Cordiant Demerger Shows Low Trading Margins

The greater transparency resulting from the Cordiant demerger (see *Cordiant Announces Demerger) and much lauded by the ad group has revealed that Zenith made no profits in 1996, according to the Sunday Times.

For the first time, figures have been released for the individual performances of Zenith, Saatchi and Bates where previously they simply made up part of the overall financial picture presented by Cordiant. Other figures show that for 1996 Saatchi had revenue of £360m and trading profit of £23.6m while Bates made £24.5m on the back of £375m. This indicates that the trading margin for both of these agencies was 6.5%, which is below the industry’s best.

One City media analyst is reported to have said that the demerger was “a pile of rubbish” while another said that “It is admitting that all the stuff they said in the past was wrong.” While most of the large ad groups are now taking an interest in the demerged companies, one of the main contenders, WPP, would experience client conflict on a rather large scale with its Unilever account clashing with Saatchi’s Proctor & Gamble if any alliance went ahead.

…It is also rumoured that P&G is urging a tie-up between Saatchi and one of its other international agencies. US-based DMB&B has been named as a possible partner for Saatchi.

* Subscribers only