Ad firm Modernista loses a 3d major client With the departure of Palm Inc. this week, the Boston ad agency Modernista has lost three of its biggest accounts. The exit of Palm, which makes the Palm Pre smartphone, comes six months after the small advertising firm lost two other high-profile accounts: General Motors Corp.'s Hummer and Cadillac brands. The losses are a big blow to the agency, which had cut its staff twice since 2008 and restructured its upper management in January. It marked its 10th anniversary this year. Modernista's struggles highlight the challenges that advertising firms - particularly boutique agencies - face at a time when companies are scrutinizing every dollar they spend. Analysts say advertising and marketing is sometimes one of the first things to be blamed - and trimmed - when a company faces hard times. 'In a down economy, people try and cut back on marketing dollars,' said Kathy Kiely, president of the Ad Club of Boston, an industry group. 'That does not necessarily have to do with the skill set at Modernista.' Modernista declined to say how big the Palm Pre account was, but it is estimated to be worth millions. The company said that in addition to its current client list, which includes the National Park Foundation, Stop Handgun Violence, and TIAA-CREF, a national financial services company, it has some new projects. They include Nickelodeon television, the Art Institute of Boston, and the Boulder Digital Works conference in Colorado. 'We'd anticipated the relationship between Palm and us ending for several months now, due to a mixture of financial and strategic reasons. It's a shame but it was unworkable,' Modernista Worldwide's president, Matthew Charlton, said yesterday in an e-mail. 'We are going through a really exciting period, we're picking up lots of business.' A Palm spokeswoman declined to comment. But advertising analysts say a flawed ad campaign for the Palm Pre didn't help as competition for the smartphone market intensified with players such as the iPhone, the BlackBerry, and the Droid. Modernista created Palm Pre ads called 'Go With The Flow' that debuted last summer. One of the surreal-looking ads featured a stoic young woman talking about having a good day as she scrolled through information on a Pre. The ads were criticized by viewers and media watchers for not effectively showing how the phone works. 'They didn't do enough to differentiate themselves in a crowded field,' said Geoff Klapisch, an advertising professor at Boston University, adding that Modernista 'didn't sell the product.' The independently owned agency was launched in 2000. Early on, Modernista landed big national clients, including the clothing retailer Gap Inc. and MTV. Modernista also quickly established itself in the ad world for its use of contemporary songs in commercials. In 2000, the firm nabbed one of its biggest clients, overseeing the ad campaign for General Motors' Hummer brand. That opened the door for the agency in 2006 to handle GM's luxury car division, Cadillac. Modernista's relationship with both brands ended last year. The agency lost the Hummer account when GM announced it was trying to sell the brand. In October, Cadillac said it was severing ties with the ad firm. At the time, the luxury car brand's chief executive said the marketing strategy could have been better, but some analysts say Modernista's loss of GM may have had more to do with GM's financial troubles than with Modernista's creative strategies. The agency produced a recent spot for Cadillac that can still be seen on television and in movie theaters; called 'Reignition,' it showcases the auto brand's 2010 wagon and SUV models racing in the desert. After it lost the Cadillac account, the agency restructured. Modernista, which had about 130 employees last year in Boston, Detroit, and Amsterdam, now has 70. The company also closed its European office late last year, the result of cutbacks from the loss of GM's business. In January, Modernista reshuffled senior management, naming Catherine Heath as chief strategy officer. Agency founders Lance Jensen and Gary Koepke remained as executive creative directors. Johnny Diaz can be reached at jodiaz@globe.com. 