I'll confess up front: I have a bit of a bias against marketing agencies. While I've invested in one - Creston - I'm still on the fence about it, and its inclusion and survival in the portfolio is probably more attributable to it bumbling along around the same share price and not grabbing my attention more than anything else. That's a terrible reason, of course - endeavour to not be like me. In the interests of being open and honest, though, I'll try and quantify my bias. You can then decide if I'm being fair or not and - more importantly - I can appraise Mission Marketing, a reasonably cheap looking company, in as balanced a way as possible.
My qualms
Before I get on to the more quantifiable stuff, I'll indulge my tabloid side. Here're some snippets from the Chairman's Statement with Mission's recent interim results:
We've got a really nice business here... Our strategy is not driven by brobdingnagian principles; it is quite simply to excel in whatever we do... ... Perhaps this is due to peniaphobia but more likely it stems from a passion to establish the missiontm as the most respected and regarded Agency group in the UK.
I defy anyone who can read that and not raise at least an eyebrow. Perhaps I'm just lacking in grey matter, but I don't like having to look up words in interim results. Maybe he's just trying to liven things up - call me Scrooge, but I like the reporting of results to be as straightforward, user friendly and unbiasedly factual as possible.
On to the more relevant stuff, though. Why am I always a bit more cautious about investments in marketing companies?
1: Marketing companies are people businesses. I feel nervous when the driving factor behind a businesses's performance is something which is so flexible, and subject to its own whims. I had the same problem with broking firms; what does the business provide here? Well, a brand name and internal systems - but that's about it. Telephones and desks aren't hard to come by. This means, of course, that in good markets staff do very well - much of the surplus flows to them. It also, to my mind, makes their results far more unpredictable and subject to a set of criteria investors - with…
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