2018 Best Practices Study

(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

42.1%

42.6%

45.3%

49.9%

52.3%

53.5%

"Non-employees" (1099 Prods/outsourced)

2.9%

2.2%

2.9%

2.6%

1.4%

3.2%

Total Payroll Benefits Payroll Taxes

45.0%

44.7%

48.0%

52.5%

53.6%

56.7%

3.7% 1.6% 3.0% 0.4% 8.6% 0.8% 0.9% 2.5% 4.2% 5.4% 0.4% 3.0% 0.9% 0.3% 1.1% 0.9% 0.3% 1.7% 0.6% 0.1% 0.4% 0.4% 0.1% 1.7% 0.0% 0.0% 0.0% 0.0% 1.7%

3.4% 1.5% 2.9% 0.3% 8.2% 1.2% 0.8% 1.8% 3.8% 5.1% 0.4% 2.7% 0.7% 0.3% 0.8% 0.9% 0.6% 1.3% 0.9% 0.2% 0.3% 0.4% 1.0% 0.7% 0.0% 0.0% 0.0% 0.0% 0.7%

3.1% 2.1% 3.8% 0.1% 9.1% 0.9% 0.7% 1.3% 2.9% 3.8% 0.2% 2.4% 0.6% 0.3% 0.9% 0.8% 0.3% 1.3% 0.6% 0.1% 0.6% 0.3% 0.2% 0.9% 0.0% 0.0% 0.0% 0.0% 0.9%

3.2% 1.5% 3.2% 0.2% 8.1% 1.3% 0.7% 1.5% 3.5% 4.1% 0.4% 2.6% 0.7% 0.3% 0.6% 0.8% 0.3% 1.3% 1.1% 0.1% 1.0% 0.4% 0.2% 0.5% 0.0% 0.0% 0.0% 0.0% 0.5%

3.2% 1.5% 3.5% 0.2% 8.3% 1.3% 0.6% 1.0% 2.9% 3.7% 0.4% 2.1% 0.5% 0.2% 0.5% 0.8% 0.3% 1.1% 0.7% 0.0% 1.2% 0.3% 0.2% 1.2% 0.0% 0.0% 0.0% 0.0% 1.2%

3.0% 1.9% 3.6% 0.4% 8.9% 2.2% 0.6% 1.1% 3.8% 3.6% 0.3% 1.9% 0.4% 0.2% 0.5% 0.7% 0.4% 1.0% 1.1% 0.1% 1.3% 0.4% 0.4% 1.1% 0.0% 0.0% 0.0% 0.0% 1.1%

Retirement Insurance

Other

Total Benefits

Total Compensation

53.6%

52.9%

57.1%

60.6%

62.0%

65.5%

Selling Travel and Ent./Conventions

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

15.6%

15.7%

12.5%

13.8%

12.1%

12.4%

Amortization of Intangibles

Officer Life

Interest

Other

Total Administrative

TOTAL EXPENSES (PRO FORMA)

75.1%

73.0%

73.3%

78.4%

78.1%

82.8%

PRO FORMA PRE-TAX PROFIT/LOSS

24.9%

27.0%

26.7%

21.6%

21.9%

17.2%

PRO FORMA EBITDA 2

26.6%

27.7%

27.5%

22.1%

23.1%

18.3%

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.

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