WPP’s Ogilvy & Mather has conducted its latest round of staff cuts, this time shedding 90 people, or 4% of staff across its North American ops.
“Despite recent new-business wins, and an uptick in our fourth-quarter financial performance, we are taking this action in response to our clients’ latest guidance and a cautious outlook for our business generally in 2010,” Ogilvy’s North American Chairman, John Seifert, wrote in a memo sent to staff 12-2.
It’s the third sizable round of cuts for the agency since early 2008. The last, which took place in January, represented a reduction of some 175 staffers, reported AdAge.
The layoffs come despite Ogilvy managing to pick up UPS’ global creative account and ad duties CDW after a slow new-business period. It also added work recently from Sarah Lee, Pfizer and Bayer.
However, Ogilvy lost the U.S. portion of its Yahoo account to Goodby Silverstein & Partners in October just after the agency launched “It’s You” branding for the client. It’s also seen some of its Kraft account exit to other McGarryBowen and TBWA Worldwide.
Excerpts from Siefert’s memo:
“I wanted you all to hear from me personally that today we are letting go 90 staff or four percent of our total North American workforce across the region. This reduction is coming primarily from our U.S. West and East Coast operations.
It’s with a heavy heart that we are making these cuts of both talented and loyal employees. Despite recent new business wins, and an uptick in our fourth-quarter financial performance, we are taking this action in response to our clients’ latest guidance and a cautious outlook for our business generally in 2010.
The economic recession is certainly not over for the marketing communications industry. We continue to experience delays — and some significant cuts — in client spending across all business sectors. We also face continued pressure on pricing, where client procurement departments are challenging every aspect of our industry’s economics, including: salaries, overhead rates, and acceptable profit margins. Even incentive compensation on superior performance results is being squeezed.
We have benefited significantly from recent new business wins, such as UPS, CDW, Medco, Sarah Lee, Pfizer, Bayer, Kimberly-Clark, and a number of other new assignments from existing clients. We have also lost some domestic business on clients such as Yahoo, Kraft and Barclays Global Investors — the result of these clients either expanding their agency rosters or consolidating business across brands and marketing channels.
Our founder, David Ogilvy, blessed us with a distinctive culture of ‘divine discontent’ in everything we do. Over the past several months, we have taken a hard look at every aspect of our business and performance. We have simplified our management structure, clarified our growth priorities, and invested in critical talent in areas such as: strategic planning, analytics, shopper and retail marketing services, performance marketing…and digital everything.
We go into 2010 realistic about the challenges of a weak economy and a turbulent marketing communications industry, but more confident than ever that we have the leadership, determination, and game plan to win for our people, our clients, and the Ogilvy brand.
As ever, my deepest thanks for your understanding and support.”