San Diego’s climate and attitude is as far removed from New York City as one can get, but not so when it comes to the quality and creative breadth of the local advertising community represented on the 2012 San Diego Business Journal Advertising Agencies list. Many of the 25 firms on the list have been in the community for decades, embracing the dawn of the digital marketing age and thriving through one of the rockiest economies in history.

The list is ranked by income from services for 2011 defined as fees from services, plus net media commissions.

Participating for the first time on the list is Covario Inc. at No. 1 reporting a 14 percent growth in local revenue from 2010 to 2011.

“Six years ago we were a software company with 10 people working over a Regional Transportation Center garage in El Cajon,” said Russ Mann, founder and CEO. “Today we have more than 200 employees globally, 100 of whom are in San Diego and now we’re moving into our new space across from UTC.”

Making the Change

Covario’s metamorphosis from a software company in 2006 that provided SaaS (software as a service)-based systems to become a leading SEM (search engine marketing) and SEO service and technology firm working with Fortune 500 companies such as Intel Corp., Procter & Gamble and IBM is due to hard work, vision, and to some degree fortuitous market conditions.

“We realized in our early stage that to become a full-service ad agency we had to redefine the role of advertising,” Mann said. “Our customers were telling us that they felt that ‘half of their advertising dollars were a waste, they just didn’t know which half.’ ”

Mann added that what triggered their growth was an interest in digital marketing and in particular, the ever-changing landscape of digital marketing.

According to the company’s website, Covario measures and helps optimize more than $250 million in annualized paid media spend and more than 1,000 branded websites through its SEM, SEO, display, broadcast and social media ROI measurement technologies.

“We help our clients rank higher on Google, Bing, Baidu, Naver, Yandex, get more traffic, and penetrate social media,” Mann said. “Our software tracks and prepares the analytics and does all the work in terms of automating the process.”

Also profiting from the explosion in digital marketing is No. 2 ranked Underground Elephant. The company’s dramatic growth from 2010 to 2011 is a result of highly targeted marketing at precisely the right time using the power of social media, according to Jason Kulpa, CEO. Underground reported a 151 percent growth in local revenue from 2010 to 2011.