Niche new-media agencies make strongest comeback

LONDON – Niche operators and digital agencies with strong links to the marketing industry seem to be showing the strongest signs of recovery in the new-media market, according to research.

The latest annual survey by shows revenue growth was achieved by niche operators like 3T Productions and Global Beach, and by Arnold Interactive, Good Technology, Profero and Zentropy Partners UK.

Even the former independent high flyer AKQA succeeded in recovering some of the revenue it had lost the previous year.

However the survey found that many of the IT-orientated consultancies continued to lose revenue, which it predicts will lead to further mergers and potential insolvencies.

Among those that lost over half the previous year's revenue were Nettec and Modem Media. Sapient, Rubus, Quidnunc Group, Oyster Partners, Hyperlink Interactive and Conchango all lost more than 30% of the previous year's revenue.

Taking the top 25 agencies as a whole, revenue fell from £224m to £159m. Conchango, Nettec, Modem Media and SBI & Company UK (formerly Scient) were among the biggest loss-makers.

According to the survey's editor Bob Willott, there are probably a handful of positive characteristics that indicate which new media agencies are well placed to benefit from a business upturn, including: evidence of revenue growth; healthy ratio of staff costs to revenue (preferably lower than 55%); and ability to achieve above-average output per employee.

Willott said other contributing factors were specialisation in an inherently profitable niche market; positive net current assets and shareholders' funds; and experienced and complementary management team blessed with all the necessary skills and preferably with an ownership stake too.

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