Advertising managers in Dallas are concerned about the ripple effects through the region’s creative community from a large advertising agency’s large loss of tent clients.
Richards Group, the largest advertising agency headquartered in Dallas with about 650 employees, expects to cut staff as the reality of this week’s mass exodus of longtime customers settles to the bottom line. The layoffs followed a revolt over founder Stan Richards’ description of a new idea for ad campaigns as being “too black”
Owen Hannay, CEO of the Dallas-based advertising agency Slingshot, is concerned Richards Group will have to throw “hundreds of employees into an advertising community that can’t absorb them.”
“And it’s just Richards Group, people,” he said. “You start looking at the editing companies, the freelancers, the shooters. … The service side of the advertising business in addition to the agencies will suffer a lot because they can not replace that business. ”
Richard’s 44-year-old running at the helm of his namesake came to a sudden end on Thursday as he effectively fired himself over racially insensitive remarks he made during an internal meeting of about 40 employees.
After his comments were made public, Motel 6 immediately fired the agency and started a week of bleeding that saw half a dozen well-known brands and Salvation Army’s charity sever ties with the company. Many had worked with The Richards Group for decades.
Hannay said it is highly unlikely that a national client such as home improvement dealer Home Depot will hire another Dallas agency.
The client drain could also hit creative businesses that Richards triggered over the years with other advertising professionals, said Leon Banowetz, president and owner of the Dallas advertising agency Banowetz + Co.
Richards separated a multicultural agency called Richards / Lerma with agency veteran Pete Lerma in 2009. Earlier this year, the agency was renamed to just Lerma. Two weeks ago, Richards Group veterans Pete Lempert and Dave Kroencke launched a new consulting group called Richards Venture.
“When something like this happens in a corner of our community, it affects us all,” said Hawkeye Agency CEO Joe DeMiero, describing Dallas’ creative and advertising community as closely cohesive.
Hawkeye has about 250 employees in Dallas and a total of 931 in 22 offices around the United States
In Dallas, it is typical for creative professionals to flow between The Richards Group and Hawkeye during their careers and vice versa, DeMiero said. He said he believes his agency can absorb some Richards employees.
“If there is any silver lining in a terrible situation, it is that more and more customers are demanding that their partner’s values match their values,” DeMiero said.
The 38-year-old director said he has also seen a shift in how large companies view their relationship with advertising agencies.
Hawkeye, one of the largest agencies in Dallas, has added 18 customers to its business during the COVID-19 pandemic and nearly all required data or a commitment to diversity and inclusion, he said.
“Transformation in the creative industry will require the purchasing side to demand it from the supply side, and the supply side strengthens and meets these demands in a way that is proactive,” DeMiero said.
The University of Texas at Austin, where an advertising and public relations school is named after Richards, on Friday issued a registered apology from Richards to the university and its students. He said in the video that he has never tolerated racial accusations and does not tolerate white supremacy, but acknowledged that his remarks were the biggest mistake of his life.
“In that moment, I wiped out years of trust,” he said. “I could hide from this, but I think it’s better to own it.”