The size of the fee reduction couldn’t immediately be determined, but it was significant enough to force Y&R to cut freelancers and a handful of employees, according to executives.
Sears is the biggest client at Y&R, which also does work for SABMiller’s Miller Brewing Co. and travel Web site Orbitz. The office has less than 100 employees.
The cut follows the completion of the merger between Sears, Roebuck & Co. and Kmart Holding Corp.
Eddie Lampert, chairman and controlling shareholder of the combined company, turned around Kmart by slashing expenses, including marketing. The fee reduction fits in with that pattern.
Last year Sears spent about $640 million on advertising, split between Y&R and Ogilvy. Kmart spent about $175 million; its agency was Grey Global Group’s G2, New York, now part of WPP.
It wasn’t immediately clear whether Sears cut fees at its other roster agencies.
Sears declined to comment, as did representatives for Y&R and Ogilvy. Grey didn’t immediately return calls seeking comment.