Aegis: We're Done With U.S. Job Cuts, Focused On 'Fixing' Carat

by Joe Mandese, Mar 19, 2009, 9:00 AM

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In a rare positive note for the U.S. advertising and media employment marketplace, Aegis Group this morning said it completed its "cost reduction" in the U.S. marketplace, indicating there would be no further cuts at the U.S. operations of Carat, Isobar, Posterscope and its other operating units here. The disclosure, part of a 2008 earnings release issued by Aegis, however, announced a "phase 2" to its cost reduction program that would cut a projected 780 jobs across 42 markets outside the U.S., the majority of which would come from Aegis Media operations around the world.

The good news for the U.S. job market comes as several other media organizations are implementing new workforce reductions, including a nearly 8% cut in the U.S. operations of Interpublic's Universal McCann (see related story in today's edition), and rumors of a new round of layoffs at Publicis' ZenithOptimedia Group. The Zenith rumors, which could not be confirmed at presstime, were being spread across social network Twitter.

And in another weak indicator for the U.S. advertising marketplace, Crain Communications, publisher of ad industry bible Advertising Age and other trade and business publications, announced a 150-person workforce reduction, and an "across-the-board" 10% salary cut for its remaining employees.

"We hope the economy stabilizes soon," Keith E. Crain, chairman of Crain Communications Inc., said in a statement published in Crain's B2B magazine Web site. "Our ability to implement these difficult decisions now will prepare our most robust brands for the future. Our goal is to emerge from this recession as an even stronger company as we begin to look forward to our 100th anniversary in 2016."

Crain Communications was founded by Keith and Rance Crain's father G.D. Crain, who launched Advertising Age in 1930, at the start of the Great Depression.

Aegis, meanwhile, reported relatively strong 2008 results, including overall revenue growth of 21%, and an "organic" growth rate of 4.6%, which while less than half of the 9.8% organic growth rate it generated in 2007, nonetheless is deemed healthy given the economic downturn.

The drag in Aegis' mix came primarily from Aegis Media's U.S. operations, particularly Carat, which has undergone a rough bout on the new business front, and has been hit by the same reduction in client spending that has affected the rest of the U.S. ad industry.

Aegis Media Americas managed to grow its gross revenues by nearly 9% during 2008, which translated into just 0.2% on a "constant currency" basis.

Aegis listed its need to "fix Carat U.S." as one of its chief goals for 2009, but noted the unit already has made new headway with a good new business start to the year, a new president, and several key note hires including former OMD research guru Mike Hess and new rainmaker Stephen Feuling.

On another bright note, Aegis pointed out that Isobar continues to be a growing asset, and is the largest digital advertising and media services network in the world. And digital services now account for 29% of Aegis Media's total revenues, greater than any of the other major agency holding companies.

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