In the UK, marcoms group Media Square is to reduce its global headcount by around 9%, as part of a cost saving programme in response to a significant reduction in client spend.
Media Square's announcement follows many similar such statements
from advertising and marcoms groups over the past few months, reflecting the sharp downturn in client spending.
However, at the group’s market research agency Illuminas, Chairman Peter Reid told DRNO that the firm had experienced an exceptionally good year. ‘Despite the economic climate, we have grown the business and have selectively added staff to complement the skills of our existing team, and we expect this to continue through the coming year,’ he stated.
In other parts of the group, clients in the automotive, retail and financial services sectors have been particularly badly hit by the global economic conditions, and Media Square says it is expecting to see a ‘very significant’ reduction in spending by one of its largest clients.
As a result of the lower client spending patterns seen in the fourth quarter 2008, operating profits before one-off restructuring costs, are likely to be just below market expectations for the current year.
Nonetheless, due to what it describes as ‘good operational cashflows’ and the recent sale of non-core assets including
Illuminas’ MR operations businesses to IQ Holdings, the group anticipates that its position in the forthcoming year end will be ahead of market expectations.
‘As we enter the second year of a three year programme we have a simpler, smaller and stronger group of agencies which will enable us to confront the recession with more stability,’ stated Media Square's Executive Chairman Roger Parry. ‘It is regrettable that we have had to take these cost reduction measures but the current state of the economy makes this inevitable and we therefore believe it is best to act quickly.’
Last August, the group returned to pre-tax profit to the tune of £900,000 after losses of £13.2m in the same period in 2007. In the group's 2008 interim results, pre-tax operating profit was up 300% over the prior year.
Web site: www.mediasquare.co.uk