Two prominent agencies that are part of Omnicom Group -- BBDO and Goodby Silverstein & Partners -- were forced to make sizable staff cuts Thursday due to client losses.
BBDO's cuts were linked to the agency's recent loss of one of its biggest U.S. accounts, Procter & Gamble's Gillette just weeks ago. After a seven-month review, the business was awarded to WPP's Grey, a major blow give BBDO's relationship with the brand spanned nearly 80 years.
A spokesman for BBDO declined to comment on the number of staffers who were eliminated, but characterized the cuts as "significant and across departments." The reduction, according to another person, could be as big as 10% of U.S. staff.
In the case of GSP, cuts were linked to the agency's loss of General Motors' Chevy business. The automaker earlier this year consolidated all of its Chevy advertising globally with McCann, which is now running the structure that was previously shared between the shops, called "Commonwealth." In addition, the cuts at GSP stem from the loss of Nintendo business earlier this year and some other client pullbacks in spending.
BBDO is global network and is much larger than GSP, which only has offices domestically, including its San Francisco headquarters and a new Big Apple outpost. The fate of GSP's Detroit office, which was opened for GM, is unclear but its staff is likely mostly being absorbed by McCann.
According to the Ad Age DataCenter's recent agency report, BBDO's revenue in 2012 was $1.47 billion, while GSP's was $170 million.
The impact of the shops' respective client losses will likely be felt this year, explaining the need to undertake layoffs to reduce the agencies' overhead. But obviously, it's not just about money, and making cuts takes a major emotional toll on agencies.
Below, how founder Jeff Goodby explained it to staff in an internal memo we obtained.
You've heard the financial reasons for reducing our staff. I just want to talk a bit about the human side of it all.
Please be assured: No one takes this process lightly.
As we often say, advertising is all about people and accounts. David Ogilvy wrote, "The assets go up and down in our elevator every day." It is so true. We value our people, and our humanistic environment, more than anything.
Strangely, that's why, when we lose business or have cuts in fee, it is important to react thoughtfully, but expeditiously. Companies that don't are not prepared for the future, and they don't serve the people who are still on staff. They endanger present and future jobs.
We are optimistic about our plan to move forward, in terms of serving present accounts and getting new ones, and will share details next week. But we are also thankful for and deeply appreciative of the contributions of people who are leaving.
We will do everything to find them new situations. And if history is any indication, we will find ourselves welcoming some of them back in the future.
Thanks for your patience about all this.