The cuts come on the heels of WPP Group's acquisition of Grey Global, but the job cuts are being attributed to loss of the Masterfoods advertising account rather than Sir Martin Sorrell's takeover.
In a statment Grey said: "We regretfully confirm that as a result of the network's loss of its above-the-line assignments on Masterfoods brands by the end of the year, some redundancies will take place at Grey London.
"However, the number of jobs at risk will be modest due to compensating new business won by the London agency. We do not currently anticipate the number of jobs at risk to be higher than 15-18, around 7%-8% of the agency."
The agency said that it wold be taking every opportunity to keep people on board by looking for alternative positions within the Grey Group.
A report in The Times this morning quoting sources close to the company, said that nearly 35 staff, or 17% of Grey London's 200 staff, were set to lose their jobs.
While the cuts are linked to the recent account loss the job cuts were foreshadowed by Sorrell when he completed WPP's $1.5bn takeover of the agency last month.
He told analysts that Grey had a staff cost-to-revenue ratio of over 60%, whereas most other big agencies operate at between 55% and 60%.
The job cuts this time around are not expected to hit creative teams and account handling staff. Most of the job cuts are expected to come from the back office as WPP looks for cost savings.
At the time of the merger, it was widely predicted that WPP will likely merge back-office functions with its other group operations in London as it looks to meet its pledge of double-figure margins at Grey over the next two years, rising from 5.8% to 11.5%.
It was not clear at the time whether Sorrell's comments were a prelude to redundancies on a large scale. However, with the dust now starting to settle, the axe has been swung at Grey, bringing an end to a bad week at the agency.
Yesterday, it lost its $90m global Slim-Fast account to WPP agency Ogilvy & Mather following a pitch and less than a month ago Mars sidelined Grey Worldwide and consolidated its advertising business globally with two Omnicom Group-owned agencies, TBWA\ and BBDO Worldwide.
The job cuts are not the first to visited on the London offices of Grey -- 18 months ago former chief executive Garry Lace cut more than a fifth of Grey Worldwide's London workforce as the result of a restructuring process. That time 48 agency staff lost their jobs, not all of which have been voluntary. The process was part of Lace's plan to make the office more profitable after pressure from Grey's headquarters in New York.
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