Do you think it childish to use a set of written principles to guide the management of an advertising agency? I can only tell you that mine have proved invaluable in keeping a complicated enterprise on course. Profit and all that I do not fancy myself as a financial wizard, but I have learned a thing or two from my partner Shelby Page, who has presided over the finances of Ogilvy & Mather since the first day. The average profit in agencies is less than 1 per cent after taxes. If you chisel on service, you can make more than that, but your clients will leave you. If your service is too generous, your clients will love you, but you will go broke. Size and profit are not the same thing. In 1981, Ogilvy & Mather made more profit than an agency which bills twice as much. Agencies add new services the way universities add new courses. Nothing wrong with that if you also discontinue services which have outlived their relevance. To keep your boat moving through the water, keep scraping the barnacles off its bottom. Seven of the twelve biggest agencies are public companies. Their share prices have increased 439 per cent during the last ten years, compared with 37 per cent for Standard & Poor’s 500. Many security analysts still believe that agencies are a poor investment. Not so Warren Buffett, one of the most successful investors in the world. He has taken substantial positions in three publicly held agencies, and is quoted as saying, ‘The best business is a royalty on the growth of others, requiring very little capital itself…such as the top international advertising agencies.’ If you read the advertising columns in newspapers, you get the impression that the agency business is dangerously unstable. The reason is that the newspapers only report movements of accounts from one agency to another. Yet only 4 per cent of total US advertising changes agencies during a year. The 25 biggest agencies in 1972 are, with only one exception, the 25 biggest today, 11 years later. Eight of the top ten are in their fifth or sixth generation of management. Only Ogilvy & Mather has its founder still on board.