Two days earlier, San Francisco’s Niehaus Ryan Wong had added its name to the list of high-tech agencies making layoffs this year, cutting about 20 percent of the workforce, or approximately 25 people across the firm’s three offices. The move followed similar decisions by Middleberg & Associates, Brodeur, and Citigate Cunningham.
Edelman was the third full-service agency to announce major cuts, following Burson-Marsteller and Ogilvy Public Relations Worldwide.
Edelman’s U.S. president and chief operating officer Pam Talbot said the firm had decided to take preemptive action after seeing a softening in the market in the first two months of the year. “We had been projecting another year like the one we enjoyed in 2000,” when domestic revenues grew 35 percent to just over $150 million, says Talbot. “We had been hiring in line with those projections. But we saw the brakes go on in November and then we began to see some slippage.”
The slippage was increasingly apparent in technology and dot-com business, although it impacted several practices, because Internet clients are served out of the consumer, corporate, and healthcare groups.
“The last time the industry went into a recession, we were too slow to react. We handled it on a day-by-day basis, making a decision here, a decision there. Our feeling was that approach just prolonged the agony. This time we wanted to act quickly and decisively. That way, we hope to protect as many jobs as possible.”
Talbot says she expects domestic growth of around 15 percent for 2001, “a healthy rate, but below the exceptionally strong rate we had experienced last year.” She pointed to several significant new business wins, including GE Lighting, Kraft, Siemens USA, Samsung, Lyonnaise des eaux, and Corbis.
In addition to the job losses, Edelman is closing its Houston office and significantly reducing its presence in Milwaukee. Some “non essential projects” will also be eliminated.
At Niehaus Ryan Wong, meanwhile, “Certain clients have gone away, particularly in the dot-com sector,” says partner Bill Ryan. “We have taken on some new business as well, but we have not replaced all the business that went away. We felt it prudent to stop holding all that extra bandwidth.”
The losses include at least one traditional technology account—Creative Labs, which took PR in-house—and high profile retailer Nordstrom.com, but for the most part consisted of smaller dot-com clients, Ryan said.