MDC Separates the Cool Kids From the Geeks

Last Updated Jan 8, 2010 6:35 AM EST

MDC Partners (MDCA) has reorganized the way it reports revenues from its agencies, which include Ad Age's "Agency of the Decade," Crispin Porter + Bogusky.

The reorg puts MDC's various agencies into two baskets, which might facetiously be labeled "cool" (glamorous, well-known ad agencies such as CP+B and Kirshenbaum Bond Senecal + Partners) and "boring" (obscure data analytics and research shops such as Accent and Computer Composition Corp.)

You can find the full breakdown in this SEC filing, which MDC made just before Christmas. MDC produced a slide show rationalizing the maneuver here. (It has lots of words like "leverage" and "integrated" in it.)

MDC also restated a series of old income statements as if they had been done under the new system, and this gives us an idea of what kind of revenues these agencies earn.

We always knew that CP+B and KBS+P were small shops -- MDC only books $584 million in revenues every year from two dozen businesses. MDC puts the "cool" basket at $364 million in 2008. By extrapolation we can guess that this year the CP+B/KBS+P side will bring in around $356 million between them and their sister shops, if MDC hits its total revenue guidance of $575 million. There are 15 other agencies in the cool basket, including shops I've never heard of such as HL Group and Hello Design. If agency revenue is roughly 10 percent of billings, then CP+B, KBS+P and those 15 smaller shops are sharing about $3.6 billion in accounts.

The "cool" basket brings in about 62 percent of MDC's total revenues, which is interesting because on page 9 of the slide show we find that MDC claims 71 percent of its revenues come from "digital" or "non-traditional" marketing, and only 29 percent comes from old fashioned advertising. The explanation for the difference is in the small print. MDC counts PR, promotions, research and direct marketing all as "non-traditional" activities, which will come as a surprise to those of us who regarded these techniques as decades-old disciplines.

And finally: MDC currently owes Alex Bogusky, Rich Kirshenbaum, Jon Bond et al $67.5 million in earnout payments, due next year, according to page 13 of this presentation.