McConnell's advertising agency has lost the O2 creative account, a major piece of its business, as the adverting slump shows little sign of lifting.

The telco giant moved approximately €13m of advertising spending elsewhere following a communications review last month. McConnell's won O2's primary advertising agency business in February of last year, with a year-long agreement.

Two other agencies continue on 02's roster – Rotcho and VVCP. O2's parent company, Telefonica, has a global agreement with VVCP. Its media planning and buying is handled by Starcom Mediavest.

Meanwhile, McConnell's managing director Fiona Scott left the agency on Friday, having taken on the managing director's role following the merger with AFA O'Meara last year. She remains a minor shareholder in the company.

She has no immediate future career plans but wants to take some time off "to relax and stop and smell the roses", according to a colleague.

Stuart Fogarty, an experienced advertising executive said of recent conditions in the industry: "This is the toughest market I've ever seen. All you can do is keep going, and adjust your expectations. I think we have seen the worst of it though."

In another blow to McConnell's, key client Tesco Ireland selected rival agency Cawley Nea to handle its recent €10m 'Change for Good' price cut campaign and other lucrative chunks of its business.