Advertising firms all over the world are coming to terms with the fiscal reality and have either terminated a considerable number of their staff or are considering this harsh move.
According to media reports from abroad, two of the top media houses Omnicom and WPP have both trimmed their staff in the recent past to adjust for the cuts in the ad spend of their clients, but regional market is still buoyant with no such drastic measures planned by any of the international firms in the region.
In New York, Omnicom Group's BBDO conveyed that it has cut 189 staffers across its North American operations "in response to some lost client accounts (e.g., Pepsi in the US) and reduced planned levels of activity on some clients."
That cut, according to industry estimates, equals approximately five per cent of the New York-based agency's staff.
The layoffs come amid confirmation that BBDO parent Omnicom is trimming less than five per cent of its worldwide staff of 70,000. In an official communique, an Omnicom representative said: "Given current economic conditions, our companies have reviewed their staffing levels as they relate to their current business requirements. Some, but not all, will have to make adjustments."
Earlier, BBDO, with Chrysler as its largest client, cut 145 employees at its Michigan, office, or 22 per cent of the staff at that location. It is believed that the current round of cuts does not include individuals in that location.
The agency stressed that the reductions are not related to the dire situation faced by key client Chrysler, which is trying to wrangle a government bridge loan before it runs out of cash. Omnicom is owed some $80 million (Dh294m) by Chrysler, according to industry sources.
The agency added in a brief statement: "We are making reductions in BBDO offices around the world based on an office-by-office assessment of planned client activity in 2009. There is no overall fixed number or percentage we have established."
"People were notified [of the layoffs] beginning today," BBDO spokesman said. When asked about plans for additional staff cuts in 2009, he said: "None are planned."
Before this staff reduction, BBDO worldwide had more than 16,000 employees in 287 offices in 79 countries, according to Omnicom Group's website.
The staff cut also left a dent in Omnicom Group's PHD, the media-buying and planning agency for Chrysler, announcing that it will cut 30 staffers, according to industry reports from the US. The trim represents about 2.5 per cent of PHD Worldwide's North American employees.
"Yes, there have been some adjustments at PHD in line with client needs," an Omnicom spokeswoman confirmed.
Seven people will be laid off in Detroit; and the Atlanta office, which employed 23, will be shuttered. Responsibilities for the Atlanta office will spread among PHD Chicago, PHD Detroit and PHD New York.
Omnicom's London rival WPP Group, was not commenting on speculation that CEO Martin Sorrell issued a memo calling for cost savings of up to 30 per cent at the company's European agencies.
But recent reports in London newspapers confirm that WPP will cut several thousand jobs as the economic slump takes hold of its worldwide operations. The group, which employs more than 100,000 people, is pushing through the cuts after budgetary meetings between divisional heads held in November and December.
The report that appeared in Guardian quoted a company insider saying that "where staff costs exceeded 60 per cent of revenue, WPP businesses were expected to "trim back" on employee numbers to meet internal guidelines. Most of the cuts will be at WPP operations in Western Europe and North America, where the slump has been severe. But the reduction in the size of the WPP payroll will be offset by increases in staff in South America, eastern Europe and Asia, where demand is said to be holding up much better and even expanding in some areas, such as public relations and market research. Here, in the UAE, media bosses are more upbeat about the industry and have not yet announced any such staff cuts across the board.
There have been unconfirmed news of "staff trim" as one source said, "but nothing as drastic or alarming as its seen abroad."
Commenting on the situation in the region, Colin Gottlieb, Chief Executive Officer for Emea, Omnicom Media Group, said in an email response to Emirates Business said: "Given the economic environment, clients (regardless of location or size) are reasonably seeking immediate improvements in the effectiveness and efficiency of their entire supply chain, including their marketing communications."
"It follows that agencies, which best demonstrate and deliver these improvements will be able to weather these challenging times better than those who are less able," he said.
Dodging the direct question of staff cuts, he said: "While we do not have a monopoly on talent, I sincerely believe the group I work for comprises the best talent on the planet to address the critical challenges ahead," making no reference to the proposed or probable staff cuts in the region.
Earlier, in an exclusive interview with Emirates Business, Bob Jeffrey, JWT Chairman and CEO worldwide, had confirmed that there will be no job cuts to face the current circumstances.
"We have to face the challenge and not surrender to it," said Jeffrey, in his perspective of the industry from the top.
"While it may deter some to step out and dare, others will take these crisis as an opportunity," said Jeffrey about conveying his approach to facing the credit crunch.
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