After trimming jobs throughout the year, Madison Avenue is bracing for even bigger layoffs in 2009.
Ad executives and recruiters expect agencies, which have been cutting in dribs and drabs, to hand out a flurry of pink slips early next year as the ad downturn worsens.
The talk in industry circles is that the major agency holding companies – Interpublic, Omnicom and WPP – are planning deeper cuts to ring in the New Year.
“Close to 50 percent of agencies are owned by holding companies,” said Joanne Davis, a longtime ad-industry consultant. “The public markets are putting pressure on these companies to perform.”
WPP agencies are bracing for cuts across the board in January after CEO Martin Sorrell acquired UK research firm Taylor Nelson Sofres, sources said.
The $2 billion deal raised concerns about WPP’s debt load just as the ad downturn hit. WPP owns creative shop JWT, media-buying firm Mindshare and direct marketer Wunderman.
At the same time, Interpublic is bracing for things to get even worse for the auto business. Interpublic agencies Campbell-Ewald, McCann Erickson and Deutsch all have a piece of the General Motors account.
Interpublic is mulling layoffs in the event GM slashes its ad spending even further or reduces its stable of car brands. Interpublic agencies employ an estimated 900 people in Detroit with ties to the auto business.
“Everybody is focused on Detroit, where there will be significant cuts,” said one source close to the situation. “Anywhere that you have an agency that touches the Big 3, you are preparing for spending to be down 25 percent.”
Several Omnicom agencies, which include BBDO, DDB and TBWA, have cut jobs this year, and industry watchers expect those agencies to make additional cuts next year.
Several ad execs estimated that the big agency holding companies have cut at least 1,000 jobs this year. Agencies usually try to keep layoffs under wraps to avoid appearing weak to clients, making it tough to get a total tally.
ZenithOptimedia, part of ad firm Publicis, predicts ad spending in North America will fall 5.7 percent in 2009, down from an earlier forecast of 0.9 percent growth just two months ago.
The last two ad recessions in the early 1990s and then again a decade later during the dot-com bust led to the loss of thousands of agency jobs, many of them in the high-flying ad center of New York.
“My phone usually rings off the wall the beginning of the year, but there isn’t going to be any hiring,” said veteran recruiter Susan Friedman. “When people quit, they are not being replaced.”