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Two years after hitting $420 million in billings-but failing to make a crucial phone call-the St. Louis office of D'Arcy Masius Benton & Bowles is cutting back again, preparing to enter 1996 almost half its former size in terms of employees.

The office is down to 228 people after 38 jobs were cut in the past two weeks, compared with a high of 375 in early 1994. St. Louis President Charlie Claggett said last week when the agency finishes "re-engineering," seven or eight more spots will be gone, though insiders put the number closer to 13.

The latest round follows Blockbuster Entertainment's decision to place its $140 million video account into review. The agency earlier this year lost the marketer's music retailing business, and now has moved media buying and most creative on the video portion from St. Louis to New York.

The upheaval isn't limited to St. Louis: Other DMB&B offices have lost nearly $100 million in billings in the past year from marketers like Denny's, Kraft Foods, FTD and Amoco Corp. Earlier this year, the New York office quietly reorganized its creative department, and the agency acquired Pacific Marketing Group, a San Francisco-based sales promotion and direct marketing agency, and merged its Los Angeles office with Pacific Marketing to form Highway One Communications.

There are also questions about what some say is the unwieldy size of the TeleVest media buying entity, and the quality of DMB&B's creative.

But the trouble in St. Louis has got to be among the most haunting for the agency, because at least one big part of it could have been avoided.

The phone call that wasn't made would have asked Anheuser-Busch, then beginning 79 years as a DMB&B client, if TeleVest could do limited buying for Miller Brewing Co. Ten months after the company learned from an Advertising Age reporter about the TeleVest-Miller deal, a still-incensed A-B Chairman August A. Busch III fired DMB&B from the $135 million Budweiser account.

During the same period, people on both the DMB&B and Blockbuster side of that account began to depart. Bill Melzer quit as St. Louis office president in mid-1994, saying he had been put in an impossible situation twice, first not being told about TeleVest and then by a lack of corporate support for meeting promises to Blockbuster.

The office also kept Pet Foods, even though it was sold to Pillsbury; picked up TWA, Enterprise and Ralcorp; and managed to keep Southwestern Bell-today (along with M&M/Mars) its biggest client-move its corporate headquarters from St. Louis, but keep the agency.

"It has been a wild two years," said Mr. Claggett.

He said the latest layoffs, only some of which were due to the Blockbuster reassignment to New York, are necessary to reposition the agency to compete.

"We are smaller in terms of our billings and the number of people, but we are evolving into a much stronger agency," he said. "We will eat their lunch."

The re-engineering follows a nearly yearlong study and investment of

$1.5 million in technology.

Still the St. Louis office is down to $228 million in billings from a

$420 million high.

While the St. Louis problems are most visible, critics say the DMB&B U.S. system has others that are not as visible. All the agency's growth this year has been overseas.

TeleVest, for instance, has been so wildly successful-it is now the biggest buyer of U.S. national TV, buying $1.6 billion each year-there now are serious questions about its prospects for future growth, its positioning and even its ability to exact the best deal in negotiations.

Some TeleVest competitors question whether TeleVest has grown so big and so dominant in certain markets-especially daytime TV-that its leverage is close to gone. Some say the independent media buying company spun off by DMB&B and run by a separate management has developed a bit of a split personality that could mean marketing dilemmas down the road.

On the one hand, it wants to be the biggest commodity buyer of media for all kinds of programming. On the other, it positions itself as a developer of quality TV programming properties for clients, as evidenced by its recent brokerage of Procter & Gamble Co.'s deal with NBC and Paramount, announced last week.

DMB&B's creative output has also come under criticism. "Historically they have never been known as a creative force," said a top creative executive of a rival agency. "They are recognized as an account management-driven agency."

The man who didn't make the call about TeleVest-either to A-B or to his St. Louis office-DMB&B Chairman-CEO Roy Bostock, quickly denies criticism of creative.

"That's bull," he said last week. "Our creative is on a par with anybody's around the world."

As evidence, he points to DMB&B's burgeoning relationship with Coca-Cola Co.

After winning a Fanta creative assignment in Latin America 15 months

ago, DMB&B has earned a series

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