WPP Agencies Ready Layoffs

First Omnicom, now WPP. The "big six" holding companies are making their cuts.

Pharma Exec published the below article today, which provides insights for pharma companies worried about how their agencies will fare. Short story: its good news for agencies focused on healthcare and consumer packaged goods. "Smaller firms that deal primarily in drug ads should be safe ... Packaged goods and healthcare hold up in down economies." For agencies focused on the auto industry and other key consumer accounts in the past - not so much.

A few WPP-owned agencies I'm familiar with in the pharma world include: RTC RM, KBM, VML, Ogilvy, Wunderman, Grey, Y&R, Commonhealth, & Compas. No word on which agencies will be taking the hit, or which functional areas, but I'm guessing digital-based agencies will fare better.

Regardless, the agency world is a tough industry to be in no matter what the economy looks like. No one likes to hear news like this, even if its their competitors, and I hope my friends, contacts and comrades out there are able to weather the storm.

Ad Agencies Feel the Crunch as WPP Readies Layoffs
Jan 7, 2009

By: George Koroneos, Online Content & News Editor

PharmExec Direct Marketing Edition

The advertising industry, which went into the holidays suffering less from the struggling economy than many other industries, got bad news this week when the British newspaper The Guardian reported that WPP, the advertising and communications mega-company, would eliminate thousands of jobs (out of about 100,000 worldwide) as a result of the recession.

While WPP denied the rumors, a flurry of stories began circulating through legitimate press organizations including AdAge and BNET, which reported that WPP subsidiary Ogilvy & Mather will shed up to 100 employees. Omnicom, like WPP a member of the “big six” advertising holding companies, announced that it will lay off between two and five percent of its global workforce.

So what does this mean for pharma and it agencies of record?

According to most of the ad professionals Pharm Exec asked, the outlook is better than it may sound. Companies with major accounts in consumer products—particularly automobiles—are in for a rough 2009, said one creative director. But smaller firms that deal primarily in drug ads should be safe—at least until patents start expiring.

“The worst layoffs I ever saw were the ones during the dot-com bust—I have never seen anything like that,” said Mel Sokotch, a veteran of Grey Advertising and Foote Cone & Belding. “But what drove that was the extraordinary money being spent by dot-coms. This time, I have a sense that [layoffs] will line up with the economy and the industries that are hurting.
“If you have an auto account, you are going to be hurting. On the other hand, if your client is Procter & Gamble or Kraft…packaged goods and healthcare hold up in down economies. It’s always been a good thing for an agency to have a lot of healthcare and packaged goods because they are more recession proof.”