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No agency merger despite tough times

MARKETFORCE and MJB&B have denied they were considering a merger proposal to combat a slowdown in the advertising industry.

Local advertising agencies report there is very little new business in the market and current clients are looking to reduce marketing budgets in reaction to uncertain revenue forecasts.

Marketforce group managing director John Driscoll said clients were finding trading conditions very difficult and the economic indicators were not very positive.

The Government is a major client in the advertising industry in WA and the proposed 30 per cent cut to the Government advertising budget has injected uncertainty into the industry.

“I don’t believe I’ve seen tougher trading conditions for many years,” Mr Driscoll said.

However he said there was absolutely no truth in talk of a merger between the two agencies.

“We are definitely not talking about any mergers they’d be more likely to try and buy us,” Mr Driscoll said.

“The Government’s created a degree of uncertainty and all agencies are finding it very tough.

“There’s no question that when the economy gets tough and clients are put under pressure you would expect to see some movement generally in the smaller agencies.”

Industry analysts have suggested that several of Perth’s smaller agencies may merge to enable them to continue trading over this difficult period.

“If the people running the agencies see the wheels are falling off then the client base is all they’ve got left and they’re better finding a partner that will allow them to continue trading,” an industry source said.

MJB&B Advertising and Marketing director Brian Bowley said MJB&B and Marketforce have a great relationship although they compete tooth and nail for clients.

MJB&B currently uses the media buying arm of Marketforce, Media Decisions, to handle their media bookings.

Industry analysts have suggested MJB&B’s strong retail client list could deliver high turnover to supplement Marketforce’s current client base in this difficult period.

Marketforce previously set up Kapow to focus on retail clients, however it was dismantled last year and retail clients like Bedshed were taken on by Marketforce.

“It’s tough in the marketplace at the moment given the downturn in the building industry in WA in particular it has always been a strong indicator of retail sales,” Mr Bowley said.

He said January and February have been very tough for most agencies in Perth.

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