Agencies prepare for a tough first quarter in 2009.

Advertising and public relations agencies hit hard by the financial meltdown are slashing employees.

l Portland’s Respond2 LLC cut 10 of its approximately 100 local workers earlier this month. The agency had hired 75 people to staff its three offices during the last year.

l CMD, a Portland agency owned by manufacturing giant Jeld-Wen, laid off eight full-time workers earlier this month, about 6 percent of its staff. The workers included designers, writers and producers.

l Livengood Nowack, a media and public relations specialist, closed its doors this fall after 32 years. The Portland firm employed 20 workers and generated an estimated $2.4 million in 2007 revenue, according to the Web site Zoominfo.com.

“We’ve seen a definite increase in the number of professional referrals in the last few months from our business associates,” said Steve Potestio, managing director for advertising and PR staffing firm 52 Ltd.

Agencies of all sorts are preparing for a rough first quarter in 2009, but realize things could get worse if Oregon’s impending downturn mirrors the state’s travails early in the decade.

In March 2001, Oregon’s advertising agencies employed 2,057 workers. The industry then shed hundreds of jobs but has since bounced back, employing 1,988 workers by June 2008, the last month for which the Oregon Employment Department offers specific numbers.

“There’s a definite possibility (ad agency worker numbers) will go down again,” said Art Ayre, Oregon’s employment economist.

Advertising Age magazine reported Nov. 17 that the industry nationwide has lost 46,600 jobs, dropping 3 percent to 1.6 million this year.

Many are cutting jobs preemptively as clients slash their business expenses.

“I have clients who are laying off thousands and thousands of people,” said Tim O’Leary, CEO of Respond 2. “That makes our environment more difficult because your contacts there change and projects get moved.”

Respond2, a $50 million company with offices in several U.S. cities, has had several projects bumped to next year’s first quarter.

CMD continues to shift from a traditional advertising firm model, or one that places ads strictly in older-line media such as newspapers, to a digital bent, including social media sites.

“Using the Internet is more cost-effective, and clients, all of them, are under tremendous pressure to do more with less and to be accountable,” said Phil Reilly, CMD’s president.

Respond2 will continue producing infomercials and serving health care industry clients whose patients rely on Medicare and Medicaid, lately a blockbuster market.