WPP Group's Ogilvy & Mather today said it would let go 90 staffers, or about 4 percent of its North American workforce.
John Seifert, chairman of Ogilvy N.A., disclosed the cuts in an all-staff memo shared with Adweek.
Lost business from clients like Yahoo, Kraft and Barclays -- as well as "a cautious outlook for our business generally in 2010" and the lingering recession drove the cuts -- Seifert wrote.
Goodby, Silverstein & Partners, the Omnicom shop in San Francisco, took over lead agency status on Yahoo in October, shortly after Ogilvy launched its high-profile "It's Y!ou" branding push for the portal. Yahoo is spending about $100 million on that campaign. Ogilvy remains on the client roster.
In October, iShares (which had recently changed ownership) moved $15 million-plus in chores to IPG's McCann Erickson and MRM. That work had mainly been with Ogilvy and Venables, Bell.
In August, Mattel moved about $30 million in ad duties to WPP's Y&R; Ogilvy handled some of that workload.
On the plus side, Ogilvy has added work from big-name clients like UPS, Sarah Lee, Pfizer and Bayer, among others.
An Ogilvy representative declined to comment on the layoffs beyond the text of Seifert's memo, which follows in full:
ALL STAFF IN NORTH AMERICA--
"I wanted you all to hear from me personally that today we are letting go 90 staff or four percent of our total North American workforce across the region. This reduction is coming primarily from our U.S. West and East Coast operations.
It's with a heavy heart that we are making these cuts of both talented and loyal employees. Despite recent new business wins, and an uptick in our fourth-quarter financial performance, we are taking this action in response to our clients' latest guidance and a cautious outlook for our business generally in 2010.
The economic recession is certainly not over for the marketing communications industry. We continue to experience delays -- and some significant cuts -- in client spending across all business sectors. We also face continued pressure on pricing, where client procurement departments are challenging every aspect of our industry's economics, including: salaries, overhead rates, and acceptable profit margins. Even incentive compensation on superior performance results is being squeezed.
We have benefited significantly from recent new business wins, such as UPS, CDW, Medco, Sarah Lee, Pfizer, Bayer, Kimberly-Clark, and a number of other new assignments from existing clients. We have also lost some domestic business on clients such as Yahoo, Kraft and Barclays Global Investors -- the result of these clients either expanding their agency rosters or consolidating business across brands and marketing channels.
Despite our cautious financial outlook for 2010, there is an exciting new momentum at Ogilvy & Mather. Recent new client wins have demonstrated the competitive advantage of our multi-discipline business model and, most of all, the people who execute it everyday. We have the most diverse range of strategic communications talent under a single agency brand in the industry.
Our founder, David Ogilvy, blessed us with a distinctive culture of 'divine discontent' in everything we do. Over the past several months, we have taken a hard look at every aspect of our business and performance. We have simplified our management structure, clarified our growth priorities, and invested in critical talent in areas such as: strategic planning, analytics, shopper and retail marketing services, performance marketing...and digital everything.
We have also raised performance expectations for all of our business leaders, none more important than creating value for clients through big ideas, creative innovation, and marketing effectiveness.
We go into 2010 realistic about the challenges of a weak economy and a turbulent marketing communications industry, but more confident than ever that we have the leadership, determination, and game plan to win for our people, our clients, and the Ogilvy brand.
As ever, my deepest thanks for your understanding and support."
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