Infoserve Group PLC
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Archived News - June 2008
Infoserve’s Strategic Review Leads to Exciting 2007
26th June 2008
Infoserve Group plc, the e-marketing company specialising in local search, has made significant progress for the year ended 31 March 2008 following a strategic review of its operations and staff and the signing of major new contracts with the world’s two biggest search engines, Google and Yahoo!
Revenue for the year increased by approximately 25% year on year to £4.65m, and the performance per sales executive increased from £32,000 to £46,600, a rise of 45% on last year and 191% on the same period two years ago.
This increase in sales performance and turnover is due to higher quality and better-trained staff, increased awareness and a more attractive product.
In May 2007, Infoserve became the official Yahoo! Local advertising sales partner for the UK, giving it exclusive rights to sell up to four featured listings to SMEs on each page of Yahoo! Local.
In early 2008 the company announced a significant contract with Google resulting in Infoserve becoming one of only two companies in Europe to be appointed an Authorised Reseller of Google AdWords.
Under this strategic agreement Infoserve will provide SMEs with full-service Google AdWords account management in order to maximise return on investment for each customer. The service launched in late May 2008 after four months collaborative work between the technical, development and product marketing teams of Infoserve and Google, will have an increasing impact on earnings in 2008/9.
In addition to improved sales performance and turnover growth, overheads have also been well managed following a strategic cost review in October. A substantial amount of overhead expenditure was taken out of the business without affecting day-to-day operations. Second half expenditure reflected a saving of around £700,000 on an annualised basis and has reduced monthly cash outflow significantly.
Furthermore gross margins have improved from 4% to more than 11% during the financial year and to nearly 24% in the second half, reflecting the increased productivity and also reduced recruitment costs. The latter has occurred partially as a result of staff retention, which has improved 60% year on year, and also due to more people applying direct to the company as awareness continues to increase. In monetary terms, recruitment costs fell from £132k for the first six months to £52k in the second half of the year.
Operating losses have also reduced by approximately £370k to £2.71million this year from £3.07million last year, as a result of the improved sales margins and the reduction in overhead costs. The losses continue to reduce significantly month on month with the average EBITDA falling from £236k loss per month in the first half to £175k per month loss in the third quarter. The last four months show an average of £46k per month loss.
With internet advertising topping £2.7billion in 2007 and forecast to continue to grow dramatically for at least the next five years, Infoserve’s chairman, James Newman, believes the strategic review and new contracts has put the Group in a strong position to exploit the popularity of online local search.
“We believe that the substantial increase in productivity per person reflects the growth of the sector,” he said. “The new products being developed are likely to sell well over time and with renewal levels being maintained at a steady level , the transparency of future revenue becomes clearer.”
Infoserve’s CEO Steve Barnes, believes the investment in Infoserve since it was launched in 1999 has cemented its position as one of the UK’s leading online search specialists.
“Between July 06 and June 07 paid for search became a £1.4 billion medium in the UK, accounting for 57.1% of the total amount of money spent on online advertising,” he said. “In July 2007 28m people visited a search engine in the UK and 26.2m of these clicked through onto a site. Google searches recently reached 1.7billion per month in the UK, which extraordinarily equates to an average of 23 searches per month for every single person in the UK.
“The strategic partnerships we signed with Yahoo! and Google position Infoserve uniquely in the UK, and will be the foundation of growth over the next few years. I am particularly proud that our integrity and transparency in our dealings with our customers enabled us to win these significant contracts.
“In addition, we have continued to invest in, develop and grow sites displaying our local search data. Our relationship with the Football League has expanded to include 49 separate football club websites, which put our data in front of more than six million visitors to these sites each month.
“Our business database of almost 3.5 million business records continues to expand, and through our daily contact with approximately 10,000 SMEs we are able to cleanse and generate up to 100,000 updates each month. We continue to collect customers’ keywords and now have the ability to deliver comprehensive relevant local search terms for over 500,000 businesses, allowing more detailed and granular searches to receive more relevant and targeted responses.
Above: James Newman and Steve Barnes of Infoserve.
“We have also enhanced and grown our own portfolio of directory sites spear-headed by www.cityvisitor.co.uk. Our single industry vertical directories now number more than 120. This portfolio enjoys more than 23 million first page results on the major search engines, covering a broad range of business categories and locations.
“A recent survey by the Kelsey Group reveals that 90% of consumer purchases are made within 20 miles of where people live or work. With our network of sites now receiving more than 32 million visitors each month, it reflects that we are matching local search demand with relevant and appropriate solutions.
“We also continue to build websites, from simple templated solutions through to bespoke comprehensive sites with full e-commerce facilities. With almost 50% of SMEs still without a website, the potential for website sales clearly remains substantial.”
“Our financial year 2007 was an exciting one for Infoserve. Our revenues grew and we continued to invest in the future. I remain convinced that local searching online will continue to grow and become integral to everyday lifestyles, and we will constantly look to develop our business solutions in order to benefit from continued market growth.”
For further information, please contact:
Infoserve Group PLC
Steve Barnes, Chief Executive
Tel: 0870 556 1001
WH Ireland Limited
Richard Lindley
Tel: 0113 394 6628
