2017 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

39.7%

43.7%

45.9%

49.7%

53.0%

52.7%

"Non-employees" (1099 Prods/outsourced)

2.4%

1.7%

2.6%

3.2%

1.0%

2.8%

Total Payroll Benefits Payroll Taxes

42.1%

45.5%

48.5%

52.9%

54.0%

55.5%

3.7% 1.5% 2.5% 0.5% 8.2% 0.7% 1.0% 2.7% 4.4% 4.9% 0.5% 3.3% 1.0% 0.4% 1.2% 1.0% 0.4% 1.8% 0.8% 0.0% 0.3% 0.4% 1.0% 1.4% 0.0% 0.0% 0.0% 0.0% 1.4%

3.5% 1.7% 3.1% 0.1% 8.5% 1.4% 0.8% 1.7% 3.9% 5.1% 0.5% 2.7% 0.9% 0.3% 0.8% 0.9% 0.4% 1.4% 0.9% 0.1% 0.4% 0.4% 0.6% 0.9% 0.1% 0.0% 0.0% 0.0% 1.0%

3.1% 2.2% 3.5% 0.1% 9.0% 1.0% 0.7% 1.3% 3.0% 3.9% 0.2% 2.4% 0.7% 0.3% 0.9% 0.8% 0.4% 1.3% 0.6% 0.1% 0.8% 0.4% 0.3% 0.9% 0.0% 0.0% 0.1% 0.0% 1.0%

3.2% 1.6% 3.2% 0.2% 8.1% 1.3% 0.7% 1.4% 3.4% 4.0% 0.4% 2.4% 0.7% 0.3% 0.7% 0.8% 0.3% 1.4% 1.2% 0.1% 1.2% 0.3% 0.2% 0.5% 0.0% 0.0% 0.0% 0.0% 0.5%

3.2% 1.6% 3.3% 0.2% 8.2% 1.4% 0.6% 1.1% 3.1% 3.5% 0.4% 1.9% 0.5% 0.2% 0.6% 0.8% 0.3% 1.1% 0.8% 0.1% 1.0% 0.3% 0.3% 0.8% 0.0% 0.0% 0.0% 0.0% 0.8%

2.9% 1.8% 3.4% 0.4% 8.5% 2.1% 0.6% 1.0% 3.7% 3.5% 0.3% 1.7% 0.5% 0.2% 0.5% 0.7% 0.3% 1.1% 1.0% 0.1% 1.3% 0.3% 0.3% 1.0% 0.0% 0.0% 0.0% 0.0% 1.0%

Retirement Insurance

Other

Total Benefits

Total Compensation

50.3%

53.9%

57.6%

61.0%

62.3%

64.1%

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

16.9%

15.5%

13.1%

14.1%

11.8%

11.9%

Amortization of Intangibles

Officer Life

Interest

Other

Total Administrative

TOTAL EXPENSES (PRO FORMA)

72.9%

74.3%

74.7%

79.0%

78.0%

80.7%

PRO FORMA PRE-TAX PROFIT/LOSS

27.1%

25.7%

25.3%

21.0%

22.0%

19.3%

PRO FORMA EBITDA 2

28.4%

26.6%

26.3%

21.5%

22.8%

20.4%

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.