DISTRUST HITS DIGITAL SALES
Ad spend suffers from fake news and Facebook scandals says Jaywing
DIGITAL CREATIVE agency Jaywing said it is hard to remember a period where there has been such turbulence and that trading conditions have been challenging on a number of fronts following the general election in June 2017.
The Sheffield-based firm reported a fall in annual earnings and said digital media has been in the headlines for all the wrong reasons. Ads appearing alongside “unsavoury YouTube content“led to several brands pausing their spending until the problem was fixed.
Talking about the challenges, Martin Boddy, chairman of Jaywing, said: “The lack of transparency in programmatic media buying... came under scrutiny with brands such as P&G taking that function in house.
“Then there was the Cambridge Analytica episode concerning their use of Facebook data, which coincided with GDPR coming into force.
“The network agency model has come under pressure with WPP in the spotlight. Too great a focus on traditional advertising, opaque charging practices, lack of client focus and competition from management consultancies have led a number of these agency groups launching new strategies.”
The group’s revenue rose 6.7 per cent to £47.5m in the year to March 31. However, underlying earnings fell from £4.9m to £3.0m.
The group’s CEO Rob Shaw said: “Market conditions for UK B2C (business to consumer) businesses deteriorated markedly after the election in June 2017 and this impacted on several of our clients.
“The knock-on effect was that our own trading suffered. Consequently, instead of focusing on accelerating our growth a great deal of my time has had to be devoted to realigning our cost base. This is never an easy task in a people business and we have been mindful not to impact our ability to return to and exceed previous levels of growth and profitability by cutting costs too deep.”
He said that whilst like-for-like gross profit was down only three per cent, EBITDA fell to £3 million resulting in a higher net debt position of £5.9 million.
“Our bank has been very supportive throughout the period and has agreed to re-structure our facilities, which will now run until 2021 and will give us the necessary headroom whilst our profitability recovers,” he said.
Over two-thirds of Jaywing’s top 50 clients now take more than one of its service lines and it has started the financial year with good new business wins from larger clients. The group said that whilst there is still caution in the UK market, it believes it is well positioned to achieve market expectations, especially with growth in Australia.
Mr Boddy said: “After four consecutive years of growth fuelled by a strong data science-led proposition, we have endured a period of challenging market conditions in the UK. We have taken the necessary actions to recover our EBITDA margin going forward whilst ensuring that we still have the necessary resources to grow our client base so we can return our EBITDA to previous levels by the financial year ending March 2020.”
The knockon effect was that our own trading suffered. Jaywing group’s CEO Rob Shaw