THE acquisition of 50 new clients in the six months to December has helped Mitchell Communications media buying group to a 6 per cent lift in the value of billings in a period when the market shrank by 8 per cent. Executive chairman Harold Mitchell said the full benefit of those wins, which included the flagship David Jones media buying account, would not be realised until the current half.
In addition, increased advertising activity in November and December was continuing in the first quarter of this year.
"Eighty per cent of our clients are Australian clients," Mr Mitchell said.
"Our competitors are probably 60 per cent international and the influence from overseas clients was to cut spending." The company bought sponsorship marketing agency Insite Organisation in December, and acquired the Perth-based business of media agency Starcom in September.
Operating revenues of $122.9 million were up 11 per cent on the previous comparable period, but earnings before interest, tax, depreciation and amortisation were flat at $15.1m. Net profit after tax was $8.4m, up 4 per cent. Mr Mitchell said the group held its prices despite pressure from advertisers generally to reduce agency costs, and margins in the company's mainstream media buying business rose slightly despite the general advertising downturn.
Chief operating officer Luke Littlefield, who will run the group while chief executive Stuart Mitchell takes a six-month sabbatical, said margins in the online division were down slightly due to the increased proportion of revenue, 30 per cent, that was being generated by search advertising, which had lower margins. "In traditional media we've gone from about 20 per cent to about 23 per cent margin on revenue," he said.
