Client Cutbacks Trigger Ogilvy Layoffs

3 percent cut affects N.Y., West Coast offices

The Ogilvy Group this week is laying off nearly 60 staffers at its New York and West Coast offices largely because clients have cut back on spending.

The cuts span multiple units, but the majority of them affect Ogilvy & Mather and OgilvyOne.

Clients spent less than expected in the final quarter of last year and have trimmed their budgets for 2012, according to Ogilvy North American chairman John Seifert. Also, the agency is changing the composition of its workforce, eliminating staffers that lack digital and mobile marketing skills.

More than two-thirds of the layoffs (42) are in New York, with the remaining 16 coming from the shop’s four West Coast offices (Los Angeles, San Francisco, Sacramento, Calif., and Denver). Before the cut, those offices employed about 2,300 staffers. The 58 positions represent about 3 percent of the total staff.

Ogilvy declined to identify which clients have tightened their belts, but the WPP Group agency works for the likes of IBM, American Express, Unilever, UPS, BP and Cisco.

“First-half spending from the client spending [budgets for 2012] that we’ve been given so far is very cautious," Seifert told Adweek. "So, we are reducing the percentage of new business that we would typically put into a budget.”

Such cautiousness was evident in a new poll of marketers and agencies that suggests that ’12 will be another challenging year.

It’s also clear that marketers are continuing to reexamine the cost of agency services. As Seifert put it, “There’s an ongoing process with clients to try to be as cost-efficient as possible. And there we’re [looking at] the balance between annual fixed staffing plans [and] on-demand project work. The balance is shifting in favor of on-demand project work.”

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