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M&C Saatchi confident in advertising bounce-back

It has returned to growth after a tricky pandemic and expects to beat analyst consensus for the full year
M&C Saatchi confident in advertising bounce-back
  • Global digital ad spend expected to rise 17 per cent in 2021
  • Swung back to a profit

Forecasting corporate UK's marketing spend is tricky because it is so volatile. At the beginning of the pandemic, it was one of the first expenses that businesses cut, which is why M&C Saatchi’s (SAA) revenue was down 15 per cent at the end of 2020. In the first half of 2021, Saatchi bounced back to growth and expects clients to continue to spend, especially on digital advertising. The familiar argument being that the pandemic has accelerated companies’ digital transformation and they want to sell this to their customers.

Inflation confuses this picture, though. Almost all companies are experiencing rising input costs which could undermine their earnings and tempt them to cut advertising spend to offset this. However, when inflation is rife, companies are reluctant to sacrifice market share even if working capital commitments have tightened. Advertising is a good way to achieve this, or that's the message M&C Saatchi will be taking to its clientele.

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