Aegis sees revenues slide

19 November 2009

LONDON: Aegis, the marketing communications group, posted a double-digit decline in organic revenues over the first nine months of this year, as the financial crisis continued to impact advertiser budgets.

The company saw its total group sales rise by 1% on a reported basis from January to September, but organic totals were off by 10.8%, including drops of 10.4% at Aegis Media and 11.5% at Synovate.

More positively, Aegis Media has recorded new business wins to a value of $2.4 billion (€1.6bn; £1.4bn) in this period, including Kellogg's, Beiersdorf, Credit Agricole, Société Générale and Nokia.

The London-based organisation has also reported staff cost savings worth £36.7 million for the year-to-date, a move which appears particularly necessary as it did not foresee that trading conditions would improve over the rest of 2009.

John Napier, its chairman interim ceo, said "our strategy to perform resiliently in a downturn has continued to deliver and we are pleased to confirm further progress in a difficult and challenging market environment."

Separately, Publicis Groupe, the marketing services conglomerate, should return to organic growth next year, having seen some "encouraging" trends start to emerge among advertisers, Maurice Lévy, its ceo, has said.

While presenting at the Morgan Stanley Technology, Media and Telecoms Conference in Barcelona, Lévy argued that "all the signs we have in budget meetings with our clients are very encouraging."

He added that Publicis was in "good shape" for the final three months of 2009, when its revenues are set to be "slightly better" than the total of €1.05 billion ($1.6bn; £953m) recorded during the period from July to September.

Looking forward to next year, Lévy predicted that "we will be negative in H1, low single digits, positive in H2, and more positive in the fourth quarter."

More specifically, he suggested that like-for-like figures were likely to "change to positive" in either June or July.

Despite this, the company's clients are expected to continue exerting tight controls on the remuneration paid to their agency partners, even when the recovery begins.

One key shift will be towards more performance-based models, a transition encouraged by the enhanced measurability offered by digital media, but which could also offer some benefits.

"There will be an incentive compensation ... and I'm convinced that fees will deliver better margins," Lévy stated.

Data sourced from Reuters; additional content by Warc staff