Makovsky & Company: Agency Business Report 2007

A perennial independent and solid performer that still dotes on its clients each quarter with a separate "quality assurance" survey, Makovsky posted several new top-line clients and strong organic growth (58% new business; 42% organic) - seeing its largest growth spurt in financial/professional services and health.

A perennial independent and solid performer that still dotes on its clients each quarter with a separate "quality assurance" survey, Makovsky posted several new top-line clients and strong organic growth (58% new business; 42% organic) - seeing its largest growth spurt in financial/professional services and health.

In new media news, what started in 2005 as a sideline blossomed into a full-fledged visual communications practice, including a Web site design team. The firm also launched an "Online Fluency" practice (blogs, Web monitoring, etc.).
 
"Although we did have 80% retention in 2006, I see talent acquisition and retention to be an ongoing challenge," firm principal Ken Makovsky says. The firm also introduced a work/life balance program, including sabbaticals for tenured employees, work-at-home days, and compensation for overtime days, among other benefits.

Principal: Ken Makovsky
Ownership: Independent
Offices: One, in New York

Staff
Reported 15% turnover. Headcount up 5% (42 total). Key hires include Scott Tangney (SVP), Alyson Nikulicz (VP), John McInerney (VP). Exits included JB King (SVP) and Ed Sweeney (AVP). Kristie Kuhl was promoted to SVP, health.

Regional performance
Makovsky works in extended areas through its membership in IPREX.

Practice areas
Five including financial and professional services ($1,468,000 in 2006 revenue); health ($3,156,000); IR ($1,174,000); tech/business services ($1,321,000); and visual comms and branding ($220,000).

Accounts
Key wins include American Express, Baring Asset Management, NY Life Investment Management, Western & Southern Financial Group, Koppers Corp., Expense Management Solutions, Vonage, NPS Pharmaceuticals, and Spherics. Clients that left include Touchstone, Everlast, and Guardsmark. The client base is 85% on retainer.

Financial performance
Makovsky reported a 14% profit margin on $7,339,000 in revenue, which marks a 27% increase over 2005 revenue.

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)      
N/A

Name of subsidiary companies
N/A

Has your ownership status changed in the past year?    
No

Name of global CEO and US CEO (or most senior equivalent)
Kenneth D. Makovsky

What is your current headcount?  How has your headcount changed since FY 2005? 
42
Yes, +5%

What was the percentage of staff turnover in 2006? 
15%

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company:   
Scott Tangney
- EVP of Financial & Professional Services
Alyson Nikulicz - VP of Financial & Professional Services
John McInerney - VP Financial & Professional Services

What senior staff have departed the firm? Please state name and previous title:
JB King - SVP Financial Services; Ed Sweeney - AVP Financial Services.

Please list any other senior management changes, including restructures and significant, senior-level  promotions:  Kristie Kuhl - promoted to SVP Health from VP Health

Have you made any acquisitions in the past year, or merged with another agency?  
No

How many wholly owned offices do you have globally? 
North America: New York City

How many partly owned offices or affiliates do you operate globally?
We belong to and Ken Makovsky founded IPREX, which is the third largest worldwide public relations agency partnership comprising more than 20 countries and 35 US cities.  IPREX enables the agency to draw on the resources, knowledge and talent of over 850 public relations professionals responsible for client budgets totaling over $100 million annually.

  • North America 39 firms
  • Latin America 3 firms
  • Europe 19 firms
  • Asia Pacific 3 firms

What offices opened in 2006 or early 2007? (State when) 
N/A

What offices closed in 2006 or early 2007? (State when)  
N/A

Which regions, US and globally, are growing, and why? 
N/A

How many practice areas do you have? Please list. 
5:  Financial & Professional Services, Health, Investor Relations, Technology & Business Services, Visual Communications & Branding

Which ones are new?
N/A

Of those, which ones are part of the core strategy of the agency?
All

Which practice areas have been phased out in the past year? 
N/A

What practice areas showed the most growth? Please elucidate. 
Financial Services & Professional Services and Health.

Which practice areas showed the least growth? Please elucidate. 
Investor Relations and Technology

What is the distribution of accounts across practice areas? 
Financial & Professional Services -$1,468,000; Health - $3,156,000; Investor Relations - $1,174,000; Technology & Business Services -  $1,321,000; Visual Communications & Branding - $220,000.

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
American Express, Baring Asset Management, NY Life Investment Management, Western & Southern Financial Group (a $40 Billion Fort. 500 Corp.), Koppers Corporation ($1-billion+ specialty chemicals company), Expense Management Solutions, Vonage, NPS Pharmaceuticals, Spherics

Of your 2006 wins, how many were across three or more countries?
N/A

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions. 
Touchstone, Everlast, Guardsmark

Did you expand any existing accounts into new domestic or international markets or sectors?
No  

What proportion of your clients are on a retainer? Has this changed over the past year?
85% (retainer = annual programs chargeable monthly on fixed fee or billable time)
No

What was your 2006 global (including US) revenue?
$7,339,000

What was the % change over 2005 global revenue: 
+27%

What was your global profit margin in 2006? 
14%

What was your 2006 US revenue?
Same as above.

What was the % change over 2005 US revenue: 
Same as above.

What was your US profit margin in 2006? 
Same as above.

Did you experience top-line or bottom-line growth in the past year, or both? Please elucidate. 
Both.  The agency won several top-line clients in 2006 in addition to experiencing near record organic growth from existing clients.

How much of your growth was organic, and how much was due to new business won?  
58% - new business, 42% - organic.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
The agency met its 2006 total revenue forcast.

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