Fallon is re-examining the mission of its New York office after losing more than $100 million in billings during the past two years. As a result of those declines, staffing at the office has shrunk by more than a third.
With new-business opportunities scarce and increasing cost pressures on all agencies, Fallon is said to be mulling the viability of the office as a stand-alone, full-service operation. Instead, Fallon is looking to pool resources between New York and Minneapolis whenever possible, sources said.
"Minneapolis is going to play a much bigger role in New York," said one source, adding, "They're still going to have a New York presence. [But] to what extent that office remains intact . . . your guess is as good as mine."
Another source noted: "Financial pressures have been so much more acute, basically dating back to the Publicis acquisition."
In the past two years, the New York operation cut staff from more than 100 to about 70-80, and billings have declined from a high of $300 million to about $150-200 million today. And although the shop won a series of accounts this year (Timberland, SilverSea, et al.), that revenue won't be fully realized until next year.
Meanwhile, the agency has not filled a top client-services post that has been vacant since December 2000. In addition, the role of New York president Alison Burns has been thrown into question, with several sources saying she may leave. But Burns, who joined the shop in 1998, dismissed such talk. "I don't know anything about losing my job, nor do I plan to pursue another job."
While rejecting talk of retrenchment in New York, agency chairman Pat Fallon said, "We have had collaboration between the two offices in the past year more than we have before and we're taking a cue from that." He added, "We're not restructuring. We're going to build the New York office. We remain very committed to the New York office." Added Burns: "We'll do everything we can to survive in a climate that has seen [other agencies] fall by the wayside."