DM Agencies Dodge Brunt of Industry LayoffsAdvertising, interactive and public relations agencies laid off scores of executives this week, but direct marketing agencies were largely spared.
Among the agencies were Agency.com, which dismissed 350 employees, and McCann-Erickson Worldwide Advertising in New York. At direct marketing shops, Frankel, Chicago, let go 30 executives after laying off 45 in February, and the Richmond, VA, office of Brann Worldwide sacked 60 executives. PR firm Cone Inc. announced it will close its New York office June 29.
"It's obviously got to do with the economic situation," said Michael Mesic, marketing director at Brann Worldwide, Deerfield, IL. "It's been a bit of a squeeze on revenues. This is not huge for us. It's not a huge number of people in the overall scheme of things in terms of the total numbers within our company, but we regret it."
The job losses come on top of cuts earlier this year by Rapp Collins Worldwide, which closed its Minneapolis office; Digitas; Grey Direct; BBDO North America; GSD&M; marchFirst; Fallon; Young & Rubicam; and Lowe Lintas & Partners.
Among the major direct shops, Grey Direct reportedly had a firing spate in recent days after a round of layoffs in February. Senior executives at Grey Direct in New York did not return calls for comment.
A call to Rapp Collins Worldwide was not returned at deadline, as the agency spokesman in New York was traveling.
The consensus among executives is that while there is no guarantee of job security, direct agencies have survived because of DM's value in tough economic times.
"I've seen a couple of things here and there where agencies have let people go en masse, but we haven't had anything like that," said Andrew Sexton, marketing communications manager at WPP Group PLC's Impiric, formerly Wunderman Cato Johnson, New York. "There have been no wholesale layoffs at Impiric."
McCann Relationship Marketing, part of McCann-Erickson WorldGroup and a sibling of McCann-Erickson Worldwide Advertising, also has not resorted to any dismissals.
"We are managing our business very prudently and have not needed to lay off," said Ray Roel, director of worldwide system development at MRM, New York. "Traditionally, direct marketing has been considered more recession-resilient because of its orientation toward accountable sales," Roel said. "In a downturn, companies need to continue to generate sales and profits, which is where direct marketing shines."
Yvonne Furth, president and chief operating officer of U.S. operations at Draft Worldwide, Chicago, agreed.
"Direct marketing, [because of] its emphasis on cost-effectiveness and results, often has advantages over other parts of marketing, and compared to general agencies, direct marketers tend to be less affected when the economy suffers a downturn," she said.
DraftWorldwide cut 30 jobs in January but has since hired 37 executives in its Chicago office, Furth said.
According to some estimates, the hiring scene for DM agencies should start picking up later this summer, though that hoped-for upswing hinges on a quick economic recovery.
"I don't think anyone is going to see anything as dramatic as has happened in the dot-com industry," Furth said. "In fact, we're experiencing real positive energy in our work for existing clients right now and we're looking to be adding some people in Chicago. I can't say how many yet. We're working on that."