OUTLOOK – Analysis of the advertising market by M&C Saatchi

Credit: André Hunter

M&C Saatchi has released its half-year results showing, like those of other global advertising groups, better-than-expected revenue growth as the market recovers from the pandemic crisis of 2020.

The company has returned to pre-pandemic growth. Overall profit before tax for the six months to June was £ 7.1million and 209% ahead of the same half in 2019.

Like-for-like net sales increased by 21% and gross sales by £ 171.2 million, up 14.7%, and net sales by £ 118.1 million sterling, up 14.2%.

And costs are increasing at a slower rate than income. Operating expenses increased 6.6% to £ 105.7 million.

Annual profit is expected to exceed expectations.

M&C Saatchi reported “exceptionally strong” customer loyalty, including successful reviews of major government contracts, particularly in the UK and US.

“New business has been strong,” the company said. “We continue to gain technology customers including Uber, Google, SoundCloud, TikTok, Tinder, sports technology brand Whoop, and Edtech Quizlet brand.

“Other notable new business wins include launching the digital grocery delivery service, Gorillas, in the UK, a digital agency partnership with Beam Suntory spanning six South East Asian markets and becoming the lead creative partner of PermataBank in Indonesia, focusing on creating innovative digital banking experiences. for its customers. We continued to win new assignments from existing customers such as Reckitt, GSK, UK government and Mercedes Benz.

The market

M&C Saatchi has detected a renewed belief in marketing.

“While the onset of the pandemic created uncertainty around customer investment, we are now seeing renewed confidence in
marketing as a key lever for growth, ”reports the company in its half-year results.

“Marketing spending levels are rising as brands take advantage of stronger economic indicators and the recovery in consumer spending.”

About 72% of marketers said that the “importance of marketing” has increased in their business over the past year. This is reflected in the forecast for global advertising revenue growth of 10.2% to a record $ 651 billion in 2021, following a 4.1% decline in 2020.

Digital transformation continues to accelerate in the long tail of the pandemic. Global digital ad spending is expected to increase 17% to reach US $ 389 billion in 2021, 14.6% more than the decline in growth in 2020.

Request connected solutions: “While digital pure play is showing significant growth, we are also seeing a growing demand for connected solutions.

“Clients increasingly want agencies to combine all communication channels, delivering optimized solutions that integrate online and offline, brand and experience, as well as paid, owned and acquired media.

“Currently, about a third of locations are connected opportunities. Bandwidth and creative data capabilities are key differentiators here – both being at the heart of our strategy. “

Talent war. “In what HR experts have called the Great Reassessment, there is a post-COVID fight for talent. Employees are reassessing their professional standards, and the evidence strongly suggests that strong brands with a clear, noble purpose will become employers of choice.

Acceleration of ESG (Environment, social and governance). “Credible ESG policies are increasingly a requirement for agencies competing for large client contracts.

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