He said the "most egregious" account was costing around £10,000 a month in lost profit.
"There’s no way the new owner of that client will be making any money either, because they said to us they won’t reduce terms even further," Taaffe said.
"Those agencies hunting revenue for revenue’s sake will fail in the long term, because they will not be able to invest in their staff and will not be able to invest in new services. We took the view two years ago that after we reorganised Grayling, we would only pursue possible contracts that are more rewarding for the teams, more rewarding for the client, and ultimately more rewarding for us."
Huntsworth yesterday reported a 5.4 per cent fall in like-for-like revenue at its Communications arm in the first half of 2018, citing declines at Grayling after the "elimination of unprofitable client contracts". Profit and revenue increased overall at the group, however.
Taaffe said there will be "less continued incremental decline [in the Communications arm] across 2019 as we unwind from these unprofitable clients", most of which have been with Grayling.
He said the ending of Red’s account last year with Wallgreens Boots Alliance - which went to WPP as part of a full-service offer across different WPP agencies - was on a "dramatic reduction" in fees compared to what it spent with Red.
"When you see these large procurement things happening, what nobody ever says is, was the total fee now smaller? What tends to happen is, it reduces the total fee element available to the market place, and shrinks the market place."
He said procurement is a "fact of life", but making sure it doesn’t end up in "abusive relationships" is "a key part of how we help our agencies".
Grayling UK ‘on fire’
Huntsworth did not disclose revenue for Grayling in the UK - overall revenue at Grayling fell seven per cent on a like-for-like basis in the first half. But Taaffe said the UK business was growing at "high single digits".
"Grayling in the UK is on fire. It’s growing at a very robust rate, certainly above where the market seems to be, and they’re winning a number of new mandates because those negative unprofitable clients bogged down the agency - they sapped morale, they churned staff, and when you’ve got good clients, you can hire staff. It’s a different kind of momentum."
Asked if new clients have made up for the loss of BA earlier this year, Taaffe said: "Absolutely. We’re seeing a number of clients growing, and also they’ve won a slew of new clients."
He said BA "may or may not have been one of those [unprofitable] clients".
New clients at Grayling in the UK have included Visa, supporting its consumer PR & social on the government-led campaign, the Great British High Street Awards; BetStars, for work on its World Cup campaign; and travel technology firm Amadeus, for a brief across the UK, US, France and Germany.
Taffee also pointed to the "dramatic improvement" in profitability at Citigate in the first half, citing the severing of ties with unprofitable clients. Citigate also had double-digit growth in Asia, he added.
Huntsworth has been on the acquisitions trail recently, this year buying a majority stake in US independent healthcare marketing agency Giant Creative Strategy following its investment in AboveNation Media, the New York-based full-service media strategy, planning and buying agency.
Taaffe said Huntsworth is "always looking at acquisitions".
"As the health and growth of Huntsworth continues, we’re in better shape to look at acquisitions. We would skew towards health, which could include PR."
He added: "What we have noticed in the market place is pricing is moving up, while agency growth has not, and that is not an attractive acquisition target."