2022 Best Practices Study

Pro Forma Expenses (expressed as a percentage of pro forma net revenues)

AGENCIES WITH REVENUES OF:

<$1.25M $1.25-$2.5M $2.5-$5M $5-$10M $10-$25M >$25M

Compensation

Payroll Employees

36.8%

37.2%

45.0%

47.2%

49.6%

52.6%

"Non-employees" (1099 Prods/outsourced)

2.7%

2.2%

1.7%

2.6%

3.6%

2.7%

Total Payroll Benefits Payroll Taxes

39.5%

39.4%

46.6%

49.8%

53.2%

55.3%

3.8% 0.9% 3.4% 0.5% 8.7%

3.4% 1.7% 2.9% 0.1% 8.2%

3.5% 1.8% 3.3% 0.1% 8.7%

3.1% 1.6% 3.3% 0.2% 8.1%

3.0% 1.4% 3.3% 0.2% 7.9%

2.9% 1.9% 3.3% 0.2% 8.4%

Retirement Insurance

Other

Total Benefits

Total Compensation

48.2%

47.5%

55.4%

57.9%

61.0%

63.6%

Selling Travel and Ent./Conventions

0.9% 0.5% 1.8% 3.3% 4.8% 0.3% 3.5% 0.9% 0.2% 0.9% 1.0% 0.4% 1.6% 0.7% 0.0% 0.4% 0.6% 0.5% 0.7% 0.0% 0.0% 0.0% 0.0% 0.7% 68.1% 31.9% 23.9% 16.0%

0.5% 0.5% 1.6% 2.7% 3.8% 0.4% 3.0% 0.5% 0.2% 0.6% 0.8% 0.3% 1.3% 0.7% 0.0% 0.3% 0.3% 0.6% 1.8% 0.0% 0.0% 0.0% 0.0% 1.8% 64.7% 35.3% 32.7% 12.7%

0.8% 0.5% 1.2% 2.5% 3.7% 0.4% 2.6% 0.5% 0.2% 0.7% 0.8% 0.4% 1.3% 0.8% 0.1% 0.5% 0.3% 0.3% 0.8% 0.0% 0.0% 0.0% 0.0% 0.8% 71.3% 28.7% 27.8% 12.7%

0.6% 0.5% 0.9% 2.0% 3.7% 0.3% 2.6% 0.5% 0.2% 0.5% 0.7% 0.3% 1.1% 0.8% 0.1% 0.5% 0.2% 0.4% 0.5% 0.0% 0.0% 0.0% 0.0% 0.5% 72.2% 27.8% 27.0% 11.8%

0.8% 0.4% 0.8% 2.1% 3.5% 0.4% 2.7% 0.4% 0.1% 0.4% 0.8% 0.3% 1.2% 1.0% 0.1% 1.0% 0.2% 0.1% 0.5% 0.0% 0.0% 0.0% 0.0% 0.5% 75.9% 24.1% 24.7% 12.2%

1.0% 0.4% 0.9% 2.2% 3.2% 0.2% 2.5% 0.4% 0.1% 0.2% 0.5% 0.3% 1.0% 1.0% 0.1% 1.1% 0.2% 0.4% 0.9% 0.0% 0.0% 0.0% 0.0% 0.9% 77.9% 22.1% 23.0% 11.1%

Automobile Expense Advertising/Promotions

Total Selling

Operating Occupancy Expenses 1

Office Equipment Expenses

IT Expenses Telephone

Postage

Supplies/Printing

Dues/Subscriptions/Contributions

Taxes/Licenses

Insurance

Professional Fees

Bad Debts

Outside Services Education/Training

Miscellaneous

Total Operating Administrative Depreciation

Amortization of Intangibles

Officer Life

Interest

Other

Total Administrative

TOTAL EXPENSES (PRO FORMA)

PRO FORMA PRE-TAX PROFIT/LOSS

PRO FORMA EBITDA 2

1 For firms that own their building and reported a much lower than peer expense load, we have normalized their occupancy expense. 2 Pro Forma EBITDA reflects normalized income and expenses after discretionary owner expenses are eliminated. Also excludes all administrative expenses.

Cross Category Comparison

56