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Layoffs and furloughs hit holding companies WPP, Omnicom, IPG, and MDC Partners as advertisers slash spending

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  • Furloughs and layoffs have begun to hit all the major ad holding companies as the coronavirus pandemic has ground the economy to a halt and led advertisers to cut spending.
  • MDC Partners' CPB, Omnicom's DDB and BBDO, and WPP's Grey were among the creative agencies affected.
  • Omnicom Media Group leadership recently confirmed a round of layoffs at multiple agencies in an internal memo.
  • Executives at WPP, IPG, Publicis, and Omnicom have said they would take pay cuts.
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Layoffs and furloughs have begun to hit the ad industry's major holding companies due to the economic effects of the coronavirus pandemic.
MDC Partners' CPB, Omnicom's DDB, WPP's Grey, and IPG's Deutsch were among the agencies affected in mid-April. Omnicom Media Group also also laid off employees across agencies including OMD, the world's largest media-buying firm by revenue.
Other reports and recent comments from the leaders of these companies indicated that cost-cutting moves will affect nearly every agency in their networks.

Omnicom Media Group laid off employees across agencies as travel clients like Carnival and Delta paused spending

Omnicom CEO John Wren said on April 14 that there would be furloughs and headcount reductions across many of its agencies.
Omnicom Media Group, which handles media-buying for clients such as PepsiCo, Apple, and McDonald's, laid off staff at the US offices of OMD, PHD, and other agencies in its network later that week, according to a memo sent by North American CEO Scott Hagedorn and COO John Swift on April 16.
"Leading our business during these times requires some very tough choices. None more so than today, as some of our colleagues were laid off across all OMG US agencies," Swift and Hagedorn wrote.
It is not clear how many employees were affected. A person with direct knowledge of the matter who is known to Business Insider but requested anonymity because they are not authorized to speak publicly said PHD was hit hardest because two of its most important clients, Carnival Cruise Line and Delta Airlines, have almost completely paused spending.
The person said most of the cuts were layoffs. An Omnicom spokeswoman confirmed that OMG agencies instituted reduced work weeks, furloughs and layoffs but declined to elaborate.

CPB, whose clients include Domino's Pizza, had to furlough and lay off staff

Two people with direct knowledge of the matter, who are known to Business Insider but requested anonymity, said the changes hit CPB on April 14.
These people said more than 30 employees were affected, with most placed on furlough but around a dozen laid off. One also said non-billable employees, or those whose hours are not billed directly to clients, were moved to part-time work, and that many took pay cuts.
CPB declined to confirm specifics.
"Like everyone across the industry, we've been affected by the global pandemic. We have made the difficult yet unavoidable decision to furlough a portion of our staff, and lay off a small group," CPB global CEO Erik Sollenberg said. "Our people are our most valuable asset and we feel for them as well as everyone affected by this situation around the world."
CPB's largest clients are Domino's Pizza and Infiniti, but both people said the agency has struggled to win new business over the past year.

DDB, BBDO and WPP's Grey have also begun to make staffing changes

Omnicom's DDB also went through an unspecified number of layoffs in multiple offices, according to two people with knowledge of the matter.
Reports had fellow holding company agency BBDO laying off between 75 and 100 employees, including top creative leaders, in its New York headquarters.
Spokespeople for Omnicom and DDB declined to comment.
WPP-owned Grey, best known for its controversial Gillette ads, instituted hiring freezes and senior-level pay cuts and placed more than 3% of New York staff on furlough to avoid layoffs, according to a person with knowledge of the matter who is known to Business Insider but spoke on condition of anonymity.
A spokesman declined to comment.

The full effects of the virus on the holding companies will not be clear for months

In internal memos and interviews, WPP CEO Mark Read and IPG CEO Michael Roth would not rule out layoffs and said executives would take pay cuts, with WPP's executive committee foregoing 20% of its pay during the second quarter.
Adweek previously reported layoffs and furloughs at IPG agencies MullenLowe and Deutsch.
Publicis, which released an early Q1 earnings report on April 13, said CEO Arthur Sadoun and other members of its advisory board would take a 30% pay cut.
Wren wrote in his memo that he would waive 100% of his own salary, with Omnicom agency network CEOs cutting their pay by one-third.
Dentsu implemented pay cuts averaging about 10% across its Dentsu Aegis Network agencies in the US, according to employees who spoke to Business Insider. The company confirmed furloughs and reductions but did not go into detail.
MDC Partners declined to comment for this story.
Each of the holding company CEOs earns the vast majority of his annual compensation from bonuses and stock rather than salary. In 2010, a prominent New York money manager that owned 1% of Omnicom at the time criticized the company for granting 22 million stock options to executives during the last economic downturn.
Got more information about this story or another ad industry tip? Contact Patrick Coffee on Signal at (347) 563-7289, email at pcoffee@businessinsider.com or patrickcoffee@protonmail.com, or via Twitter DM @PatrickCoffee. You can also contact Business Insider securely via SecureDrop.
SEE ALSO: Platforms for ad creatives are thriving in the pandemic, and their rise could further erode advertising agencies
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* This article was originally published here

https://www.businessinsider.com/wpp-omnicom-and-mdc-partners-hit-by-furloughs-and-layoffs-2020-4

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