The Federal Government is spending less money on non-campaign advertising, if today's profit warning by Adcorp is any indication.
The full-service agency won the master Federal Government account together with Dentsu Aegis outfit Mitchell & Partners last year.
While Mitchells was appointed to the campaign portion of the contract, Adcorp was appointed to handle the Government's non-campaign advertising needs.
Mitchells has responsibility for overall media planning and buying, but recruitment and public notice advertising is being sub-contracted to Adcorp.
However, Adcorp told the Australian Securities Exchange that while it was previously expecting a before tax profit of $500,000 for the half year to June 30, that it would now merely break even before taxes for the full financial year.
One of the reasons given for the about-face was a “contraction in Australian Government expenditure and an associated reduction in fee income in the second half”.
It said that the reduction in fees came about “after extended negotiations with the principal contractor” involved in the contract.
It also pointed to a delay in revenue from its Showrunner TV production unit and a reduction in revenue from its other clients, particularly in the commercial property and employment sectors.
While Adcorp said it was expecting to break even for the current financial year, this compares with a $2.7 million loss in the previous financial year.
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