17008: Cut To The Chase, Cut To The Quick, Cut Out Completely.

Advertising Age reported on how federal agency cuts are impacting Adland. While White advertising agencies may be adversely affected by reduced and retracted governmental contracts, non-White shops will likely experience far greater losses.

 

The Trump administration’s anti-DEIBA+ stance poses direct threats to crumby assignments historically delegated to minority agencies.

 

To compound matters, minority agencies have been routinely relegated to second-class status—or worse—in multi-agency coalitions servicing ginormous governmental accounts such as the U.S. Army and U.S. Census.

 

In the emerging environment, typical Prime Redlining could be entirely erased. The erasure, however, won’t be rooted in progressing toward fairness, equity, and justice; rather, it will ignited by an increased exertion of control, dominance, and power from the ruling majority.

 

How federal agency cuts are affecting the ad industry

 

Contracts are being scrapped and campaigns put on pause as Elon Musk’s DOGE slashes the federal bureaucracy

 

By Ewan Larkin

 

The Trump administration’s mission to pare down the government is taking a toll on marketing shops responsible for supporting federal agencies.

 

The Department of Government Efficiency (DOGE) led by Elon Musk has moved swiftly to cancel government contracts and reshape the federal workforce by slashing jobs. Musk, the owner of X and adviser to President Donald Trump, aims to hit $1 trillion in savings and has said the DOGE team is already working inside nearly every federal agency.

 

Some departments are feeling the heat more than others, including the Department of Veterans Affairs and the U.S. Agency for International Development, which has led to scrapped contracts with ad agencies, paused marketing campaigns and more. Agencies, in turn, have been forced into making job cuts and pivoting to focus on new areas. And with cuts—and reversals—coming abruptly, all the involved parties are keeping a low profile.

 

“It is an environment of deep anxiety,” said one communications agency executive who works with an impacted federal agency and who, like almost everyone interviewed for this story, requested anonymity to speak freely. People are “wondering every day whether funding is going to be cut.”

 

Feeling the impact

 

Several federal agencies, including some within the Department of Homeland Security and the Department of Health and Human Services, have paused some marketing campaigns, according to multiple people familiar with the matter. (HHS and DHS did not provide comment.) Many departments are doing their best not to attract unwanted attention, said a second marketing agency executive.

 

“We’ve had a lot of clients keep their heads down,” this person said. Without canceling contracts, they “have scaled back or put things on pause.”

 

A third ad agency executive noted that some contracts are being put on hold for 90 days, which presents numerous challenges. “We’re supposed to keep our staff on hold for 90 days while the government gets their shit together? Yeah, that’s nearly impossible to do,” this executive said, noting that agencies with government contracts cannot fire or rehire staff easily due to lengthy clearance processes.

 

Some contracts are being entirely scrapped, too. The U.S. Agency for International Development—which manages foreign assistance—has been hit particularly hard, with Secretary of State Marco Rubio boasting that 83% of USAID programs have been canceled. The fallout has reached Ogilvy PR, a longtime USAID partner, which recently saw its communications contract with the federal agency terminated, according to a person close to the situation.

 

Ogilvy PR declined to comment. USAID did not provide comment.

 

Marketing agencies have also had to cull their staff due to contract cuts. Due to canceled contracts with the Department of Veterans Affairs (VA), Virginia-based consultancy Aptive Resources recently laid off hundreds of employees, according to multiple people familiar with the matter. The cuts are incredibly fluid and unfolding gradually, making staffing decisions difficult for marketing shops.

 

Aptive Resources did not return multiple requests for comment. VA did not provide comment on which contracts it had canceled.

 

Many federal agencies are experiencing other sudden changes, including the HHS, which in January was told to pause all external communications.

 

That communications freeze appears to have impacted the marketing efforts of ​​the Centers for Medicare and Medicaid Services, the federal agency that provides health coverage to more than 160 million people through Medicare, Medicaid, the Children’s Health Insurance Program and the Health Insurance Marketplace. In July, CMS launched a review to find multiple shops to help develop, implement and evaluate national integrated communications campaigns. The federal agency had been providing public updates about the review, but has not posted anything since December.

 

In early February, federal agencies were allowed to resume some communications. Asked about the status of the review last week, a CMS spokesperson said the “communication hold for this solicitation has been lifted,” while adding that a decision has not been made.

 

Military contracts appear relatively unscathed, for now

 

DOGE has so far largely avoided many of the biggest sources of contract spending in the federal budget, including the Department of Defense (DOD), which includes military branches. 

 

Multiple agency executives who work with military units told Ad Age their scopes have not been reduced and there have not been any changes to contracts. Given Trump’s focus on having a strong military and an ongoing recruitment crisis, contracts with the DOD generally seem “safe,” said Mike Kapetanovic, a business development consultant at GrowthLab, which is focused on supporting advertising and marketing agencies that work in the public sector.

 

“I think DOD, writ large, is fine,” said Kapetanovic, who works with roughly 50 agencies. “I don’t see that getting cut. I’d be shocked, but I would have said the same thing about the VA two months ago.”

 

To be sure, any cuts to military contracts would have a substantial impact on the agencies involved. VML’s deals with the Marines and Navy are valued at $1.9 billion and $455 million, respectively, while DDB’s agreement with the Army stands at $4 billion. And GSD&M’s contract with the Air Force is worth roughly $741 million.

 

The DOD, Navy, Marines and Air Force did not provide comment.  

 

The Army has not made any changes to its contract with DDB nor shifted its marketing strategy, said Laura Francisco, public affairs officer at the Army Enterprise Marketing Office. In fact, the branch debuted a recruitment campaign on Monday, she said.

 

DDB’s new campaign highlights the dual lives—as both civilians and critical response personnel—of the Army National Guard’s members.

 

With all the uncertainty at the moment, Francisco didn’t rule out eventually having to tweak the Army’s marketing strategy, but said, “Unless they decide to shrink the size of our army … we’re still going to be marketing.”

 

DEI crackdown causes anxiety

 

The Trump administration has moved to implement an executive order to stop DEI programs across the government and its agencies, and repercussions have already started for some federal contractors, according to Dismas Locaria, a partner at Venable in Washington.

 

“I am aware of several contractors that have lost contracts, apparently based upon their DEI posture,” said Locaria. “The threat is real.”

 

Agencies working with the federal government that are still touting DEI need to figure out if they want to “resist and put a foot down” or “risk looking misaligned with the administration’s priorities” and lose out on opportunities, Locaria said.

 

The crackdown on DEI has also hurt morale at some shops.

 

The second agency executive told Ad Age their employees were required to scrub their pronouns from their email signatures, an order a few staffers took issue with and pushed back on. “We had to say … ‘We understand this is very personal for you, but this is a potential matter of our livelihoods, so we’ve got to play ball,’” this person said. “Some people understand that, and some people really don’t.”

 

What’s next

 

Agencies that rely heavily on contracts with the federal government are rethinking their growth strategies, according to Kapetanovic. Many shops, for example, are looking to “parlay their federal experience into appropriate commercial markets,” including high-regulated industries such as health care, financial services and utilities, he said.

 

“That’s one thing that a lot of these agencies are doing,” he added. 

 

The third agency executive said they are exploring more state-level contracting, citing increased opportunities in states including Florida and California. “It’s something we’ve been looking at for a while,” this person said. “As I've been talking to a lot of my peers in this space, I am hearing a lot of, ‘We need to be looking to state contracts.’”

 

This person also noted interest in doing more commercial work but added that such a transition won’t come without challenges. It “doesn't happen overnight,” this executive said. “But the agile, smart companies that have the resources to endure a painful three to six to 12 months are going to be able to figure out how to do that.”