Advertising giant GSD&M has laid off 32 employees in anticipation of continued downturns in the economy, a company official said last week.
The Nov. 10 layoffs — the Austin-based firm’s first in recent history — included employees of all disciplines and represented about 4.3% of GSD&M’s 750-person workforce. (One source, who left the company earlier last year, told the Chronicle that the number of employees dismissed was closer to 50.) The company doesn’t expect to make any other reductions, said Eric Webber, vice-president of communications. “We were trying to do a lot of planning for the next year; we were trying to predict the future and make adjustments accordingly,” Webber explained, adding that other large national firms are also taking some belt-tightening measures as dot-com firms and other companies slash their ad budgets, or close their doors altogether.
GSD&M recently lost its contract with the wireless division of SBC Communications after the division was spun off as Cingular Wireless, a joint venture of the San Antonio-based SBC and Bell South. But Webber said the staff reduction was not in direct response to the loss of the contract, and that the ad agency still handles a large chunk of the phone company’s advertising work.
GSD&M’s local offices are housed in the eye-catching “Idea City” flagship at Sixth and Lamar. With offices in Dallas and Chicago, the firm is one of the largest creative ad shops in the country, generating about $65 million in sales in 1999. Its top-notch client list includes such longtime customers as Southwest Airlines, and relatively new clients like DreamWorks SKG. The company recently picked up a $50 million U.S. Air Force account.
News of the layoffs caught some media-related business owners by surprise, while others had already received résumés from some of those who were axed. Most local ad and PR leaders, however, don’t regard the layoffs as a sign of gloom and doom, particularly in a town like Austin, which is considered one of the hottest markets in the country right now. In the past two years alone, national firms have moved to town in droves to capture a piece of the booming tech market. While less-established firms might not survive the economic roller coaster, the older shops still have many profitable years ahead, said Kerry Tate, who runs the downtown public relations firm TateAustin. Her sense is that GSD&M, in business since 1971, is merely playing it smart going into the new year. “I see this as more of a leveling off of the economy,” she said. “We’re now going back to the level we were at before all of that funny money, the venture capital money, came into the economy.” As for GSD&M, she added, “they have such a huge, diversified client list, they’ll be able to weather any kind of storm. I don’t think there is any great tragedy about to happen.”
Though Tate’s firm is strictly a PR company, Tate is no stranger to the unpredictable world of advertising. Until two years ago, TateAustin handled both PR and advertising clients before deciding to narrow its focus on the more stable public relations business. “In advertising,” she said, “you’re always adjusting to client demand, but there’s always a need for PR no matter how the economy is doing. You need PR in bad times and you need PR in good times.”
Mike Kolar, vice-president of the R.J. Kolar ad firm, believes that the “good times” still exist; they’re just tamer than they were during the massive IPO blitz. An economic cooling cycle, he said, puts the brakes on the frenetic job-hopping trend that was creating high turnover rates at local ad agencies. “If the economy is more sustainable, it’s much easier to plan and grow your business,” said Kolar, whose firms include 3M, Dell Computers and Sun City. “As for the future, I’m cautiously optimistic. The ideas and innovations going on in Austin right now are just too strong of a force.”
This article appears in December 29 • 2000.
