New media agency revenues on the rise and 2005 looks rosy finds report

by Jennifer Whitehead, Brand Republic 22-Mar-05, 08:00

LONDON - New-media agencies are managing to translate the boom in online advertising into profitability, with two-thirds recording an operating profit, compared with only 44% the previous year, new research has found.

According to the New Media Agencies Financial Intelligence report, big loss-making consultancies are disappearing and the future for the sector is looking more rosy this year.

It found that, when taking into account the overall performance including net current assets, operating profit and operating margin, Omnicom's Agency.com was the second-best performing agency, behind specialist software developer Global Beach.

Other digital agencies to perform well were Modem Media at number four, and Syzygy at number seven.

AKQA moved into sixth position as it recovered from recent losses, with a rise in revenues of 31%.

However, the survey editor Bob Willott said that the agency still had some way to go to return to the form it had seen before the dotcom bust.

"Profit margins and productivity fell well short of what should be achieved," he said.

On the less enviable end of the list were wireless agency iTouch, which posted a loss of £14m, to bring its cumulative losses to £93m, although the company is now at breakeven stage. Arnold Interactive recorded the biggest loss per head of staff, at £78,964.

Copies of the report are available from Fintellect Publishing.

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