New-media shops making a recovery

Britain's new-media agencies are clawing their way back to profitability after the crisis that threatened to overwhelm them at the start of the new millennium.

Year-on-year revenues were up by 5.6 per cent, according to research from New Media Agencies Financial Intelligence.

At the same time, two-thirds of the companies surveyed earned an operating profit, compared with just 44 per cent last year.

Bob Willott, the survey's editor, said the results would have been even better, had the big operating losses incurred by a few companies not obliterated the smaller profits delivered by many.

However, with most loss-makers having recovered or been absorbed by other businesses, Willott predicted that most of the top 30 new-media shops would achieve operating profits next year.

Global Beach, the software specialist, was the best-performing agency.

Despite a 16 per cent fall in revenue, the company had the best revenue and profit per employee.

Omnicom's subsidiary achieved the second-highest overall ranking.

However, this was on the back of a very weak balance sheet.

Ajaz Ahmed's AKQA made a partial recovery from recent losses, with revenues up by 31 per cent. But Willott warned: "Profit margins and productivity fell well short of what should be achieved."

The biggest loss - £14 million - was incurred by the AIM-listed wireless agency iTouch, bringing its cumulative losses to date to £93 million.

The company has since reached break-even.


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