Battling to Bounce Back

After a tough year in the advertising game, could a shake-up be ahead among African American agencies?

determined to survive with that singular focus. Then there are those companies that have diversified their focus and are willing to grow and evolve with the market and with the industry,” he says. “Those companies that have diversified are those that are going to thrive.”

Advertising Agencies Eligibility
An advertising agency must be at least 51% black-owned and have been fully operational for the previous calendar year. To qualify as a full-service advertising agency, the company must provide creative services as well as make media placements: purchasing time and/or space for a clients’ advertising. Companies that only provide consulting services, create or produce advertising, or do media placements do not qualify as full-service agencies. (We canvassed the Standard Directory of Advertising Agencies, combed industry publications, and made inquiries in the field to identify full-service agencies.)

An agency’s financial status is measured in terms of billings–monies allocated by an advertiser to its agency to buy time on television and/or radio or space in publications. These media outlets then pay a commission to the agency in the form of a discount, typically between 15% and 20%, which the agency counts as revenue. Other sources of revenue include production fees that the agency charges to its clients and fees for adjunct services such as public relations, consulting, and promotional work. Our ranking of the 15 top agencies is based on a combined total of actualized billings, in addition to capitalized billings (commissions that haven’t been paid but the media buys were completed), and other agency fees.

Although it’s been an issue for black ad shops for some time, the outcome of last year’s investigation into the minority hiring practices of 16 general-market firms on Madison Avenue could end up making the problem even worse.

B.E. 100s Flashback
The first time BLACK ENTERPRISE ranked our Top 15 black advertising agencies was in 1973; those firms produced collective billings of $31.4 million. In 1998, our editors revisited the ranking because of changes in the industry. Some black firms, once the go-to agencies to reach African American consumers, were now merging with majority companies, and others were competing with mainstream agencies for accounts. The 20 agencies ranked that year–only three from the original list had survived–had collective billings of $794 million. Today, BE agencies (the list is scaled back to 15 again) continue to be cut down as ad giants persist in invading their turf.

Advertising Summary:

  2006 2005 % Change
Employees 1,076 1,049 2.57
Billings* $2,109.134 $1,963.207 7.43

*In millions of dollars, to the nearest thousand. as of Dec. 31. Prepared by B.E. Research.Reviewed by the Certified PublicAccounting firm Edwards & Co.

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