Another Blow Dealt to Detroit's Ad Business

BBDO, Siblings to Slash Staff Following Spending Cuts by Chrysler

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A correction has been made in this story. See below for details.

DETROIT (AdAge.com) -- Eighty staffers at BBDO's area office in Troy, Mich., were called into human resources one at a time this morning and told they were being let go, according to executives close to the matter. The positions cut from the Omnicom Group agency will affect numerous departments, although an agency spokesman stressed they were mainly administrative.

PHD Detroit, also Troy, is readying an undetermined number of cuts this week as well, as is sibling Organic, Bloomfield Hills, Mich., the executives said.

On Chrysler's roster
All three Omnicom agencies work on Chrysler. Equity firm Cerberus Capital management bought a controlling interest in Chrysler last year from Germany's Daimler and took it private. The "new" Chrysler has said it expects to post a $1.6 billion loss in calendar 2007 and projected major improvements this year.

The automaker has been aggressively cutting costs. Two months ago, Chrysler announced it would slash up to 10,000 hourly jobs and 1,000 salaried slots on top of 13,000 staff reductions it revealed early in 2007.

BBDO Detroit, which had nearly 1,100 staffers two years ago, cut some 200 staffers in early 2006.

"We did make some reductions at BBDO Detroit today," a spokesman for the agency in New York confirmed. He declined to reveal the exact number of staffers terminated, saying the Detroit-area office will have 675 employees following the cuts. The moves were designed to create a more cost-efficient and cost-effective agency, he added.

PHD, which shares offices with BBDO here in Detroit, has 150 employees, a spokeswoman for the agency in New York said. PHD had planned to reduce staff in Detroit because of redundancies between the offices here and in New York, which also has 150 employees, she said.

PHD's earlier NYC shift
As Advertising Age first reported last October, Chrysler said PHD initiated the move early this year of hundreds of millions of dollars of the automaker's national broadcast and cable TV budget to the agency's Manhattan office. PHD said at the time only 15 staffers in Detroit would be affected and that an undisclosed number of them had been offered "the opportunity to move with the business to New York."

A spokeswoman for Organic, which handles Chrysler's interactive account, declined comment.

The Chrysler and Dodge brands spent a total of $586 million in measured media in the first nine months of 2007, according to TNS Media Intelligence. Jeep, whose creative is handled by upstart Omnicom shop Cutwater, San Francisco, was backed by $222 million during the nine-month period, according to TNS.

PHD still handles Jeep media planning and buying.

Bleeding ad jobs
From the start of 2005 through last summer, the Detroit area lost creative ad accounts for auto brands that spent some $880 million in measured media.

Advertising employment in Michigan -- which is concentrated in Detroit, traditionally the No. 4 ad market -- has fallen off despite a rebound in U.S. advertising jobs nationwide from the downturn earlier in the decade. As of last summer, the state's share of U.S. ad employment is 3.2%, down from 4.3% in the mid-1990s.

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Contributing: Bill Shea is a reporter for Crain's Detroit Business.

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CORRECTION: An earlier version of this story incorrectly stated that BBDO Worldwide had 1,100 staffers two years ago. BBDO Detroit had 1,100 staffers in 2006.
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