Enfatico

It was about a year ago (July 29, 2008 to be exact) that we realized the months old Enfatico hadn't done anything for Dell. Well, a lot has happened since then, with Y&R taking over and all.

So the 90-day deal Y&R CEO Peter Stringham put in place is coming to and end once July runs out. But in the meantime, Mother NY (one of the agencies that worked on Dell ebfore Enfatico came along) has done some work (above) for the client, Dell. When Enfatico first picked up the business, they told Mother NY to keep a lid on the fact that they (Enfatico) weren't doing any TV work. Not anymore. The piece above was sent right to us. Nothing much to it, but it's a noteworthy change, albeit minute.

When asked about the change, Mother NY said, "Mother continues to support Dell in many areas of its business including creative work, design and experiential marketing." Cool, but you were supposed to be done last December, so...

More: "Details on the Enfatico Fold-in; Boone to Stay, But High-level Reorgs to Come"

We've been looking into what will happen now that Enfatico is getting taken over by Y&R. Rumor has it that the digital work will stay with Schematic, and Y&R will have to fight for the print and broadcast work. But fight who? Enfatico has a 3 year contract for the business.

Also it's been about 30 days since we told you about Y&R's 90-day plan to get things up and running for the client, Dell. Since then, Della has come and gone, and not much else has happened. 60 days to get it done, guys.

Update: We're hearing Dell hasn't made any requests for Schematic to take on the digital work, and since Schematic is a part of WPP, we're not convinced it really matters.

More: "AdAge Has It Wrong. The Enfatico/Dell Website Story Is Crap"

Sources within Austin based Enfatico confirm that the WPP PLC agency has been given 90 days to get things going in a positive direction for Dell Inc. We've learned that Y&R CEO Peter Stringham visited the Austin office yesterday to update staff there on this situation, stating that the agency is to focus on nothing but Dell Inc. for the next 90 days. The phrase "double down" has been used.

Sources offer varying opinions as to what this means for the agency. A few spies indicate that after hearing Stringham's talk, their notions are that the shop is now on probation. One said that the probationary period was the only way Enfatico could prevent Dell Inc. from leaving. That has not been repeated by others.

Another source took a different tone on the matter, stating that Stringham is merely using the next 90 days to "right the ship" — not to say it's off course (but Dell is very unhappy, we're told, hence all this hullabaloo).

Stringham has, for the last week or so, been giving this speech to all the Enfatico offices, either in person (in New York, Austin) or via teleconference. Seemingly, his goal has been to inspire the troops, though my sources have interpreted that message as a negative one despite his posturing. Some feel that they have 90 days to get it right or they may lose the client. And then what?

Let me be clear; each of my sources have said in no uncertain terms that the client, Dell, is not happy with Enfatico's work to date. Interestingly, Y&R seems to be committed to the Enfatico model despite the fact that that may be exactly what is preventing the agency from providing the kind of work Dell needs — or wants, anyway.

The last time we spoke with Dell, a representative there said of allegations that the company is unhappy with Enfatico, "As we've said previously, Dell and Enfatico have ongoing dialogue on how best to meet Dell's broad marketing needs."

We contacted Dell this morning, but they did not respond by press time.

In a company-wide e-mail (to Enfatico) yesterday, Stringham had mostly positive things to say to the year-old start-up. The Y&R CEO said he met with Enfatico's top brass to discuss the agency's absorption into the Y&R brand. He explained how his agency works, using independent agencies etc, and reconfirmed that Enfatico will be around for a long time. Stringham is apparently committed to the Enfatico model which makes little so no sense at all considering, as we said, it hasn't worked yet and so far it seems to be nothing more that hyperbole.

The meaning of this news is certainly up for interpretation, so if you have any information that can help clear it up for the hundreds of Enfatico employees who are certainly feeling skiddish regarding these talks, please e-mail matt at mediabistro dot com, anonymously tip us or IM/tweet me at agencyspy.

More: "Details on the Enfatico Fold-in; Boone to Stay, But High-level Reorgs to Come"

Today's Enfactico story alleges that the company may either to broke or to incompetent to purchase a website in a timely fashion for their client Dell. From the AdAge story with the headline, "Enfatico Didn't Want to Fork Over Funds for Website?":

"...the Dell agency refused to pony up $750 a month to lease Adamo.com -- the most obvious domain for Dell's new ultrathin laptop computer, launched recently to rival Apple's MacBook Air. Luckily for consumers, that decision didn't stick once Dell founder and CEO Michael Dell caught wind of the situation; the domain was eventually bought, and now users can reach it via Adamo.com and Adamobydell.com."

MSNBC has picked this up as have other outlets. And guess what - for all of us who work in advertising? We know it's total bollocks. Why?

1. Agencies very, very rarely get to just go ahead and purchase URLs for clients who generally, demand all sorts of approvals before anything is ever done. We don't have carte blanche like AdAge is implying. It's possible that Dell stalled on Enfactico's request and/or just decided not to purchase it. Anyone who has worked in an agency knows this is very possible. AdAge is wrongly assigning blame to Enfactico and yes, I'm defending them. I can't believe it either, but right is right and this assumption is wrong.

2. The brand isn't actually called Adamo. It's called Adamo by Dell, so why would they even be interested in Adamo? Often, brands purchase similar URLS for their product and have it redirect users to the main client site. We all know this, as well. Dell already owns Adamobydell.com. What it sounds like is that the company was unsure as whether to fork over $750 for a like-minded URL.

There. Case closed.

More: Twitter Star David Armano Leaves Critical Mass

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Just to update you on the situation, as it stands the merger of Enfatico and Y&R is set to take place immediately. But what will that mean for employees in the agency's largest office in Austin, the new office in Mangattan etc? Here's what we know, according to sources familiar with the situation:

— As stated, effective immediately, Y&R will absorb Enfatico.

— We have confirmed that Enfatico has won its second piece of business (the first being Dell), Bedford, Mass.-based Progress Software.

— The "worker bees" will likely not lost their jobs, but we can expect some high-level reorganzation.

— Torrence Boone will continue on in some role with the Y&R brand. Details on what he will be doing have not yet been floated.

— In an internal memo, Boone cited, "capability gaps" in Enfatico's design.

— The idea to fold Enfatico into Y&R was Enfatico's idea.

— Y&R helped during the initial transition period when the agency opened just over a year ago.

— Though it's too early to speculate about the fate of the Manhattan office Enfatico leased for the next 10 years, we imagine their legal team is working a deal to get out of that ASAP.

What's important here is that the agency appears to have its employees in mind regarding this transition. The probability that some small portion of the staff will be let go is high, but as we stated previously they are likely to be higher-level folks.

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More: "Breaking: Enfatico Folds Into Y&R, WPP Is Feeling The Burn"

Our Google alert has alerted us to the news that WPP's Enfatico will be merged with Y&R. From the WSJ, who broke the story:

"The move is a retreat from one of the most ambitious projects on Madison Avenue - an effort to eliminate turf wars by housing many different marketing disciplines within a single firm. The structure was one of WPP's key selling points when it landed Dell's advertising and marketing business in December 2007."

A statement from the agency read that this was "a strategic decision" and that "Enfatico remains a standalone brand alongside Y&R's other companies including Y&R Advertising, Wunderman, Burson-Marsteller, Landor and others."

You knew this was coming. From the beginning, Enfatico was the subject of the ad industry's jeers. One client. Too many bodies. A huge lease on a downtown building. Mediocre creative, high level staff changes on the client side and everyone has heard the rumors that Dell is shopping around. A bold idea has gone bad. CEO Sir Martin Sorrell was going to have to do something with the increasingly heavy weight of Enfatico. WPP isn't healthy enough (and really who is?) to redistribute the shop's employees, which number around 800 people worldwide. Where are they going to go? As Sorrell recently wrote in The Financial Times: "Some have said that, intellectually, recessions are exciting or fun. That is callous nonsense. Telling someone who has lost their job or business that their troubles are merely part of a cycle will provide little comfort." Oh how true. Maybe Marty-Mar should write everyone at Enfatico a little note, hmmm?

Meanwhile, WPP as a whole is struggling. JWT recently closed its Chicago shop. In the UK, Publicis beat out a team from WPP for Visa's 2012 Olympic business. Y&R Chicago just lost the Miller Genuine Draft account to the New York office of Publicis Groupe's Saatchi & Saatchi. And WPP's Mindshare is defending the $250M Wrigley account any day now.

Tough times for WPP. Still, the company is pushing deeper into the Pakistani market. Does Sorrell have President Asif Ali Zardari in his pocket? Zardari is known as "Mr. 10% Percent" considering his alleged skill in the fields of bribery and money laundering. WPP isn't alone though. Plenty of death star agencies are hoping that growing businesses in "developing countries" will defray some of the shock and awe happening in the US, as well as Europe. In WPP's case, the balance sheet is a little shaky. Sure, WPP posted $13.6 billion in revenue for 2008, but that includes two months of revenue from TNS and it's against a whole lot of debt.

In early March, the Sorrell told investors that: "I'd just like to say in the 25, 30 years that I've been in the business, I have never seen anything quite like this." His long list of worries is surely growing and growing and growing.

More: Enfatico Fails On The Adamo Campaign

We didn't realize that Valerie Hausladen, managing director of communications agency Enfatico's Austin office, was one of the employees who hit the employment line during the late February layoffs at the Dell oriented agency. At the time, Enfatico's workforce was cut by 8 percent, roughly 80 to 100 people.

Folks around the web have been saying that the shop has six months to live. Hmm... There does seem to be a ton of terrible news coming out of Dell including the cancellation of their smartphone due to lack of interest from carriers. As well, Dell has warned staff at its UK operations that as many as 20 per cent of the work force is about to be eliminated.

Still, the company is moving forward with the release of their Apple competitor - the ultra thin laptop called the Adamo, and the associated creative, which Enfactio created over a year ago. The campaign shows the laptop as a high end fashion accessory. Um, you guys are missing the point. Apple gets all that love for more than just its stylish, highly designed product line. Their brand message goes way, way deeper. Trying to co-opt it isn't such a hot idea. You ain't got the character for it. As PC World noted: "This is a fine example of what a company that is not cool comes up with in an attempt to be cool. The video [an introduction to the Adamo] should be filed under "badly overreaches" and put away permanently."

Enfatico has more than six months to live. They're going to keep going till their heart stops, but heavens! They are a prime example of what happens when agencies don't dig deep on the insights. Plus, not so sure that this the right jump off for a laptop considering the economy and all the financial worries consumers are facing. Is fashion the right thrust here? Maybe stylish AND durable would be better proposition? How about highlighting the warranty or the overall reliability of the computers? How about just being who you are? Dell has gotten way off track as of late in a desperate attempt to take Apple to the mat. Dell's brand message - which used to be about functionality, ease and dependability - needs to make a comeback, hasta pronto.

More: WTF is Up At Enfatico?

Following up on Tuesday's news that Enfatico underwent a round of layoffs that left 100 or so people without work, here's what's being said of the situation around the Web.

— Brand Republic via George Parker: "My final forecast... Enfatico will be rolled into Grey or Y&R within six months... And the agency of the future will rapidly become the agency of the past." Here's their official piece.

— Adweek via David Gianatasio and Eleftheria Parpis: They said nothing about the situation, just reported it.

— AdAge via Rupal Parekh: "In a September sit-down interview with Ad Age, Mr. Boone said Enfatico had previously turned away some new-business opportunities, and estimated the agency would bring a new client onto its roster in six to nine months."

— B|Net via Jim Edwards: "Dell's spending on SG&A has declined 12 percent over the last year. In Q3 it spent $1.6 billion. That was down from Q2 when it spent $1.8 billion. And that was down from Q1 when it spent $1.9 billion. It's a pretty good bet that Dell's Q4 earnings, out in a couple of days, will show another decline in the budget."

— Tribble Ad Agency via The Founder: "The reason Enfatico can be 'called out' is because it's a single client ad agency, meaning just look at Dell's financials to tell you what is going on at Enfatico. Numbers like this can (and normally are) hidden by other advertising agencies because they have other clients they can claim they are receiving funds from. Currently Enfatico has no such crutch. So what's the answer?"

— AdAged via GEO: "To the best of my knowledge, Enfatico has yet to produce a single ad for its only client, Dell. I'm sure that failure should not be borne by the people being schmised by the agency. I'm sure there are Enfatties at the 'C-level' shaking their heads, tsk-ing, destroying and expensing car-service to their country places."

More: "We Hear: Layoffs Have Begun at Enfatico"

Update 2: (8% of staff will be cut from a stable of 800 globally - 64 people) From Enfatico's blog, nextstoryboard —

"Today, we announced a proposal to restructure our team and decrease our workforce by approximately 8 percent. Persistent cost pressures require that we reorganize our operations to better align our business with what is happening in the global economy. These changes also put us in closer alignment with Dell's new global structure and reduced marketing spend. We acknowledged these moves in an internal memo (see below to download) that we distributed today.

While the economic environment remains uncertain, we believe these proposed steps will strengthen our agency so that we can continue to deliver results for Dell and organize for future growth."

Note: there are about 800 Enfatico employees globally. We're working to find out how many are in Austin. If you know, e-mail matt@mediabistro.com or use the anon tips box.

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Update: The layoffs are happening as we speak. What began as a slow drip is now being described as a "slaughter house" — people go into the office and come out laid off. Here's an interview with CEO Torrence Boone that DM News published yesterday. Above is the video that accompanied that interview.

Sources inside WPP agency Enfatico tell AgencySpy that at least three people have been let go from the Austin, Texas staff today. We're awaiting word from the agency, but this news has been confirmed by multiple sources. We will update this story as we hear more.

More: "Dell Loses Another Top Level Enfatico Supporter"

Rumors have stirred recently that Enfatico is having trouble paying some freelancers and is under the gun from Dell, which has purportedly "had their lawyers serve Enfatico with breach-of-contract papers, for failing to deliver on anything they claimed they could do," according to George Parker. Both matters may have snowballed beyond truth, AgencySpy has learned, though Enfatico's future remains unclear.

Payroll Matters
Of the two issues Parker brings to the table (in a post called, "Is Enfatico Finally Fucked?"), the payroll part may be the simplest to unravel. AgencySpy has spoken with sources inside the agency who claim that five to 10 freelance employees went without pay for up to a month.

Enfatico rep. Matthew Hutchison's explanation of the matter; "The vast majority of our freelancers are paid either each week or every other week through our third-party agencies with which we contract. To put it in context, only a handful of freelancers have been affected, and we are and have been moving quickly to resolve the situation."

Dellving In
As for claims that Dell aims to back out of the partnership, a source within the agency tells us that a company-wide e-mail was sent from newly minted Dell CMO Erin Nelson, which noted in no uncertain terms Dell's commitment to the project.

Again, Hutchison: "Additionally, Dell has not served Enfatico with papers. And, in fact, Dell and Enfatico remain committed partners. Dell has reinforced its commitment and partnership to Enfatico and we're already in close collaboration with the new leadership."

Though both Enfatico and Dell could very easily be posturing here, it remains unclear how Enfatico will weather the recession. That said, a transition to full-time staff won't be easy once Schematic returns to other projects. At this time, we're told by internal sources that Schematic is handling the strategy while Enfatico's freelancers produce.

Oh wait, the agency wants to say something about that. "Enfatico is driving all of the digital strategy for Dell worldwide under the leadership of our Chief Digital Officer David Shulman and Global Creative Director and US Director of Strategy Josh Sklar. Enfatico is working with a number of WPP partner agencies worldwide — including Schematic here in the U.S. — on regional execution."

More: "Hey Enfatico, How's That "Getting Other Clients" Thing Going?"