We’ve talked about the advertising industry’s love for gross billings. But again, gross billings is a misleading metric. So much of your result is impacted by the kind of services you’re offering your client and what the cost of goods for those services is. Clearly we need to find a better way to monitor and measure the financial health of agencies.
Medium asked me to look at this issue further. If gross billings is not the right benchmark, what is? At Agency Management Institute, we teach agency owners to look at AGI or adjusted gross billings. This number is vital to tracking your agency’s health. Have you used AGI to monitor your agency’s business? What has your experience been? If you don’t, what do you used to measure your agency’s financial health? I want to hear your experiences.