Mobile advertising drives M&C Saatchi growth for 2011

MUMBAI: Even as industry pundits predict that digital and mobile advertising is the mantra for the future, mobile advertising and social media marketing services helped M&C Saatchi to more than double its pre-tax profits last year.

The mobile group has contributed 15-20 per cent of M&C Saatchi’s UK profits, doing work for brands including the O2 arena and Speedo.

Advertising spending on mobile devices leapt by 157 per cent last year to ?203.2m in the UK, according to figures published on Tuesday by the Internet Advertising Bureau and PwC.

Revenues rose 22 per cent to ?153.1m in the year ended 31 December with pre-tax profits jumping from ?7.8 million in 2010 to ?16 million.

The Financial Times quoted M&C Saatchi chief executive David Kershaw as having said: “2012 has started well. We see pretty good growth. We are looking at double-digit earnings growth next year and going into 2013.”

In 2010 M&C Saatchi acquired Inside Mobile, an agency dedicated to creating applications and other forms of smartphone marketing.

Much of M&C Saatchi’s mobile revenues are coming from existing clients. “There’s an inverse relationship between client knowledge and agency margin,” Kershaw told FT. “At the moment, client understanding of mobile is in the foothills, which means there’s a greater dependence on experts. There is not an oversupply of experts yet, which means you get a healthy margin. The next two or three years should be very healthy.”

The agency’s newer international offices in South Africa, the US and Latin America also contributed to the boost as they became profitable.

M&C Saatchi was hit by some big client losses particularly in Australasia but won in other fast-growing areas, such as mobile.

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