US agencies lead Covid layoffs – now it’s DDB

Covid-19 is “no respecter of individuals” UK cabinet secretary Michael Gove said when PM Boris Johnson was hospitalised, neatly deflecting a questioner who wondered why lots of people in 10 Downing Street had got it.

That certainly seems to be the case where Covid-related redundancies are concerned, with some big names already departing BBDO in New York and, elsewhere in the Omnicom empire, Unilever global business director Mark Mulhern one of a new round of casualties at DDB Chicago.

Didn’t departed DDB Worldwide boss Wendy Clark do well to avoid all this? Although quite what awaits her at Dentsu Aegis Network when she takes over as global boss in September we can only speculate.

Mulhern was the CEO of We Are Unlimited, the bespoke DDB agency set up to handle McDonald’s in the US before the business departed to Wieden+Kennedy. So he may have been on borrowed time.

Cuts in Chicago will send a tremor through the DDB empire though. Adam&eveDDB in London recently emerged as the biggest UK creative agency by billings (ahead of Omnicom sibling AMV BBDO) after a stellar 2019 when billings increased by 51.5 per cent. If it has to make cuts as part of a wider Omnicom cull there’ll be hell to pay.

These things starts with forced or voluntary pay cuts – usually ten per cent, a modern form of decimation perhaps – followed by so-called furloughs (paid leaves of absence, often for three months) and then redundancies.

Holding company-owned agencies are particularly vulnerable as they look forward to two quarters of thoroughly gruesome numbers to reveal to shareholders. Many such shareholders will be hoping for takeover or break-up bids from private equity and the like as it will take months, maybe years, for the holding companies to rebuild businesses that weren’t growing very fast anyway.

The US – home of dog-eat-dog modern capitalism – is always quickest with the firing gun, as instanced by 22 million (and rising) on what we used to call the dole with Trump-fuelled civic unrest in many big cities.

We suggested a while back that there would be about half the previous number working in established creative agencies when the crisis eventually abates. Media agencies, which employ far more, are harder to gauge. Even though their business was under pressure from suspicious, in-housing clients before the crisis, they always seem to have an amazing ability to come through reverses relatively unscathed.

This particular reverse will be the most testing yet.

Update

AMV BBDO in the UK is reported to have “furloughed” 15 per cent of its staff, a substantial number. Is Omnicom right to act first and try to get the pain over with?

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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