is at least 75% of its total. Healthcare shops are not ranked among traditional agencies or marketing services shops. They are ranked separately (see Top Healthcare Agencies, Page S-12).
However, if healthcare revenue at a shop is less than 75%, then the shop is considered "traditional" and ranked with agency brands.
Billings are the ranking metric for media specialist companies (see Page S-4). Paris-based Recma Institute projected billings for these companies and Ad Age estimated their revenue from Recma totals. A top 20 U.S. media specialist ranking is available at AdvertisingAge.com.
Average annual exchange rates-posted with the questionnaires-are applied to foreign currencies. Ad Age's historic treatment of currencies leaves each year with its own rate.
Staff for this report: R. Craig Endicott, Kevin Brown, Scott MacDonald, Mark Schumann, Maria Raynes, Lacy Weathersbee, Maureen Morrison, Ruth Reader, Mike Ryan and Ken Wylie.