As we approach the end of a turbulent 2010 for UK Advertising Agencies, Plimsoll have taken a look back at the highs and lows of the last 12 months and looked forward to the threats and opportunities facing the market in 2011.
203 agencies are finishing the year in financial difficulty according to the latest Plimsoll Analysis examining the health and prospects of the top 708 companies in the market. Having clung on through the bad times many of these struggling agencies are running out of time and will fail unless a sustained recovery takes hold. Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year. On the flipside, their demise will bring a welcome reduction in competitive pressure for those left.
However, there are still some good stories in the market despite the persistent gloom. We have picked 345 strong companies that prove success can still be achieved in the market despite difficult trading conditions. They also prove that bad companies fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success.
The market is due further consolidation with the number of companies in trouble leading to heightened takeover activity. With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high profile mergers and takeovers. Further consolidation is needed to sort out the remaining dead wood. We have named 59 companies as the best acquisition prospects in the market.
In addition, a band of reckless companies continue to chase sales despite mounting losses, 137 serial loss makers are operating in the market. For the 2nd and even 3rd year running these companies have made a loss. While the rest have taken painful but necessary decisions to refocus on the bottom line, these reckless companies have continued to chase sale regardless. These companies have to cut their cloth accordingly or face the consequences.
The new Plimsoll Analysis shows a buffeted market emerging from recession with 1 in 3 of its participant companies in financial difficulty. If you are going to make a success of 2011, you need to learn the lesson of the last 12 months. There are going to be lots of takeovers, a number of high profile failures and even the odd surprise or two along the way.
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