Big agency groups track industry employment uptick

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Total employment in the ad industry is growing, albeit slowly.

Data from the U.S. Bureau of Labor Statistics show the number of employees in advertising and related services in the U.S. has increased 2.2%, to 434,100, a preliminary September 2005 number, compared with 424,900 for full-year 2004-the lowest annual total since 1996.

Ad Age estimates the world's top five marketing organizations make up 16.7% of the BLS total, up from 16.2% last year, a percentage made larger in this year's report by the addition of Grey Global Group to WPP Group. On the accompanying chart, Grey's estimated employment figures are folded into WPP for both 2005 and 2004. The addition makes WPP the largest of the top five holding companies by worldwide headcount, surpassing Omnicom Group. In the U.S., however, Omnicom remains the largest.

The top five's U.S. headcount of 72,584 employees in 2005 is up 1.5% over 2004, a year when growth was virtually flat, after having fallen sharply in '02 and `03. Worldwide, the top five this year employ 230,564, up 2.1%, compared to a slight decline last year.

Staff costs have increased this year, as has the ratio of those costs to revenue, reflecting the uptick in hiring and wage increases. For the first nine months, Omnicom's salary and service costs increased 9.3%, equal to 71.1% of revenue, the highest ratio of the top five. At Interpublic Group of Cos., salaries and related expenses grew 6.7% in the same period, to 65.9% of revenue. Interpublic's accounting problems affected some of that growth: Its third quarter report noted increased costs were incurred in part from hiring finance staff "to improve the accounting and control environment."

Publicis Groupe also showed increased staff costs in its six-month interim report, with personnel expenses rising 5.8% to 61% of revenue. Compensation costs at Havas fell 3.2% in the same period, the only one of the top five to not show an increase, but revenue fell as well, setting the ratio to revenue identical to that of Publicis, at 61%. WPP's interim report indicated that staff costs were equal to 59.8% of revenue, the lowest of the five, for the first six months of 2005. Though staff costs weren't broken out, WPP's total operating costs increased 21%, mirroring the company's 21.8% revenue growth for the period.

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