Print Published 26th Nov 2012, 12:07

Four privately-owned agencies win maximum score for financial credentials

Adam and Eve Group, Karmarama, Response One Holdings and Ptarmigan Media Holdings all achieved the maximum score for their financial credentials in the annual awards made to privately-owned marketing agencies by Marketing Services Financial Intelligence, announced today.  The scores were achieved despite the depressed economic conditions that prevented any companies achieving the maximum last year. The full report is available free to subscribers (see below).

The review of financial performance identified an unexpected upsurge in the number of agencies enjoying annual income growth of 5% or more over the last two years – 33% of them achieved such a growth rate compared with 23% in the previous year’s survey.

What we cannot ascertain is whether the surge in income reflected a market trend or – more likely – reflected a polarisation of business towards the better performing agencies at the expense of the worse ones.

Under good management, any material growth in income should flow through into bigger profits as the company becomes more productive. And that appears to have been the case. More companies achieved a 15% operating profit margin. More companies achieved an operating profit per head of at least £12,500. More companies improved their ratio of income to staff costs. And, as a result, more companies made an operating profit of £500,000 or more.

Companies showing a big improvement in ranking this year included design consultancies Radley Yeldar (up from 20th to 12th) and Jones Knowles Ritchie (up from 23rd to 13th), integrated agency Albion Brand Communications (up from 31st to 15th), media agency TCS Media Holdings (up from 34th to 19th after putting behind it the costs of an earlier staff fraud) and medical communications agency Nucleus Holdings (up from 35th to 22nd).

The “Private Plums” awards scheme was launched by Marketing Services Financial Intelligence in 2002 to draw attention to good financial management among privately owned UK marketing agencies with gross income (revenue) of £2.5 million or more. Companies are awarded up to eight “plums” for meeting various financial criteria that include revenue growth, profitability and balance sheet strength.

Winners of the maximum number of plums are likely to become some of the juiciest targets for potential acquirers – assuming they want to sell. For example, since completion of the financial period for which the companies were assessed, Adam and Eve has been acquired by Omnicom and merged with its DDB network. And Karmarama has been the subject of a management buy-in by former Financial Dynamics chairman Charles Watson with private equity backing. Reinforcing the attractiveness of the award winners, three top-scoring agencies in the previous year have also been taken over since – the controlling stake in BBH Holdings was sold by its management to Publicis Groupe, Response One has been sold to St Ives and AKQA has been acquired by WPP.