Capstrat: Agency Business Report 2007

There's something to be said for a firm that can pull off a Teen Tobacco Prevention campaign in Big Tobacco's shadow.

There's something to be said for a firm that can pull off a Teen Tobacco Prevention campaign in Big Tobacco's shadow.

"It was like trying to execute a beer prevention campaign in Milwaukee," CEO Ken Eudy says. "But some 30,000 teens last year did not start smoking as result, so it was one of the really gratifying moments."

Recruitment and retention are still priorities, despite having added 16 new bodies, "but we're facing the same challenges as other firms," Eudy says.

The Web is a "fulcrum in our universe," Eudy says. As such, Capstrat will deepen its capabilities in interactive communications, dynamic media and government relations, and employee marketing. The firm increased its external training budget by 25%, and doubled its "Phi Beta Capstrat" internal training curriculum.

Principal: Ken Eudy, CEO
Ownership: Independent
Offices: Two, Raleigh, NC, and Washington, DC

Staff
Nearly 33% growth to 73 staffers from 55. Turnover settled at 19%, with no senior hires or departures stated.

Regional performance
The Raleigh, NC, office services most regional and national clients. The DC office has made some recent hires. It focuses on federal government issues, especially bud- get, healthcare, and entitlements such as Social Security, Medicare, and Medicaid. Capstrat endowed a full scholarship at the University of North Carolina's School of Journalism for minorities to study PR.

Practice areas
Focuses on five industries - tech (23%), healthcare (27%), economic development (27%), education (5%), and financial services (18%). Added an engagement marketing practice, including a "social media developer to help clients stay ahead of the changing communications landscape."

Accounts
Key wins included GlaxoSmithKline, Dataflux, Siemens Medical Solutions, Council of Better Business Bureaus. Expanded global work with Deloitte & Touche and Quintiles Transnational. Most clients are not on a retainer.

Financial performance
Revenues of $8.8 million (a 24% rise), with 18% profit margin; 80% of growth organic, 20% new business.

Agency's full questionnaire follows below:

Name of parent division/company
N/A

Name of subsidiary companies
N/A

Has your ownership status changed in the past year? If yes, please explain
NO

Name of global CEO and US CEO (or most senior equivalent)
KEN EUDY

What is your current headcount?
73

How has your headcount changed since FY 2005?
We saw a net increase of 55-73

What was the percentage of staff turnover in 2006?
We had a turnover rate of 19%

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company
N/A

What senior staff have departed the firm? Please state name and previous title
N/A

Please list any other senior management changes, including restructures and significant, senior-level promotions
N/A

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

How many wholly owned offices do you have globally? Please list with agency names and cities under the following headings. Add majority-owned offices in parentheses.
North America RALEIGH, WASHINGTON, DC

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.
N/A

What offices opened in 2006 or early 2007?
N/A

What offices closed in 2006 or early 2007?
NONE

Which regions, US and globally, are growing, and why?
RALEIGH, NC - over the years, we've built a team of strategists, designers, media relations experts, web specialists and others that defy the standard label of PR firm or ad agency. Today, Capstrat is a strategic communications firm that helps clients deliver their messages with the greatest impact.

How many practice areas do you have?
AREAS OF INTEREST: Capstrat works primarily in five industries - technology, healthcare, economic development, education and financial services.

Which ones are new?
N/A

Of those, which ones are part of the core strategy of the agency?
All of the listed above are part of Capstrat's core strategy.

Which practice areas have been phased out in the past year?
None

What practice areas showed the most growth?
Professional Services, Healthcare, Biotech, Technology

Which practice areas showed the least growth?
N/A

What is the distribution of accounts across practice areas?
HEALTH CARE-27% ECONOMIC DEVELOPMENT-27% TECHNOLOGY-23% PROFESSIONAL SERVICES-18% EDUCATION-5%

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
GLAXOSMITHKLINE, DATAFLUX, SIEMENS MEDICAL SOLUTIONS, COUNCIL OF BETTER BUSINESS BUREAUS

Of your 2006 wins, how many were across three or more countries?
0

What key accounts did you lose in 2006? If based outside the US, or are global, please state regions.
0

Did you expand any existing accounts into new domestic or international markets or sectors?
Yes, we expanded our global work with Deloitte and Touche and Quintiles Transnational.

What proportion of your clients are on a retainer? Has this changed over the past year?
Most of our clients are not on a retainer basis; they are on are on a project basis No.

What was your 2006 global (including US) revenue?
18,500,000 gross; 8,800,000 net revenue

What was the % change over 2005 global revenue
84% gross, 24% net

What was your global profit margin in 2006?
18%

What was your 2006 US revenue?
18,500,000 gross, 8,800,000 net

What was the % change over 2005 US revenue
84% gross, 24% net

What was your US profit margin in 2006?
18%

Did you experience top-line or bottom-line growth in the past year, or both?
We have equally experienced both types of growth.

How much of your growth was organic, and how much was due to new business won?
~80% ORGANIC ~20% NEW

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
Our performance exceeded our expectations for the year largely due to expanding relationships with existing clients

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