SYDNEY: Marketing communications company Adcorp will incur a one-off $10 million loss as a result of a restructure of its motor and property divisions.
Peter James, managing director of Adcorp, which holds clients across the employment, motoring, property and retail sectors, said the restructure was about focusing on parts of its business where it was able to get a better return.
“It’s fair to say we were getting different returns on each sector of our business. Our traditional business of employment marketing and communications remains the most profitable component,” James said.
While Adcorp's retail business has achieved healthy returns since it acquired Andrews Advertising last September, poor shareholder returns on its motoring business has forced it to reduce its focus, particularly in NSW and Victoria.
“A lot of motor advertising has moved online, particularly at dealership level. The returns are certainly not as great as employment, and not an appropriate use of shareholder funds,” James said.
Adcorp has already resigned a number of its motoring accounts over the past year, James said, but will still work on motor businesses on a case-by-case business.
Adcorp has also repositioned its property business to focus on commercial property and property developers, rather than residential, spurred by its acquirement of Gold Coast based property marketing business Q Creative late last year.
The restructure decision was “well received as being good business” by shareholders, James said.
After the restructure, which is expected to be finalised by the end of June, Adcorp plans to launch a stand-alone agency that will specialise in digital new media.
Adcorp ranked number 15 in the top 20 Australian media agencies in 2006, earning revenue between $80 million to $90 million, a 15% drop from 2005’s $100 million to $110 million, according to Nielsen Meida Research AdEx figures.
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