Cello trumpets 'value not volume' as profits soar

Published on Tuesday 18 March 2008 20:55

CELLO Group, the owner of leading Scottish advertising agencies the Leith Agency and Navigator, has reported a 45 per cent rise in turnover to £108.3 million in 2007, boosted by a strong performance from its Edinburgh headquartered marketing division.

The firm, which announced earlier this year that it was to restructure its marketing and advertising businesses under the Tangible banner, also revealed that pre-tax profits rose 28 per cent to 7.6m.

The Tangible arm, which is now based in Scotland and accounts for about 40 per cent of turnover, boasted a 20m rise in turnover over the period to 57.4m, while operating profits shot up by 3.4m to 4.1m.

John Rowley, chief executive of Tangible, said the division's success was largely a result of its increased focus on customer research and planning.

He said: "The Leith Agency alone has around nine planners out of a team of 70 people, which is a huge ratio, even compared to a big London agency.

"We have invested a lot in taking on extra staff in this area over the last couple of years – it means we are getting high-end value as opposed to volume, which is what ad agencies traditionally focus on."

Rowley said Cello was unlikely to look for more acquisitions in Scotland, where its agencies have increased staff numbers by about a third to more than 150 since being bought up by Cello three years ago.

He added: "We would like to double our headcount in London to around 200, but we would remain firmly headquartered in Scotland."

The remaining 60 per cent of Cello's business is in market research, where it has made a number of acquisitions, most recently snapping up agency 2CV.

Overseas income at the research division increased to 21.2 per cent of the group's turnover following a period of investment in foreign markets.

Cello Group chairman Kevin Steeds said the company's outlook for 2008 was strong.

He said: "These results represent another excellent year for the group with significant growth in all key financial metrics."

Steeds added: "Cello is a focused group of scale and quality in research and response with a solidly growing international revenue stream.

"We have made an encouraging start to 2008, and with a strong pipeline and order book, are confident of another successful year."

The firm said in yesterday's statement that like-for-like operating income was up 13.8 per cent in the first two months of 2008.