recession we had to have

TMP's collapse surprises industry: advertising agency

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Mate sent this to me earlier thought some might find it interesting...

Linket

TMP's collapse surprises industry: advertising agency

Simon Canning March 20, 2010 12:00AM

THE collapse of advertising agency TMP, once the biggest in the nation and controller of the "rivers of gold" classified advertising market, has caught the recruitment and government ad industry by surprise. The Australian operations of TMP Worldwide, which specialises in recruitment and government advertising, were placed in voluntary administration on Wednesday, bringing to an end an advertising fairytale that began immediately after World War II, when it was started as a side job by a Sydney newsagent.

But newspapers, local governments and state governments were left scrambling as they sought to place tens of thousands of dollars worth of advertising in media ahead of the weekend -- a prime period for local and state government advertising for jobs, information and tenders.

About 200 jobs are now understood to be on the line at six offices around the country.

Administrator Korda Mentha was called in on Wednesday to take control of the company, which was struggling in the wake of the global financial crisis.

TMP Worldwide Australian chief executive Alex Walker, who engineered a local $10 million buyout of the agency in 2006, when TMP withdrew from the region, told staff it had become impossible to sustain the company

"Ultimately we were overwhelmed by the impact of the global financial crisis, which cut our revenue in half," Mr Walker said.

"As a private company (with bank debt) in the marginally profitable industry of job advertising, TMP was a challenging place to be at the best of times."

Mr Walker said he had no choice but to call, in administrators.

Along with the impact of the slowdown in job advertising as a result of the global crisis, TMP is also believed to have been hit hard in Queensland, where Premier Anna Bligh mandated a 25 per cent cut in government advertising spending.

Industry sources said the privately held company appeared to be trading well, with one rival describing TMP as "a very professional" organisation. "I did not see this coming," he said.

In some part parts of the country, TMP was believed to be responsible for between 40 and 60 per cent of all local government non-campaign advertising expenditure.

TMP first came into the Australian market in 1996, when its online subsidiary Monster.com purchased Neville Jeffress Advertising -- at the time one of Australia's largest advertising agencies, funnelling tens of millions of dollars worth of classified job ads through Australian newspapers.

Monster had originally been the online recruitment supplier to Ninemsn but split with the portal in the late 1990s, opening the door for PBL to partner with Seek.

Monster withdrew from Australia in 2006 (returning in late 2008 in partnership with News Limited) and the local TMP operations -- still largely print-based -- were acquired by Mr Walker, the company's chief financial officer at the time.

Administrators from Korda Mentha did not returns calls from The Australian.

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About 200 jobs are now understood to be on the line at six offices around the country.

Administrator Korda Mentha was called in on Wednesday to take control of the company, which was struggling in the wake of the global financial crisis.

Someone didn't tell 'em the GFC is over and its boom time.

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TMP Worldwide Australian chief executive Alex Walker, who engineered a local $10 million buyout of the agency in 2006,
"As a private company (with bank debt)

I think I may have found the problem, and if I read the article correctly, they are still largely print based, an area that is declining anyway, so it's a bit of a double whammy.

High levels of debt seems to be a common theme in these high profile bankruptcies.

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managers must have thought they where working in govment. , ie run yaself over budget and someone else will take care of it. no no pals this is a real business you can only spend what you take in.

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