Markets

Enfatico is Wrapped Into Y&R; Layoffs Expected; Dell Looks Elsewhere

By Jim Edwards

Updated on: April 10, 2009 / 11:55 AM EDT / MoneyWatch

Even though everyone expected it, it's still a surprise: Enfatico has been wrapped into Young & Rubicam, effectively killing* WPP and Dell's grand experiment of a giant new international agency to serve only the computer maker. (See correction below) No layoffs have been announced as yet, but there is only one reason for such consolidation -- to eliminate the redundant duplication of tasks. Enfatico staffers would be advised to update their resumes. There was already one round of layoffs at the shop in January.

One exec on the hot seat is Enfatico CEO Torrence Boone. He will now report to Y&R Brands CEO Peter Stringham. He used to report directly to WPP chief Martin Sorrell.

What is the meaning of this org-chart revamp? Here's one opinion: Sorrell doesn't want to see Boone's face or hear his voice as much. That leaves Boone in an interesting position -- his business cards say "CEO," but inside Y&R he will simply be* be the equivalent of the most highly paid account chief of a particularly large account team.

That's not a bad position to be in -- in a business of relationships, the person with the actual client relationship ought to be rewarded for keeping the business on board. But there are reasons to believe that Boone's relationship with Dell isn't a match made in heaven.

First, Boone has been actively looking for new clients as Dell cuts its budgets. He managed to embarrass himself by forgetting the names of his pitch team members in Enfatico's failed bid for Vonage, Tribble reports. Ad Age:

Enfatico finally managed to attract its first non-Dell client: Bedford, Mass.-based Progress Software, a maker of infrastructure software programs.

Don't count on that client to move any needles. It's B-to-B work, and the media budget will be tiny.

And Dell has been looking beyond Enfatico for more help. Think about that: This is Dell's custom-designed, built from the ground up, one-client plaything -- and Dell doesn't think it can do everything it needs to do.

More seriously, the client execs that actually wanted Enfatico created left months ago. Ad Age:

Cracks in the Enfatico structure were all too evident with the exit of the two top Dell marketers who designed the agency, Mark Jarvis and Casey Jones. The latter once told Ad Age he hoped that the Dell agency being built at WPP would come to be known as "the greatest agency in the world."

Ad Age leaves the most telling quote to the end:

"Torrence [Boone] didn't have enough time. Had he been the guy at the beginning, it may have worked," said one top executive. "I just don't think they had the talent that really understood the high velocity of the transactional nature of the Dell business. They thought it was a big global branding assignment, but brand is part of that, and you have to drive the transactional part. It's a tough piece of business, and what's tough about it is to really understand is how do you drive the business and drive the brand at the same time. I think they struggled with that."

Look at the tense the source is using: He or she is talking as if Boone has already left the building. More seriously, there's a strong suggestion that after more than a year working for Dell, the agency didn't* doesn't understand the nature of the business they were serving. That's always eventually fatal -- for the agency.

What does Sorrell have to say? He's keeping uncharacteristically quiet. He's probably embarrased. He knew at the time that it was a strategic error to create this agency. But hey, clients pay the bills and call the tune, right?

* This item and its headline have been corrected. Enfatico is not "dead," as the original headline said. It remains a standalone brand inside Y&R.