Following an earlier downward revision of his outlook for the major agency holding companies due, in part, to the effects of Hurricane Sandy, an influential Wall Street analyst this morning said the “superstorm” has also impacted the performance of some big, free-standing digital agencies, including SapientNitro and LBi.
“Sapient indicated last week that its agency SapientNitro would lose $1 million to $2 million (0.5% to 1.0% of fourth quarter 2012 revenue) given disruptions for the company's 700 New York-area employees,” writes Pivotal Research Group’s Brian Wieser in an equity research note sent to investors this morning. “Even the Amsterdam-based LBI indicated last week that it is "assuming a degree of disruption (due to) storm damage in New York. In general clients are behaving tentatively and visibility has deteriorated slightly relative to typical levels... power cuts driven by storm damage in the New York area could negatively impact the number of billable days in November."
Those reverberating effects, Wieser added, are causing Pivotal to rethink its overall estimates for the ad industry for the fourth quarter.
“We already assumed modest deceleration (close to 0.5% for each company), but such rates of decline may be optimistic if our negative view for media owners in fourth quarter 2012 plays out.”
One “sign of optimism,” Wieser continued, “may be found in Publicis' statement over the weekend that organic revenue growth rebounded to grow in October by 7%. Still, even Publicis indicated that it may be too early to tell if this rebound reflects something more lasting.”