NEW YORK (AdAge.com) -- MDC Partners yesterday posted what the ad-agency holding company called a record 2008 based on revenue for the full year, and bucked the trend of doomsday forecasts to promise an even better 2009.
Revenue fell 5% to $145 million in the fourth quarter, but the Toronto-based holding company was up for the full year, increasing revenue 10% compared with the previous year to $585 million. MDC attributed its boost in revenue to organic growth from existing clients as well as new-business wins, which totaled a net of almost $80 million for 2008.
Net income in the fourth quarter was $4.7 million vs. an $8 million loss in the same period the year before, and swung to a profit for the full year compared with a loss of $26 million in 2007.
Speaking to analysts and investors, CEO Miles Nadal was surprisingly optimistic about MDC's performance this year.
"Despite the tumultuous global economic environment, along with the reduction of project spending by all clients across the spec of industries during the fourth quarter, we finished off a record year," Mr. Nadal said. "The first 45 days of 2009 have been quite strong."
Most notably, at a time when most companies are revising their forecasts downward, MDC projects to book in the range of $590 million and $605 million in revenue in 2009, or between 1% and 3% growth over its 2008 results.
MDC is considered a tiny player compared to mega marketing conglomerates such as Omnicom Group and WPP; it has just 1% market share in the U.S. The company is the parent of a host of small marketing firms as well as recognizable ad shops such as Crispin Porter & Bogusky and Kirshenbaum Bond & Partners. About 20% of MDC's business is from Canada.
Mr. Nadal said MDC's size gives it an edge in the current environment. "We are benefiting by being small and nimble and able to react quickly to change."
"It's also important to note that we've been very lucky," Mr. Nadal added, pointing out that MDC has not been subjected to exposure in two badly hit sectors of the market, domestic automotive and financial services.
Investing in digital
MDC derives 23% of its revenue from digital marketing and has set a goal of 40% in the next five years. Going forward, the company plans to invest further in areas such as data mining, data analytics and social media.
For the time being, though, MDC seems to be wary of making acquisitions. "We have had, and continue to have, numerous acquisitions brought to us, and in general, we have continued to pass on just about each and every one of them," Mr. Nadal said.
In response to a question from an analyst, Mr. Nadal provided some context around the company's split with Cliff Freeman & Partners, in which MDC purchased a stake in 2004.
"The Cliff Freeman relationship got far more coverage than it was economically worth talking about," Mr. Nadal said. "We had a total of $800,000 invested in the business," and "we just came to the mutual conclusion that [the split] was in the best interest of his business. ... It was not something that MDC wanted to increase its ownership in, because we didn't think it would meet our financial criteria long-term."