NEW YORK (AdAge.com) -- The industry's largest holding company, Omnicom Group, is preparing a massive layoff of nearly 5% of its global work force of 70,000, according to executives close to the situation.
The executives would not confirm which divisions or agencies would be affected by the estimated 3,500 job loss, but it is believed that BBDO, the agency for ailing Chrysler, which lost its flagship U.S. brand Pepsi business this year, would particularly feel the ax. Earlier today, Ad Age reported that Omnicom media agency PHD was laying off 30 people and closing its Atlanta office.
An Omnicom spokesperson could not immediately be reached for comment.
Not all units affected
The executives said not all Omnicom units will be touched. "Wherever adjustments had to be made, agencies that needed to make the adjustments made them," said an executive with knowledge of the situation. "That does not mean all companies made adjustments." And the current layoffs, to be concluded by year's end, may not be the end of it: Additional cuts could come in January across the holding company, executives said.
The depth of the layoffs is striking considering Omnicom already took measures to reduce its head count earlier this year. Just last month BBDO slashed 22% of its staff in Detroit as the office's embattled Chrysler client indicated it plans to reduce its marketing activity. Earlier this month, Ad Age reported that Chrysler, now in the midst of trying to win a government bridge loan to stay alive, is believed to owe the holding company some $80 million.
Omnicom, the parent company of agency brands such as DDB Worldwide, TBWA Worldwide and Goodby Silverstein & Partners, employed roughly 70,000 people worldwide by the end of 2007, up 6.1% from the end of 2006.
Omnicom Group in October posted $213 million in net income for the third quarter of 2008, up slightly from $202 million in the same period last year. But signs of trouble for the holding company were beginning to show in its third-quarter earnings statement: Its public-relations practice, which is made up of Fleishman Hillard, Ketchum and Porter Novelli, among others, showed negative growth for the quarter.~ ~ ~
Contributing: Rupal Parekh, Bradley Johnson