In another troubling sign that the problems plaguing Chicago’s once-thriving advertising industry are far from over, one of the city’s oldest agencies cut close to half of its staff on Thursday, sources said.
Euro RSCG Tatham Partners, a unit of Paris-based Havas, fired close to 30 people, including its president, Denis Glennon, and director of operations, Jane Melvin, who was hired less than six months ago to help integrate advertising, promotions and direct marketing businesses.
The agency, which dates to 1945 when Tatham, Laird & Kudner was formed, has suffered a traumatic loss of business in the past several months, losing roughly $30 million in billings from Alberto-Culver and another $20 million from Hillshire Farms, among others.
Its biggest piece of business–the $80 million Red Lobster account–is under siege and could leave the agency as early as next week. Walgreen Co., which bills more than $30 million annually, is also expected to part ways with the agency in coming weeks.
Sources said the agency has already lost nearly $150 million in billings in the last year and continues on with only a skeletal staff, which could be reduced further.
And the last link to the agency’s history–the name Tatham–is likely to disappear within the next several weeks. The New York-based management has plans to drop Tatham and rename the agency Euro RSCG.
Tatham’s crisis comes after several failed revival attempts after it lost its massive Procter & Gamble business in 1998. In 2000, the agency attempted to overhaul its staid packaged-goods image to a creative-driven agency when it bought boutique McConnaughy Stein Schmidt Brown.
While the combined entity showed early progress, the agency’s culture never fully changed, say several former staffers. And this year it lost key creative director Jim Schmidt.
In the meantime, as agency chief Gary Epstein set out to introduce a more integrated approach to the agency, combining its advertising, promotion, direct marketing and other so-called “below the line” practices into one big company, the advertising side suffered.
Epstein on Thursday took the blame for the problems, saying that he had taken his eye off the advertising side. However, he denied that the agency was planning on walking away from its advertising practice.
“Absolutely not,” Epstein said when asked whether there were plans to exit the advertising practice.
“Jim Heekin (Euro RSCG Worldwide CEO) and I spent a great deal of time together and have a plan to rebuild the advertising practice,” he said. “There’s no denying that in setting up the [other practices] I was doing other things, and needed to be focused on this.”
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But many industry observers question whether Euro will be able to rebuild its advertising practice.
Once one of the strongest midsize agencies in the country, Tatham remained mainly a regional player while other agencies have relied on strong global networks to grow with big multinational clients.
“It’s questionable about what their point of difference will be,” said one local advertising consultant.
Epstein wouldn’t give specifics about how many jobs were cut Thursday. He said that including its other practices, the cuts amounted to close to 10 percent of the whole Chicago operation. But insiders said that only a handful of jobs remain in the advertising practice working on a handful of accounts.
Tatham’s downfall comes as much of the advertising industry in Chicago continues to struggle to remain viable in the wake of massive consolidation. What was once a thriving advertising town, loaded with numerous independent shops, now consists mainly of agencies owned by big public companies.
Hundreds of jobs have fallen away in recent years as clients cut fees and agencies strove to boost profit margins.
Many of the agencies now face conflicts with their larger New York offices, which tend to gravitate toward bigger clients–leaving Chicago to fight for those clients that don’t want to travel to New York.
Observers expect that the city won’t be able to absorb most of Tatham’s job losses.
Most of Tatham’s staff expected the ax to fall hard and took their frustrations out mostly in symbolic ways. In a defiant sign, several of the pink-slipped employees gathered at the Chili’s restaurant in River North after leaving the office Thursday. Chili’s is the direct competitor of Red Lobster–still Tatham’s client, for now.
On the move: Chicago based management search firm Roberts & Ryan added Debra Bruno as an associate reporting to Gregg Orloff, a partner of the advertising/marketing group.