M&C Saatchi has released its half year results showing, like other global advertising group's, a better than expected lift in revenue as the market recovers from the 2020 pandemic slump.
The company returned to pre pandemic growth. Headline profit before tax for the six months to June was £7.1 million and 209% ahead of the same half year in 2019.
Like-for-like net revenue was up 21% and gross revenue was £171.2 million, up 14.7%, and net revenue £118.1million, up 14.2%.
And costs are growing at a lower rate than revenue. Operating costs increased by 6.6% to £105.7 million.
Full year profit is forecast to be ahead of expectations.
M&C Saatchi reported "exceptionally strong" client retention, including successful reviews of major government contracts, notably in the UK and US.
"New business was strong,' the company reported. "We continue to win technology clients including Uber, Google, SoundCloud, TikTok, Tinder, the sport-tech brand Whoop and the Edtech brand Quizlet.
"Other notable new business wins include launching digital grocery delivery service, Gorillas, in the UK, a digital agency partnership with Beam Suntory spanning six south east Asia markets and becoming the lead creative partner for PermataBank in Indonesia, focusing on creating innovative digital banking experiences for its customers. We continued to win new assignments from existing clients such as Reckitt, GSK the UK government and Mercedes Benz."
The Market
M&C Saatchi has detected a renewed belief in marketing.
"Whilst the onset of the pandemic created uncertainty around client investment, we are now seeing a renewed belief in
marketing as the key lever for growth," the company reports in its half year results statements.
"Marketing spend levels are increasing as brands take advantage of stronger economic indicators and the recovery in consumer spending."
Around 72% of marketing chiefs said the "importance of marketing" has grown in their companies over the last year. This is reflected in forecast growth in worldwide advertising revenue of 10.2% to a record $651 billion in 2021, after falling 4.1% in 2020.
Digital transformation continues to accelerate in the long tail of the pandemic. Global digital ad spend is estimated to increase by 17%, reaching US$389 billion in 2021, 14.6% more than the dip in growth in 2020.
Demand for connected solutions: "Whilst pure play digital is showing significant growth, we are also seeing increased demand for connected solutions.
"Clients increasingly want agencies to combine the whole range of communication channels, delivering optimised solutions that integrate online and offline, brand and experience, and paid, owned and earned media.
"Currently around one-third of pitches are connected opportunities. Creative bandwidth and data capabilities are critical differentiators here - with both at the heart of our strategy."
Talent war. "In what has been called the Great Reappraisal by HR experts, there is a post-COVID fight for talent. Employees are re-assessing their vocational criteria, and the evidence strongly suggests that strong brands with a clear, noble purpose will become employers of choice.
Acceleration of ESG (Environmental, Social, and Governance). "Credible ESG policies are increasingly a requirement for agencies competing for significant client contracts. In addition, there is increased demand from clients seeking consultancy and activation support for their own sustainability strategies and the role of marketing in sustainability."
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