Gross Profit Margin

Gross Profit Margin is ultimately the most critical metric to be tracked within your agency. It answers the question: “Are we providing our services to customers in a profitable way?” Pricing in order to maintain sufficient margins is especially difficult in the world of advertising. Unforeseen expenses and changes in client budgets can quickly turn a profitable project into a loss. Maintaining an appropriate utilization across the organization and tracking project by project profitability helps to ensure that your gross profit margin as a company stays on track.

  • 32.9%
  • 46.5%
  • 60.1%
  • > 61%
6.09% Average revenue growth. Source: Finlistics

The strongest brands out there are the ones that are relentlessly relevant.”

Project Profitability

With the advent of digital media, perhaps no industry was changed more than Advertising. The well-liked Agency of Record model has been largely replaced with a project-based approach, necessitating agencies to adapt or fall victim to the new highly competitive advertising landscape that exists today. Because agencies can no longer rely on lengthy customer relationships with steady work, it’s critical to ensure the projects you undertake are profitable and efficient. It’s vital to track your organization’s profitability as a whole, but to also understand profitability at the client and project level as well in order to make necessary adjustments that can have a company-wide impact.

  • 3.32%
  • 7.13%
  • 11.1%
  • 15.07%


As an advertising agency, your most important assets are your employees and their skillsets. Utilization rate indicates how much time your employees are spending on client creative work versus internal work. Optimizing employee utilization maximizes profits and allows your business to take on more projects, hire the best talent and attract high-caliber clients. It’s important to set realistic utilization targets for your employees and compensate them for their achievements. A utilization target that is too high may result in employee burn-out, while a target that is too low won’t incentivize employees to be more productive and reach their full potential. Having a clear view into your company’s utilization rate is critical to recognizing inefficiencies, improving staffing, identifying training opportunities and increasing profitability.

  • 62.8%
  • 70%
  • 72.7%
  • 78%
Best in class

Revenue Growth





Revenue Growth

This metric indicates the rate at which your agency’s total revenue is growing.







The percentage of time that your consultants are billing clients. The higher the better, until it gets to a point where it negatively impacts employee morale. The typical target utilization for agencies is 80%.

Gross Profit




> 61%

Gross Profit

Percentage of revenue after direct costs. For an advertising agency, direct costs include the cost of buying digital media, materials for physical advertisements and staffing costs.

Spend Under

Decentralized buying

40 – 60%

60 – 85%

> 85%

Spend Under

The percentage of procurement spend managed by a contract. Purchasing goods and services using pre-negotiated contracts typically allows for better price negotiation. The higher this percentage, the more likely that your agency is saving money on goods and services.

Project Profitability






The amount of revenue generated above and beyond the expenses incurred on a project by project basis. The higher this percentage, the more profitable each project is.

Days Sales Outstanding

146 days

45 days

32 days

< 30 days

Days Sales

How many days, on average, it takes your clients to pay invoices. The lower this number is, the better. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your receivables are being managed.

Finance FTE per $50M Revenue

> 3.5 FTE

3.5 FTE

2.6 FTE

1.8 FTE

Finance FTE per
$50M Revenue

A calculation of how many FTE (Full Time Equivalent) Finance department resources are required for each $50M in revenue earned.

IT FTE Per $50M Revenue

> 4 FTE


2.9 FTE

1.8 FTE

IT FTE Per $50M Revenue

A calculation of how many FTE (Full Time Equivalent) IT department resources are required for each $50M in revenue earned.

Source(s): Finlistics



Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.


Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Best in Class

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.


You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.