Due to a dramatic drop in demand in the media sales sector, Publigroupe is cutting a total of 250 jobs in Switzerland and abroad. The economic downturn triggered by the crisis in the financial and capital markets has apparently hit the cyclically sensitive advertising agency harder than previously expected. As a result, total costs will be reduced by approximately 40 million Swiss francs, rather than the 10 million Swiss francs originally planned in the summer of 2008. This corresponds to a group-wide reduction of about 10 percent. At the beginning of 2008, the group had 3,000 employees.
The cost-cutting measures are affecting the Media Sales division and central services in particular. The results of the Search & Find, Custom Publishing, and Digital & Marketing Services divisions have so far been in line with expectations, but this is not the case for the key Media Sales segment, which markets print, television, radio, cinema, and online advertising under the Publicitas brand, as Publigroupe announced on Tuesday. In 2007, Media Sales accounted for three-quarters of the group’s revenue—that is, 1.5 billion of a total of 2.16 billion Swiss francs.
A Significant Drop in Demand
Consumer sentiment has taken a sharp turn for the worse since September, Group CEO Hans-Peter Rohner said Tuesday during a conference call. This has been accompanied by a «veritable» slump in advertising demand. Rohner explained that the Media Sales division is currently recording double-digit revenue declines every month compared to the previous year. Job advertisements and commercial advertising in key customer segments such as retail and the automotive industry have been particularly affected. If demand for advertising does not recover by the end of the year—and especially during the holiday season—Rohner fears the Media Sales segment will slip into the red.
The far-reaching changes in the media market have prompted Publigroupe to review Media Sales' business model. Publigroupe views the current difficult business conditions not only as a cyclical problem but also as a structural one. (sda/red)

Due to a dramatic fall in demand in the Media Sales division, Publigroupe is cutting a total of 250 jobs in Switzerland and abroad. The economic downturn triggered by the crisis on the financial and capital markets has evidently hit the economically sensitive advertising marketer harder than previously expected. As a result, costs will be reduced by a total of around CHF 40 million instead of the CHF 10 million planned in summer 2008. This corresponds to a Group-wide reduction of around 10 percent. At the beginning of 2008, the Group had 3000 employees.
The cost-cutting measures are affecting the Media Sales division and central services in particular. The results of the Search & Find, Custom Publishing, and Digital & Marketing Services divisions have so far been in line with expectations, but this is not the case for the key Media Sales segment, which markets print, television, radio, cinema, and online advertising under the Publicitas brand, as Publigroupe announced on Tuesday. In 2007, Media Sales accounted for three-quarters of the group’s revenue—that is, 1.5 billion of a total of 2.16 billion Swiss francs.
Anticipatory adaptation
The consumer climate has deteriorated abruptly since September, said Group CEO Hans-Peter Rohner in a telephone conference on Tuesday. This is associated with a "veritable" slump in demand for advertising. Rohner explained that the Media Sales division is currently recording a double-digit drop in sales every month compared to the previous year. Job advertisements and commercial advertising in key customer segments such as retail and the automotive industry are particularly affected. If the demand for advertising does not recover by the end of the year, particularly during the Christmas period, Rohner fears that the Media Sales segment will be in the red.
In Switzerland, most of the staff reductions have already taken place or are in progress, mainly by taking advantage of natural fluctuation, but in around 50 cases there will still be redundancies, the advertising marketer writes. Implementation at international level will take place over the next few months. The reduction in the workforce will primarily affect back-office services, while sales capacities are to be maintained as far as possible.
Publicitas business model under review
The profound changes in the media market, accentuated by the current financial crisis, are also prompting Publigroupe to review the Media Sales business model. Publigroupe sees the current difficult business situation not only as an economic problem, but also as a structural one. The analysis is intended to provide the basis for a comprehensive assessment of Publicitas' current business model as a partner to the national and international publishing and advertising industry. The results should be available in spring 2009.
Publigroupe's business performance and the gloomy outlook due to the economic downturn have had a significant impact on the Publigroupe share price this year. At the beginning of 2008, the share was still trading at CHF 369.75. Shortly before midday on Tuesday, it was trading at CHF 110, down 1.8 percent on the previous day.