What's Working at Small to Mid-size Ad Agencies (Home)

Many agencies lump their billing together for the purpose of their financial statements by simply listing “billings.”  Our advice is to separate categories.

For example, if you have media billings, list them separately.  Creative billings, the same, digital billings, likewise.  Take a look at the example below.

Make sure if you categorize your billings, you do the same with outside direct costs.  For example:

Breaking out all of these categories allows you to make sure the agency is getting a fair margin in each billing or sales category.  It’s one thing to look at the agency’s AGI (AGI= total agency billings minus direct outside costs) to see if the margins are acceptable but if you can do the AGI calculation on a category by category basis, you can see where you stand in each of the agency’s billings categories – allowing you to make corrections before things get out of hand.