Razorfish North America Went Through a Round of Downsizing Last Month

By Patrick Coffee Comment

Sources have confirmed today that Publicis Groupe’s Razorfish recently went through a round of layoffs across its North American offices that started late last month and carried through to the first weeks of July.

An agency spokesperson declined to comment on this development, but others confirmed that the downsizing did occur and that it ultimately affected less than 1 percent of global staff. Given that the company currently employs several thousand in dozens of offices around the world, it’s difficult to determine how many individuals were let go. But the overall total was almost certainly in the low three digits with offices in the East, West and Central regions of North America affected in turn.

Sources tell us that this move did not reflect a “restructuring” or any significant operational changes and that it did not include any major shifts in Razorfish’s North American leadership. At this time, it cannot be tied to any specific pieces of business but rather reflects what at least one party described as “[ongoing] difficulties with Razorfish” that caused North America to lag behind other regions in terms of organic growth.

The primary reason for the round of changes that started last month, then, was a combination of the failure to meet unspecified revenue goals for North America and the after-effects of Publicis Groupe’s December 2015 global re-organization.

In this week’s Q2 earnings report (full text here), holding company CEO Maurice Levy told investors that 2016 has been and will continue to be a challenging year, predicting that 2017 would be far better financially for the holding company. The reason for this trend is a combination of various deals that have yet to deliver in terms of revenue due to a combination of international markets’ reactions to the Brexit vote, a series of account losses and “clients canceling and postponing campaigns last year.”

Levy’s predictions for a better 2017 are predicated, at least in part, on wins like the recent Walmart consolidation, which he and others hope will counter losses like P&G’s shift from Publicis to Omnicom for its North American media business, UM’s win in the Coca-Cola media review last summer, and Walmart’s decision to end its relationship with Starcom MediaVest earlier this year.

The CEO said, “The third quarter will be the most affected by contracts lost last year. Organic growth will be weak in the third quarter, but it won’t be a negative number.”

In terms of Razorfish, the organization is still adjusting to the large-scale restructuring that included the creation of the Publicis.Sapient hub as well as the late 2015 death of CEO Tom Adamski. Sapient Inside, a project in which every Publicis agency will establish an in-house team of consultants, is still in its early stages. As Levy has stated repeatedly, the ultimate goal is to break down silos in order to better facilitate collaboration between the data-heavy Sapient organization and Publicis’ varied creative/digital shops, Razorfish included.

Moving forward, expect to see Publicis.Sapient groups (DigitasLBi, Razorfish, etc.) that once pitched against each other to work together in the interest of winning new business. The outcomes of several ongoing reviews will also play a role in determining how the next 6-12 months unfold for the Razorfish organization.

In the meantime, the network continues to release projects, like this week’s Patron/Amazon Echo collaboration, that showcase its digital capabilities.

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