Red Sky Interactive Widens Layoffs

Red Sky Interactive said it has cut sixty employees, or 12 percent of its staff, in a continued workforce reduction.

According to a memorandum obtained by Internet Advertising Report, the San Francisco-based company’s Chicago office has been closed as a result of the cost-cutting. Its Houston office also has been “scaled back significantly.” The memo indicated that most of the cuts affected support services and administration.

Company spokesperson Sarah Haun said the reductions were due to “the dramatic changes in the economic climate and a drive to become a profitable, self-sustaining business.”

“We believe that it positions the company on a solid foundation moving forward,” Haun added.

It’s the second series of cuts undertaken by the company in recent months. In late November, Red Sky cut about 70 positions. At the time, the company said most of those were also “non-billable resources.”

The company said its November cuts were designed to allow the firm to refocus on core compentencies like systems integration, interactive marketing and entertainment-oriented work.

At the time of those earlier cuts, sources close to the company told IAR that Red Sky had lost several expected new business wins, prompting the layoffs. Company spokespeople denied the allegations.

Following this latest round, Red Sky Interactive said it has about 430 employees remaining.

Haun said the company doesn’t anticipate a third series of cuts, and added that Red Sky is working on several undisclosed “high-level” assignments and new projects that will “support remaining staff.”

“We don’t anticipate any impact on our ability to deliver,” Haun said.

Like many in the interactive agency space, Red Sky Interactive has been buffeted by sluggish industry-wide revenues. Industry leaders Sapient, Scient, iXL and others have all felt some of the worst effects of the dot-com shakeout, while traditional advertisers are only gradually beginning to invest in online marketing efforts.

Red Sky might be better positioned than some to make a successful change in this environment, however. The company’s client list already includes a number of traditional companies, including Miller Brewing Co., Paine Webber and Texaco — the latter of which made a minority investment in the firm in October. Omnicom Group is also an investor in Red Sky, through its Communicade portfolio of i-shops.

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