The economic winter takes its toll

We may be looking forward to spring, but in economic terms we are still in the depths of winter.  Weak companies, made more vulnerable by the cold winds of recession, have been eager to find warmer homes.

Nowhere better has this been illustrated than at the former Media Square subsidiary Fourninety that moved into literally warmer climes in the shape of Indian group Basil last week.  And the gloomy trading climate that surrounded the Cello subsidiary Farm appears to have prompted the transfer of people and clients to enjoy the hotter prosperity of Inferno.

These deals are just two of many that must be going on quietly throughout the marketing industry.  Often they tend to happen towards the end of a recession, because that’s when the money starts to run out and also when potential buyers regain enough confidence to take a few risks.

There’s no evidence to suggest that either Fourninety or Farm were in dire financial straits as both were previously owned by public companies.  But they certainly were not prospering and a change of climate may be all that is required to restore them to better health.

Talking of taking risks, Publicis must have viewed Pixelpark as an opportunity not to be missed while it continues its drive to emerge from the recession as the most digitally savvy global group.  Pixelpark had been losing money.  Publicis had cash to spare (before buying back most of Dentsu’s shares, that was) and was prepared to part with €30 million to gain support for its bid.

A change of climate might also help a number of other high profile sickies like WFCA, Adventis Group and Asia Digital Holdings, not to mention the many privately owned agencies whose owners play their financial cards closer to their chests.  Almost certainly there will be more casualties to follow those like Brilliant Media Group, rescued from administrators by Mediacom.

All that one can hope is that the weaker agencies are able to conserve their financial fuel until better climes return or to find shelter with someone else until the worst of the economic winter has passed.

Bob Willott is editor of “Marketing Services Financial Intelligence

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