Internet Marketing Shops Slide More

IXL’s latest cutbacks underscore the growing pains—and in many cases outright contractions—being suffered by interactive marketing firms nationwide.

Atlanta-based iXL is consolidating its Massachusetts operations at its Wakefield, Mass., office, said iXL representative Bill Getch. IXL employs 315 in its combined Wakefield and Cambridge, Mass., locations; sources said up to half of those people were told they were being let go.

Getch declined to confirm any layoffs as a result of that consolidation and declined to comment on reports of sizeable layoffs at iXL’s 115-person San Francisco office. He did say “fewer than 20” marketing staffers, mainly at the Atlanta headquarters, are being let go; this follows iXL’s layoffs three weeks ago of 350 employees networkwide, or 10 percent of its global workforce, said iXL. And amid last week’s turmoil, iXL chief marketing officer Jonathan Ballon resigned.

In recent weeks, most top Internet marketing companies have cut staff, closed offices, seen their stock tank or released dismal financial numbers.

Both AnswerThink and Interpublic Group’s Zentropy Partners have confirmed layoffs in recent weeks. Omnicom’s Razorfish is also believed to be cutting 6-8 percent of its 1,800-person staff. On Thursday, L90, Modem Media and Viant all released third-quarter numbers showing losses or disappointing earnings, about which analysts raised concerns. Analysts said the downturn is due to softness in the Net market, as well as excessive hiring and collateral spending by some companies.

Digitas in Boston, despite posting a third-quarter loss of $4.9 million, has added about 500 staffers this year and plans new offices in Europe, said CEO David Kenny, citing strong client partnerships as spurring success. But Bill Montbleau, a consultant in Burlington, Mass., said Digitas, by narrowing its loss, is doing well by current market standards; but it must show a profit by early 2001 or risk seeing its stock price fall.