As of yesterday there was about an 8% reduction of 1000 employees at the advertising agency, basically 80 people have been fired over the past 24 hours. Now we have been told by 3 senior level officials at the company that this is “once and done” and that no other layoffs are expected. The problem we have with this is that Dell informed Enfatico a month ago of this action. In fact Dell told Enfatico that they are cutting big parts of their advertising budget.. My friend at CBS / B|Net Jim Edwards called them out on this.
“Dell’s spending on SG&A has declined 12 percent over the last year. In Q3 it spent $1.6 billion. That was down from Q2 when it spent $1.8 billion. And that was down from Q1 when it spent $1.9 billion. It’s a pretty good bet that Dell’s Q4 earnings, out in a couple of days, will show another decline in the budget.”
So an 8% reduction in staff for a 12-20% reduction in spending (just wait after Q4 is released) doesn’t add up.. not by a long shot.
There’s no good answer to this… It could mean that Enfatico was overstaffed by huge numbers *on Dell’s tab* prior to the layoffs… or that this is just round 1 of *a continued layoff process*.
There is no other way to answer this.. either “we over billed Dell big time” or “we lied and more layoffs are on the way” .
The reason Enfatico can be “called out” is because it’s a single client ad agency, meaning just look at Dell’s financials to tell you what is going on at Enfatico. Numbers like this can (and normally are) hidden by other advertising agencies because they have other clients they can claim they are receiving funds from. Currently Enfatico has no such crutch.
So what’s the answer?