Omnicom, the second-largest advertising holding company, confirmed in a memo from CEO John Wren that it would furlough and lay off staff because of the economic effects of the coronavirus pandemic.

In the memo, Wren thanked employees but wrote that Omnicom had to "respond quickly to the reality of the moment." He also outlined other cost-cutting steps.

Omnicom's rival holding company Dentsu instituted furloughs and pay cuts earlier this month.

During the last economic downturn in 2018, the company laid off an estimated 5% of its global workforce, or about 3,500 people.

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John Wren, the chairman and CEO of Omnicom, sent a memo to all employees on Tuesday saying that the second-largest ad holding company would furlough and lay off staff across its global agency network because of the economic effects of the coronavirus.

Its rival holding company Dentsu confirmed earlier this week that it had instituted pay cuts and furloughs across agencies, and sources told Business Insider that some had been laid off.

The full memo from Wren, which is included below, thanked employees for their work but said the company had "to respond quickly to the reality of the moment" by reducing expenses in ways that would affect Omnicom's 70,000-plus employees worldwide. Wren also wrote that he would waive 100% of his own salary through the end of September.

An Omnicom spokesperson declined to comment.

A source who is known to Business Insider but spoke on condition of anonymity because they are not authorized to comment said furloughs at the company, which includes agencies such as BBDO, OMD, and TBWA\Chiat\Day, were expected to begin this week.

The scale of the changes is unclear. During the last economic downturn in 2008, Omnicom laid off at least 5% of its global workforce, which amounted to 3,500 people or more. Analysts told Business Insider that the current recovery would most likely be longer and more challenging for the ad industry.

Read the full memo below:

A message from John Wren As the impact of COVID-19 continues to evolve, we are focused on protecting the safety and well-being of our people, continuing to serve our clients and preserving the strength of our business. I have personally heard from clients around the globe just how much they value the work you are doing in their time of need. Thank you for everything you are doing, despite all the challenges. Unfortunately, COVID-19 has had a profound impact on the economy, on our clients' businesses, and in turn, on ours. While we hope for a swift recovery, we have to respond quickly to the reality of the moment, to ensure the sustainability of our business and our ability to continue to provide our clients with outstanding service. Since my last note to you, we have solidified some of the internal measures to adjust our business to meet the changing needs of our clients. Regrettably, this will include furloughs and staff reductions across many of our agencies. We are doing everything we can to limit staff reductions, and to take care of those who are affected. Where possible, our agencies will use furloughs rather than permanent reductions, so we can bring people back if, and when, conditions improve and client demand recovers.

Our agencies will participate in government subsidy programs around the world to reduce the number of permanent staff reductions we need to make.

We have expanded coverage in our U.S. health benefit plans for those affected by COVID-19.

We are actively looking to move people into areas of our business that are growing, such as Omnicom Health Group.

Omnicom's executive leadership team, including our Network and Practice Area CEOs, are reducing their salaries by a third, and I am waiving 100% of my salary, through the end of September.

With few exceptions, we have stopped all new hires, frozen salaries, and reduced the number of freelancers we use.

We are eliminating discretionary costs and capital expenditures, wherever possible, including participation in award shows and industry events.

Lastly, we have suspended our share repurchase program, have strengthened our liquidity position through new financings, and are conserving cash wherever possible. You are the heart of our business and that makes these actions extremely difficult. We have survived crises before. Our people and our company have shown tremendous grit and resilience and we will come out of this stronger. Thank you for your hard work and commitment during this difficult time. Stay home. Stay safe. John

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