McCann Is Hemorrhaging Jobs and Clients, and CEO Dooner Needs to Name a Successor

Last Updated Nov 2, 2009 5:37 PM EST

McCann Erickson needs to win something to distract from the drumbeat of bad news coming out of the agency. George Parker at Adscam predicted "the shutters may come down very soon on McCann, New York," but we should take that with a pinch of salt.

Nonetheless, there is reason to believe that Interpublic (IPG) needs to start paying attention to the situation at McCann. A recent note to investors by BMO Capital analyst Dan Salmon said:

McCann, in particular, needs some positive news. The primary losses are centered on Microsoft, where the business' exit has been ongoing throughout the year. Other key losses include Viagra (estimated $120 million of billings) and digital/creative work for Hewlett Packard's Personal Systems business in the EMEA region (estimated billings or $150 million).

Moreover, Lori Senecal, head of the New York office, recently departed for MDC Partners' Kirschenbaum, Bond, Senecal and Partners. As IPG's flagship agency, the continued bad news out of McCann is very problematic.

Salmon did see some rays of light:
Fortunately, some news to stem the tide has already arrived. The agency won the Barclay's iShares account earlier this week and Robert LePlae is settling into the North American President's role after leaving Omnicom's TBWA.
McCann was mentioned only once on IPG's recent conference call, even though it is IPG's biggest agency. IPG CEO Michael Roth said:
McCann has felt the brunt of the impact of the issues in the tech and auto sectors that I mentioned earlier.
He mentioned some measures to strengthen the brand in Brazil and then said:
... We continue to have confidence in the Worldgroup as one of the industry's leading providers of integrated solutions for global clients.
"Continue to have confidence"? Why would he need to say that? In terms of jobs, IPG also had some unexpectedly bleak news. CFO Frank Mergenthaler said:
As a result of our severance actions, base salaries have decreased $50 million through nine months, and headcount has decreased 5,100 employees.
That's 2,100 more jobs gone that previously reported. If McCann is 40 percent of IPG, then about 1,000 of those jobs have gone from McCann alone. IPG even updated its PowerPoint From Hell:

There are more layoffs to come. The agency told investors on the call:

Looking to the fourth quarter, our severance actions will increase in step with our more conservative revenue outlook.
The problem, of course, is that at 61 years old, McCann CEO John Dooner is probably too near retirement to turn the ship around. He must now name a successor that can.