• BNet, Wednesday, February 25, 2009 9:34 AM

Enfatico, the WPP ad agency created to serve Dell, is laying off 8% of its staff. It's the latest in a chain of bad news for the shop, beginning with the exit of Dell vice president of marketing Casey Jones, and Dell CMO Mark Jarvis. Insiders say about 80 agency employees are losing their jobs.

Dell telegraphed to WPP's Enfatico that layoffs were imminent back on January 28, with the statement that it is trying to cut $3 billion out of its operating expenses. Those cuts are assumed to include advertising.

WPP boss Martin Sorrell's key mistake may have been to set up the one-client agency just as Dell began a dramatic reduction in its sales and marketing spend. Dell's spending declined 12% over the last several months, from Q1 when it spent $1.9 billion, to Q3 when it spent $1.6 billion. It's a pretty good bet that Dell's Q4 earnings, due in a few days, will show another decline. Not surprisingly, Enfatico CEO Torrence Boone has started publicly reaching out to new clients.

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