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Jaywing rides through the turbulence

Jaywing has moved to new offices in Sheffield
Jaywing has moved to new offices in Sheffield
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​Digital creative agency Jaywing ​​said ​it is hard to remember a period where there has been such turbulence​ and that ​trading conditions have been challenging on a number of fronts following the general election in June 2017. ​

The Sheffield-based firm​​ ​reported a fall in annual earnings and said digital media has been in the headlines for all the wrong reasons. Ads appearing alongside ​"​unsavoury YouTube content​"​ led to several brands pausing their spending until the problem was fixed.

​Talking about the challenges, Martin Boddy, ​c​hairman of Jaywing, said: ​"The lack of transparency in programmatic media buying... came under scrutiny with brands such as P&G taking that function in house.

"Then there was the Cambridge Analytica episode concerning their use of Facebook data, which coincided with GDPR coming into force.

"The network agency model has come under pressure with WPP in the spotlight. Too great a focus on traditional advertising, opaque charging practices, lack of client focus and competition from management consultancies have led a number of these agency groups launching new strategies."

The group's revenue ​rose 6.​7​ per cent​ to £47.5m in the year to March 31 and was up 6.3​ per cent​ on a like for like basis. However, underlying earnings fell from £4.9m to £3.0m.

​The group's CEO ​Rob Shaw said: "Market conditions for UK B2C​ (business to consumer)​ businesses deteriorated markedly after the election in June 2017 and this impacted on several of our clients.

​"​The knock-on effect was that our own trading suffered. Consequently, instead of focusing on accelerating our growth a great deal of my time has had to be devoted to realigning our cost base. ​T​his is never an easy task in a people business and we have been mindful not to impact our ability to return to and exceed previous levels of growth and profitability by cutting costs too deep.​"​

​He said that ​whilst like​-​for​-​like gross profit was ​down only 3 per cent​, EBITDA fell to £3​.0m resulting in a higher net debt position of £5.9m at the year end.

​"​Our bank has been very supportive throughout the period and has agreed to re-structure our facilities, which will now run until 2021 and will give us the necessary headroom whilst our profitability recovers​," he said.​

Jaywing ​said that over two thirds​ ​(​68​ per cent)​ of ​its​ top 50 clients ​now take more than one of ​its​ service lines​. The firm said it has started​ the financial ​year with good new business wins from larger clients​.

​The group said that whilst there is still caution in the UK market​, it​ believe​s it is well positioned to achieve market expectation​s​, especially with growth in Australia enhanced by ​its most recent acquisition.

​​M​r Boddy​ ​said:​ ​"After four consecutive years of growth fuelled by a strong data science-led proposition, we have endured a period of challenging market conditions in the UK. We have taken the necessary actions to recover our EBITDA margin going forward whilst ensuring that we still have the necessary resources to grow our client base so we can return our EBITDA to previous levels by the financial year ending March 2020.

​"​Despite these challenges it has been a year of progress in terms of expanding our fast-growing Australian operation through the acquisition of Frank Digital, plus we have launched innovative technology incorporating the use of Artificial Intelligence for clients in the UK and beyond.

​"​Clients are increasingly looking for more data, digital and technology focused agencies and consultancies with collaborative operating models. This is very much the sweet spot for Jaywing, so we remain excited and optimistic about our future potential."