Ninety Out in Latest Round of Ogilvy Cuts

Agency Is Being 'Cautious' in Response to Recession, Client Guidance

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NEW YORK (AdAge.com) -- WPP-owned Ogilvy & Mather, blaming pricing pressure during the recession and the increasing involvement of client procurement departments, is conducting another round of cuts, this time shedding 90 people, or 4% of staff across its North American operations.

"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 head of North America, John Seifert, wrote in a memo sent to staff today.

"The economic recession is certainly not over for the marketing communications industry," he added. "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."

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.

The layoffs come despite Ogilvy managing to pick up UPS' global creative account and ad duties for tech behemoth CDW after a barren new-business period.

Ogilvy has had some client losses, too. The U.S. portion of its Yahoo account was handed to Omnicom Group's Goodby Silverstein & Partners in October just after the agency launched the huge "It's You" branding blitz for the internet giant. It's also seen pieces of its valuable Kraft account exit to other agencies such as McGarryBowen and TBWA Worldwide, and lost the iShares account to McCann a few months ago.

Mr. Seifert is expected to hold a series of "town hall"-style meetings with staff to discuss the layoffs and answer questions.

Under new global CEO Miles Young, Ogilvy has spent the better part of 2009 on restructuring its struggling U.S. business -- shaking up management by bringing in new talent and eliminating some roles, as well as attempting to move from a model reliant purely on advertising to one that also focuses on marketing consulting.

Most recently Ogilvy, New York, saw one its longtime leaders, Carla Hendra, move to set up one of several specialized consulting practices the agency has set up this year.