Ad Worm Turns on Australia's Analysts

07 November 2008

ST LEONARDS, NSW: Advertising and media people the world over will salute Robert Morgan, executive chairman of Clemenger Group, Australasia's largest marketing communications firm, who this week hit out at the region's plague of haruspices – media analysts whose glib opinions, rarely called into question, can send stock soaring or plunging.

In an interview with The Sydney Morning Herald, Morgan condemned that for predicting a contraction in the mainstream media market for 2009.

Said he: "The worry I've got is that the local analysts are not listening to local media companies, nor are they talking to the major advertisers. They're not doing that. It amuses me when you have these analysts who make predictions when all they do is look at what is happening in America.

"If you talk to the major media buyers around town, they are still talking in positive growth territory. Mainstream media might be up 1% to 1.5% next year and if you add in digital you could be looking at 2% to 2.5% growth. We are not seeing that sort of doom downturn that has been experienced in Europe or North America.

"We are not getting any of those signals from our media buying businesses. They are talking in positive territory. We are not seeing major cuts from our clients. One of the problems we've got is everybody is talking it down. We're not seeing that."

Morgan acknowledge that there is some negative posturing in the market because media buyers and media owners were readying themselves for the annual rate deals for 2009.

"There are some people talking the market down to ensure media companies do not get too much of a rate increase. You've got to take that out."

He was also in bull mode with regard to acquisitions. The downturn, Morgan believes, will deliver a raft of acquisition opportunities for his cash-rich group; currently six deals are under negotiation.

"We're not saying it's not going to be tougher but we've been around a while and seen a few of these things before," he said.

"The fundamentals of our company suit these times. We don't have any debt, we are not labouring under an enormous number of intangibles so we don't have a large amount of goodwill we have to think about. We have been accumulating funds and frankly there are going to be more realistic values put on businesses.

"We haven't perhaps been seen as sexy to the market as others but I think at the moment our shareholders are feeling pretty good."

Data sourced from Sydney Morning Herald; additional content by WARC staff