Publicis Groupe in the jobs vanguard as Leo Burnett closes GM outpost

It’s that time of year when HR departments dust off their scalpels and try to make the numbers fit. Which they never do of course so the holiday season is when redundancies are decided, ready to smuggle out over a period when holding companies and agencies think no-one’s looking.

Publicis Groupe has already wielded the axe in the US, firing over a 100 staff from various agencies for declining to return to the office. Now it’s closing the Troy, Michigan office of Leo Burnett (below) with the loss of 79 jobs following a General Motors review which has seen the agency lose Cadillac, Buick and GMC creative.

GM itself is struggling with the hoped-for transition to EVs and is laying off 1,000 at its Global Technical Center in Warren on top of 1,000 software jobs in August.

Publicis says: “Detroit remains an important city for us, and we will continue to invest in our capabilities and offerings there.”

Most of the holding company big creative agencies are struggling even while the impact of AI has still be fully felt. Where it hits most obviously is production, a for decades a steady stream of highly profitable income for the agency groups. Back in the day UK creative agencies used to charge 15% commission on production and then, for good measure, mark this up a further 15% to reach 17.25% (for reasons which remain lost in the mists of time.) With some big TV production budgets of over £1m even then, the profit contribution is clear.

That’s mostly gone as the holding companies have centralised production to compete with the likes of Tag (now owned by Dentsu.) This, presumably, is one reason why creative agencies margins have reduced so dramatically. At WPP, for example, most production goes through Hogarth which has remained profitable even while its feeder agencies (in some cases) have not.

Then there’s the rise of specialist in-house agencies like Brandtech Group’s Oliver which has just muscled its way onto the easyJet roster, doubtless to the displeasure of mainstream agency VCCP. AI will only accelerate this particular trend and one of the consequences will be the loss of production-based jobs across the spectrum.

This holiday season looks certain to be another bumpy ride for many.