Ad agencies are losing leading talent to technology companies big and small. This disturbing trend is clear enough. There are also defections to big consultancies and in-house agencies in marketing departments. But the exodus to tech companies is insidious because it strikes at the very heart of our industry. There is way more competition for talent now.
According to Ad Age statistics, U.S. ad agency employment reached 204,100 jobs in July, up since 2000. In contrast, Internet publishing and also broadcasting and web search portals in July reached an all-time high of 232,300 jobs, double since 2011 and passing traditional agency employment.
Amy Hatton, managing director of Barefoot Proximity NY, said she lost one of her strongest people to LinkedIn. She also lost a San Francisco candidate to Google with numerous additional examples on the recruiting side.
There are several reasons for this defection, she says, but three stand out: The perceived prestige of tech companies, an attempt to "future proof" one's career, and better benefits.
Tech is sexy
No doubt, it's sexy to talk about joining a familiar tech company or hot new start-up at a cocktail party or around the Thanksgiving dinner table. Sadly, that job trumps being the 30th creative director to work on Skittles at an agency.
Millennials and Gen X-ers who grew up with Facebook and Instagram are hearing the siren song. A CEO of a WPP digital agency says, "Especially when the economy is good, young people jump around."
College grads right out of school just aren't attracted to ad agencies. Tech firms are more appealing with the promise of changing the world. They have a median age in the 20's, you can dress as you are and your role models are only a year or two older than you.
Then there is the cornucopia of benefits like free lunches, unlimited PTO, working from home, sabbaticals and in some cases - equity. With razor thin margins, agencies just can't afford to offer these benefits. They are also slow to react to the call for flexible work schedules.
"The agency model is broken"
One refugee from the large mainstream agency in a leading advertising market (who asked not to be named) piles on "the agency model is broken" bandwagon. He contends that the advertising holding company he left was "managing with zero head count, being understaffed by design."
He said that the agency world "has not operationally embraced the complexity of what they are facing today. They have no idea how to deliver." They "put it on the backs of individuals to figure it out" and he got tired of managing continuing decline. He said it's "like a pie eating process when the prize is more pie."
He's invigorated by his new position at a new marketing technology company. The benefits are better and his work is refreshingly challenging.
I made a note to check back with him in a year to see if the honeymoon continues. That's because some defectors boomerang back to agencies when they find the work too monotonous or too narrowly focused. As noted previously in Ad Age, agencies often offer the variety of working on broader client problem solving than a single vertical day in and day out.
Agencies and holding companies like WPP and Omnicom are acquiring specialty technology companies to better compete. Omnicom recently purchased management and IT consulting firm Credera and housed it in a unit called Omnicom Precision Marketing Group. OPMG was organized to distinctly separate their technology brands from creative units.
Technology and consulting firms are also gobbling up creative resources. IBM folded Resource Ammirati into IBMiX. Similarly, global management consulting powerhouse, Accenture, acquired Meredith digital agency MXM. This acquisition adds creative, digital marketing, content strategy and execution to Accenture Interactive and, in turn, gives agency personnel access to Accenture's global resources and future opportunities.
While the dust hasn't settled on either of these combinations, the question remains: Which culture prevails?
Strategy veteran Cybelle Srour who's worked at DDB, Proximity/BBDO, Resource/Ammirati and IBM iX, says technology is a powerful tool. Still, she believes "whoever understands people better than anyone else will win the day."