TIDMJWNG
Jaywing PLC
30 October 2017
RNS Reach
Jaywing plc (AIM: JWNG) reacts to latest IPA Bellwether
report
The Q3 2017 IPA Bellwether report was released earlier in
October. The quarterly report's authors survey a panel of around
300 marketing professionals to provide key indicators of the health
of the economy and marketing industry, analysing marketing spend
and commenting on key economic indicators.
In summary while marketing budgets have risen again in Q3 of
2017 to provide a five-year period of budget growth, they have not
risen as strongly as they have previously since the financial
crisis. The net balance of UK companies revising marketing budgets
up is at +9.9% but we are seeing stagnation in a number of
companies (70% at the same level as three months ago) and channels
(main media advertising, sales promotion, direct marketing) and
decreases in optimism about the industry and only a small increase
in optimism about their own company's financial prospects up a
little following Q2's at an 18-quarter low.
Uncertainty around the impact of Brexit was the key driver,
along with reports of reduced sales and investment and a desire to
keep costs lean.
Since the publication of the report, the UK economy figures have
shown some slight growth for the quarter (+0.4%), with industries
such as computer programming, retail and service sectors showing
the strongest growth. This is ahead of the expectations of many
economists, including the report's authors, which had set it at
0.3%. Ad spend was expected to see growth of 0.6% in 2017 and no
growth in 2018 before recovering in 2019 and 2020 at 1.8% and 2.3%
respectively.
In Q3, budgets were reported as follows:
-- marketing budgets overall +9.9% (Q2 +13.1%)
-- internet +17.0% (Q2 +22.7%)
o search/SEO +16.3% (Q2 +15.6%)
o mobile advertising +5.8%,(Q2 +3.0%)
-- events +9.4% (Q2 +2.1%)
-- PR +7.2% (Q2 +2.1%)
-- 'other' +2.3% (Q2 -2.6%)
-- main media advertising 0.0% (Q2 +9.8%)
-- sales promotion 0.0% (Q2 -10.7%)
-- direct marketing 0.0% (Q2 -4.7%)
-- market research -2.4% (Q2: -6.2%)
Further, a recent parliamentary review cited "Voice" and voice
activated systems as a key platform growth area, with the rise of
products such as Amazon Alexa achieving commercial success. In the
same report, AI and Autonomy were also cited as having a big impact
in 2017, although this mainly focused on concerns around physical
safety and insurance in a world of driverless cars.
In Econsultancy's recent Top 100 Digital Agencies Report, where
Jaywing ranked 21(st) in the UK and as the second largest agency
outside of London, similar themes were coming through. In addition,
the report identified key trends in: agency consolidation to fewer,
bigger agency relationships across more services; digital
transformation to enhance customer experience; Brexit, the US
election, the economy and GDPR as key challenges; and AI and data
science as key to finding time for creativity.
Commenting on the reports, Martin Boddy, Chairman, Jaywing plc,
said, "The ongoing Brexit negotiations are not yet bringing any
clarity to the uncertainty so it's difficult to see an immediate
upturn from the current stagnation of budgets on the horizon,
however, there remains a degree of cautious optimism. For example,
while economic growth for the last quarter was still small, it may
give rise to a revision of ad spend forecast in the next report as
this is slightly against the authors' expectations.
"The good news is that spend on the 'internet' category rose
well, if not as strongly as previously. Within that category,
'search' saw a revision to a seven-year-high with mobile and PR
also doing better than the previous quarter.
"The rise of 'voice', as noted in the Parliamentary Review, will
be a critical change in how marketers do marketing. The role of
brand is likely to be elevated beyond where it has been felt
necessary so far in the digital age in order to compete amongst a
much smaller set of search results. That, along with artificial
intelligence, is set to change the nature of marketing considerably
and marketers will need to be able to bring brand and performance
together. All of which is very much in-line with our propositional
and operational strategic direction.
"The perceived advantages of cost and return of digital
marketing were noted as key in driving budget growth in this area,
although we would also not be surprised if things like digital
transformation projects and GDPR were occupying some of those
budgets. Against a backdrop of technological complexity, it is
essential for brands to use GDPR as an opportunity to reset their
customer relationships, using data and machines to enhance and
enrich their experiences, creating a fair exchange and avoiding the
'pile it high, sell it cheap' approach to digital marketing that
has been seen in some places over the last decade. Again, this very
much requires a coming together of key technical and communications
skills and ones we possess within Jaywing.
"Finally, digital transformation is attracting the big
consultancies into businesses although they often don't have the
breadth of creative and practical marketing skills to bring to the
table and agencies tend to lack the credibility to handle
large-scale business and technical transformation programmes. For
organisations able and wishing to be more nimble, Jaywing is well
placed to assist such transformations."
ENDS
Enquiries:
Jaywing plc (www.jaywingplc.com)
Michael Sprot (Company Secretary)
Tel: 0114 281 1200
Cenkos Securities plc
Nicholas Wells/Callum Davidson (Nomad)
Tel: 0207 397 8920
About Jaywing
Jaywing is a major data science-led UK agency that is listed on
the London Stock Exchange. The company employs over 650 specialists
in the fields of marketing, customer management and credit and
fraud risk regulation and management. 1 in 10 is a heavyweight data
scientist. Jaywing is dedicated to its collaborative approach that
brings hand-picked teams of specialists to each client challenge
across a host of sectors to connect powerful ideas, rich data and
new technologies.
Financially, Jaywing reported revenue of GBP44.5m, Gross Profit
of GBP36.0m (up 13% on 2016) and growth of 12% in EBITDA for
2016/17. Net debt reduced by GBP1.79m to represent 0.7x EBITDA
(1.2x in 2016) and 1 in 3 of its top 50 clients buy more than one
service line (1 in 4 in 2016).
In May 2017, Jaywing announced the launch of Jaywing
Intelligence, a marketing product suite that uses sophisticated
mathematics, artificial intelligence and virtual reality to improve
clients' marketing and free their time to think more
strategically.
In September 2017, Jaywing won a Cannes Corporate award for its
work with Castrol and Epiphany was named Search Agency of the Year
at the UK Agency Awards.
Jaywing continues its major collaboration with world-class
university Imperial College London, working with the College's Data
Science Institute (DSI) on a three-year research programme designed
to measure, understand and predict people's emotional response to
marketing stimuli, an approach that has been adopted into its
creative methodology. The research involves the use of advanced
technology, including the DSI's impressive Data Observatory
facility and advanced neuroimaging kit.
Jaywing works with a number of blue chip clients, including Sky,
Pepsico, HSBC, Grattans Holdings, Castrol, Ebuyer and Pandora.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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