Aegis Improves Despite Wal-Mart Re-Pitch, Touts New 'Brand Value' Tool

by Joe Mandese, Dec 20, 2006, 8:16 AM

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Citing strong recent new business wins, a "slight pick-up" in ad spending in some key markets, and an increasing shift toward digital media services, London-based Aegis Group today reported that conditions have actually improved modestly since it reported its first half results in early September.

"With eleven months of trading complete, the group has continued to perform in line with our expectations," Aegis said in a trading update released early this morning. Much of the improvement, however, is coming not from its media services units, but from its market research division Synovate, which introduced new products during the second half of the year, including the "Brand Value Creator."

The new research service, which Aegis described as "the first market research framework capable of predicting accurately what people will buy as a result of brand marketing investment," sounds suspiciously like Y&R's famed Brand Asset Valuator, and is another indication that big marketers are looking for new research tools to help manage their media and marketing investment decisions.

Aegis said market conditions also have improved for its media services operations, including Carat, Vizeum, Posterscope and especially digital media unit Isobar.

"We have seen a continuation of recent trends in spending patterns, with digital services accounting for an ever increasing proportion of marketing activity," the company said.

Second half results appear to be a little more mixed for Aegis' traditional media services, and the company singled out "the additional cost of pitching and preparing to service these new clients," an obvious allusion to the protracted, and surprisingly restaged Wal-Mart media services review. Aegis' Carat North America unit originally won the media portion of Wal-Mart's advertising account as part of a joint pitch with Interpublic's Draft FCB unit, but was forced to re-pitch the business when Wal-Mart dumped Draft FCB following new revelations about the review process. The cost of such pitches can run into the seven-figure range, according to knowledgeable sources.

Last month, with the Wal-Mart win factored in, Aegis told analysts that it was leading the industry in new business wins through the first 10 months of 2006. Other big wins during the second half include: Alliance & Leicester in the UK; pan-European appointments for General Motors and Tommy Hilfiger; Cadbury's in Mexico; and P&G in the Philippines.

"We expect to deliver a satisfactory performance for the year at Aegis Media, despite the additional cost of pitching and preparing to service these new clients," the company said.

By region, Aegis said its media services operations "continue to trade well" in Europe, citing a modest improvement in advertising spending in France and Germany, and solid performance in the U.K. "In the Americas and Asia Pacific, we continue to expand and improve our market positions," the company said.

Aegis, which continue to be the source of speculation of a potential takeover by one of its French rivals, especially Havas Chairman Vincent Bollore, who currently is Aegis largest shareholder, will report full 2006 results on March 15, 2007.

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