The question I am asked most often, particularly
at this time of year, is: “What is the job market like?”
Everyone wants to know.
The truth is that there are mixed signals. On the one hand the economy is getting
stronger. There are even reports in the trade press that advertising revenues are up slightly. On the other hand, there still don’t seem to
be a lot of jobs at any level.
While the economy is getting stronger,advertising seems to be lagging. Last
week’s job report showed unemployment at 7.3% a slight dip, but the dip is
attributed to fewer people actually looking for jobs. In advertising, although the unemployment figures are not
reported, I believe unemployment is slightly higher. However, over the
past five to seven years, huge numbers of people have left the business.
Corporate profits continue to be strong. Analysis of the balance sheets of the Fortune
200 still show that companies
continue to hold cash. There is pressure
from Washington to start spending that money on research and development,
staffing and marketing. An increase
in R&D means that new products spending will go up in the near future. In the past, that translates to more work for
ad agencies, both traditional and digital, the media and other marketing
companies.
The commensurate bad news is that procurement
continues to put pressure on ad agencies to cut their blended rate (blended
rate is the average cost of all staffing on an account). Agencies are also under pressure todecrease the
margins made on their accounts despite having to do more work with fewer people. As a result, hiring is, at best,
sluggish.
Despite all this, I fully believe that this trend will ebb and hiring will begin to pick up in the fourth quarter.
Despite all this, I fully believe that this trend will ebb and hiring will begin to pick up in the fourth quarter.
Why?
Because previous cuts have been so great as to leave too few people to
do the work. Every agency president I speak to is aware of this issue and
complains that the holding companies continue to pressure them not to
hire. I honestly believe that there will
be a reversal of this policy within the coming months because agencies need more people to do the work. In fact, there is some evidence that ad agencies
are beginning to push back against the procurement policies of their clients.
I tend to be Pollyanna-ish. But I honestly believe
that there will be surge in hiring late in the fourth quarter and at the
beginning of 2014.
Paul, solid overview. As evidence, August made for a flurry of new business activity and many agencies were overwhelmed. That said, as those opportunities convert let's hope hiring in the 4Q will probably surges.
ReplyDelete@Anon: Hope you are right.
ReplyDeletePaul … Thanks for sharing your perspectives and optimism about the 4th Quarter and beyond regarding agency hiring. From your lips to God’s ears!
ReplyDeleteBut just to keep everything “real”, I thought I’d share this personal anecdote with you and your readers because I think it illustrates the circular logic that too often has prevailed and still exists today at most agencies:
Not so long ago I met with the president of a significant NYC agency to discuss the possibility of my joining them to head up their new business development efforts. She made it clear that new biz in the U.S. was a top priority for their network and that I was just what they needed to get them more opportunities to pitch and hopefully win. It was a great discussion … right up to the point when she said at the end of our meeting, “I would love to hire you right now, but I can’t add to staff until we get more new business and revenue.”
It’s the classic “Which comes first, the chicken or egg?” conundrum and I don’t really believe it will ever change without some thoughtful and courageous leadership from the captains of our industry – however large or small their ships may be. Bill Crandall
Bill: Having run a couple of businesses including an ad agency, I understand the conundrum. At least this president didn't say that her parent company wouldn't let her hire.
DeletePaul ... Oh yes, she did! The folks in Canada said, "No new revenue, no new hires in NYC." BC
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ReplyDeletePaul do you think this hiring upswing is going to happen for all disciplines and departments in our industry (i.e.: Account Management)?
ReplyDelete@Anon: I think when the floodgates open, they will open for everyone. As far as I can tell, every department is understaffed now.
DeletePaul, it also seems that matching candidates to open roles is an ongoing challenge for those senior folks looking to hire. With the scope of work on most clients, and related income, in constant flux, it's increasingly difficult for leadership to find the right talent. I assign part of the softness in the senior hiring space to this dilemma.
ReplyDeleteAgencies should have a contractual ability to hire to suit their staffing requirements at all levels. Even under the commission structure, income fluctuated, but surely every agency should be able to average and hire accordingly. Sometimes I think financial management uses this as an excuse. Just remember - if a $180,000 a year person is needed, for every month they do not hire, $15,000 goes to the bottom line.
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