"There was simply too much lost in income to rationalize keeping an East Coast office open," said Dave Luhr, W&K's director of account services.
After W&K lost the Subaru account, Luhr had said the agency would "most definitely" keep its Philadelphia office open. Yesterday, he said economics made that impossible.
"This agency has always been financially very stable, and we want to make sure we continue that," he said. "Too many agencies today are worrying about their financial problems instead of their clients' problems, and we simply didn't want to be put in that position."
He also said the agency had had no trouble attracting national business to its Oregon office.
At least two clients served from W&K's Philadelphia office said they expected to continue working with the agency, presumably in Oregon: ESPN, a $10 million to $20 million-a-year account, and YM magazine, a $1 million account.
Elizabeth A.N. Williams, vice president of marketing at Philadelphia Newspapers Inc., which publishes The Inquirer, said, however, that PNI and the agency agreed that "it just isn't feasible" to continue their relationship ''given the distance."
Before closing up shop, the agency will complete a campaign to launch The Inquirer's new daily Main Line/Delaware County section, Williams said. The Inquirer's account was worth $1.5 million annually, half the amount originally projected, because the paper postponed plans to produce other daily zoned
sections in addition to the Main Line section.
Subaru had hired W&K to help boost its declining U.S. sales, but sales continued to plunge despite W&K's "What to Drive" campaign.
Other Philadelphia agencies expressed regrets about W&K's departure. "They brought a kind of vitality to the market," said John Goodchild, president of Weightman Group. "It's always great to have someone doing national business in Philadelphia."
Steven Grasse, president of Gyro Advertising, said W&K's presence lent credibility to other Philadelphia agencies.
W&K's Philadelphia office referred all questions to agency headquarters. One employee in Philadelphia said workers were "lining up at the copier" with their resumes.
Luhr said "a handful" of the 45 employees would have jobs in Oregon. "We hired a terrific group of people. . . . It's absolutely dreadful to have to let a majority of them go. People in this business know that it's a risky business, but it still comes as a huge shock, obviously."
Local ad executives said they saw the closing as an isolated case involving W&K's dependence on the Subaru account. But they said other local agencies also were struggling through tough times, taking steps that included layoffs and across-the-board pay cuts.
Luhr said W&K's office closing "is a testament to what happens in the ad business. The average client stays with an agency 2.7 years. That's why the business has been and always will be very volatile."