Credit: Ambitious Studio - Rick Barrett via Unsplash
M+C Saatchi’s Australia business, identified in the group’s 2024 results as a drag on advertising revenue, is expected to continue to be challenged with “stubbornly high” interest rates.
“Australia is a troubled economic environment,” CEO Zaid Al-Qassab told analysts in a briefing.
“They've just had their first interest rate cut for five years, so it's lagging the rest of the world.”
M+C Saatchi posted a 3.7% increase to £231 million in like-for-like net revenue for 2024 but the advertising side slipped into negative territory, dampened by economic challenges in the UK and Australia.
The result was driven by 6.7% growth in non-advertising specialisms, offsetting a decline of 1.9% in advertising.
Advertising recorded strong growth in Europe and UAE but challenging economic environments in Australia and UK resulted in an overall net revenue drop of 1.9% to £77.4 million.
“I don't have a crystal ball any more than you do,” Zaid Al-Qassab said in response to analyst questions.
“I'd expect that to continue to be tough. Other than that, I think we feel that we can deliver on our expectations, to grow broadly across all of our business, and broadly across all of our other regions.
“And in terms of new business, we're pretty confident from a pipeline point of view.”
The latest Australian media agency bookings numbers, via SMI, show a better result for the advertising marketing. However, stripping out the impact of a surge in spending via the current federal election, and the market continues its slide.
Al-Qassab said the softening in Australia and the UK happened towards the end of last year.
“I think that is a result of the macro environment, and also elections, by the way, which, which caused some hiatus, we tend to see that coming back.”
The UK is the company’s largest region, accounting for about 47% of group revenues.
“APAC was our most significantly macro impacted region, and that was due in part to the size of our Australian business, where we did experience client spend reductions in consumer driven industries such as retail and telecoms.”
In Australia, M+C Saatchi has been hiring and reorganising, moving to a more consulting business with higher margins.
In January, the group M&C Saatchi announced a series of strategic hires across its creative departments as part of a new focus under its Cultural Power proposition.
The agency group has been building its capabilities in data. Last month M&C Saatchi launched Cultural Power Index, a proprietary AI-powered, diagnostic tool that helps brands drive growth by harnessing the power of culture.
The index, created by the group’s consulting division, analyses billions of data signals from across media, social, and cultural landscapes to measure a brand’s cultural power in real-time.
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