M&C Saatchi Emerges from the Red Despite 'Short-Sighted' Clients

31 March 2008

LONDON: The brothers Saatchi and their eponymous agency emerged from the red to post a pretax profit of £7.96 million ($15.83m; €10.05m) for the year to 31 December 2007 – versus a loss of £1.2m in 2006 – and bettering analysts' expectations.

But M&C Saatchi ceo David Kershaw (pictured) is cautious about future growth prospects in the current economic chill. Advertisers, he said, are taking a shorter view in terms of their marketing plans – but "I don't think it's doom and gloom yet."

He added: "I think what [clients] have got to do is plan very short-term. If the consumer economy does take a downturn you have got to be ready to adjust accordingly.

"But so far the market hasn't collapsed by any means. Clients are continuing to spend, but they are being cautious about how long their commitments are for."

Kershaw adopts a bullish stance on prospects for the remainder of this year even if UK and US shoppers do zip their purses.

"There is no sign of cutting and running because [advertisers] have learned from previous recessions that you have to protect your market share."

However, Iain Daly, an analyst at Ingenious Securities, takes a less Panglossian view. "Clients are shortening their terms, but the absolute spending level is not declining.

"But that affects visibility and it certainly isn't going to lead to marketing companies [agencies] being given the benefit of the doubt.”

Data sourced from Financial Times; additional content by WARC staff