Ad Agencies Getting Gutted
With the Q3 2009 earnings season in the rearview mirror, I can say my prediction was off the mark: The job situation at ad agencies is actually a lot worse than it looked before the U.S. holding companies made their earnings releases. It’s not “dozens” of layoffs — it’s thousands.
Here’s why: Interpublic (IPG) and WPP (WPPGY) both disclosed that the reduction in headcount at their agencies was far larger than previously reported. IPG said it had lost 5,100 jobs when previously only 3,000 lost jobs had been reported. WPP admitted 11,232 jobs were gone when previously only 7,800 job losses were reported.
Omnicom (OMC) said it had axed 5,000 from its staff, when previously it had said 3,500, but added it would continue to adjust its headcount as required.
In addition, Cliff Freeman & Partners closed its doors.
The numbers are adding up fast....and these are high paying service jobs. J&J announced thousands of cuts today and so did Nokia. We are also seeing city, county, and state job cut announcements flood in....especially in schools, police and fire departments.
In a service economy....job growth is a leading indicator. No jobs, no service being offered. In a production economy, you can produce more with the same base of labor.
America was a production economy in Post WW2 until recently....in the past ten to twenty years, we have morphed into a consumer/service economy dependent on bodies to produce revenues.
Evidening the dramatic slowdown in the economy is the OVER 20% drop in income tax receipts. With layoffs accelerating recently, next year will likely be much worse despite claims being made to the contrary.