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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 WPP’s Grey were among agencies affected this week.
- Omnicom CEO John Wren earlier this week predicted furloughs and staff reductions across many of its agencies.
- Executives at WPP, IPG, and Omnicom also said they would take pay cuts.
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Layoffs and furloughs began to hit the ad industry’s major holding companies due to the economic effects of the coronavirus pandemic.
MDC Partners’ CPB, Omnicom’s DDB, and WPP’s Grey are among the agencies affected.
Other reports and recent comments from the leaders of these companies indicated that cost-cutting moves will affect nearly every agency in their networks.
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 late yesterday.
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 layoff 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 client is Domino’s Pizza, but both people said the agency has struggled to win new business over the past year.
Omnicom and WPP have also begun to make staffing changes
Omnicom’s DDB also went through an unspecified number of layoffs today, according to two people with knowledge of the matter.
Omnicom CEO John Wren told all staff yesterday there would be furloughs and staff reductions across many of its agencies. Spokespeople for Omnicom and DDB declined to comment.
WPP-owned Grey, best known for its controversial Gillette ads, also instituted hiring freezes and senior-level pay cuts and placed more than 3% of New York staff on furlough this week to avoid layoffs, according to a person with knowledge of the matter who is known to Business Insider but spoke on condition of anonymity because they are not authorized to discuss it.
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.
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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