One of the first swings of USF&G Corp.'s $75 million cost-cutting ax has fallen on its advertising budget, and two large local ad agencies are feeling the blow.
VanSant Dugdale & Co., which has held the bulk of USF&G's reported $11 million advertising account for several decades, confirmed yesterday that its billings have been cut "significantly."
And Richardson, Myers & Donofrio said the $3 million account for corporate public affairs and the annual USF&G Golf Classic it handled for the insurance company in New Orleans has been eliminated.
The USF&G cutbacks -- which cover print, broadcasting and promotions -- will affect VanSant most. The agency, with annual billings of close to $40 million, is predicting layoffs among its 60 employees.
"There is no doubt that we will cut people, but we won't know how many until we see how the cuts affect our billings" after the first of the year, said Kenneth Mayhorne, VanSant chief executive. W. Minor Carter, USF&G senior vice president, said the entire "national advertising and promotion pie has been cut by 50 percent."
Hal Donofrio, chief executive at Richardson, Myers & Donofrio, said there will be no layoffs at his agency because of USF&G cutbacks. The agency is larger than VanSant with annual billings of $59 million and holds a smaller portion of USF&G's advertising business.
USF&G began its cost-cutting effort to help stem losses caused by continuing difficulties in the property and casualty insurance industry and growing concerns over the company's extensive real estate and "junk" bond holdings.