Dogfight On Madison Avenue

Advertising firms zero in on new niches while they battle mainstream firms for accounts

were sent to these agencies, those that responded and met the criteria were placed into our ranking.

To qualify as a full-service advertising agency, the company has to make media
placements — that is, purchase time and/or space for its clients’ advertising. Companies that ony provide consulting services, or only create or produce advertising or only do media placements do not qualify as full-service agencies.

We elected to list only the 20 highest-earning agencies, based on 1998 performance, on the assumption that these firms were most likely to have at least one national account and a minimum of $2 million in billings.

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 and other print media. These media outlets then pay a commission back to the agency in the form of a discount in the 15%-22% range, which the agency counts as revenue. Other sources of revenue for an agency include production fees that the agency charges the client to produce the advertising, and fees for adjunct services such as public relations, consulting and promotional work.

Our ranking is based on a combined total of actualized billings plus capitalized billings (where commissions have not yet been paid, but the media buys were completed) and other agency fees reported as revenues, an accepted industry practice for reporting earnings status. In most all cases, this accounts for the differences between Red Book figures and agency-reported figures.

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