Just eight months after entering Orange County, the national advertising agency N W Ayer said Monday it will shut down most of its operations in Irvine, leaving in doubt the future of 50 employees and $25 million in annual billings.
The Irvine unit, which will shut down creative operations and become a service office with about 10 employees, was under-utilized, said John Littlewood, chief executive officer of Ayer Pacific, the agency's western division.
"It was 25,000 square feet, and we weren't doing (enough) business to be able to afford that," Littlewood said.
He said a few members of the county staff might be offered jobs in Ayer Pacific's Los Angeles office.
Ayer, based in New York, moved into Orange County in March by buying the Reiser Williams deYong agency. The acquisition brought Ayer about $20 million in annual billings and hopes for even more expansion.
Dan Ginsberg said he was recently fired as Ayer Pacific president after he disputed the decision to shut down the creative operation.
"Business was great and Irvine was making money," Ginsberg said.
But Littlewood said costs of labor and space were too high to justify maintaining the office. "It was a corporate decision. Creatively, the Irvine office did very good work."
Littlewood said when Ayer began looking at Reiser Williams, the agency was in offices about half the size of the current quarters. The agency moved to larger offices in January.
The Irvine office also suffered because it was forced to resign the $7 million-a-year account for Pizza Hut's Western region after Ayer won the much larger national account for Burger King. The firm could not handle both accounts because the fast-food companies are competitors.
Littlewood said he hopes that clients who had dealt at least in part with the Irvine office--including Toshiba America Inc.'s Copier Products and Information Systems division, worth $15 million in annual billings--will move their work to Los Angeles.
But some clients said they are considering other agencies.
"It would be like going to a new agency. We were very happy with the work of Irvine," said Doan Hoff, advertising manager of Yamaha Electronics. "It's likely we'll go elsewhere."
Industry sources also said Ayer's $1.3 million Orange County Transit District account is in doubt because of the OCTD's desire to use a county-based agency.