The agency talent market is about to experience serious whiplash.
After laying off thousands of people during the pandemic, ad agencies attempted to rehire as the ad market rebounded this past year, refilling vacant roles and adding new positions as the economy steadily got back to normal and brands began spending again.
But bringing people back wasn’t as easy as anticipated. Agencies were met with the “Great Resignation,” a fleeting moment where, across industries, thousands of people simply declined to go back to their old jobs on the same terms as before. Bidding wars and salary inflation ensued, driving up the costs of white-collar talent.
Then, just a few months later, the Great Resignation came to a screeching halt, and another round of massive layoffs ensued.
While the realities of Twitter’s layoffs last week were shrouded behind Elon Musk’s narcissistic drama, Meta’s 11,000 staff cuts yesterday put into stark perspective that the major ad platforms do not, in fact, defy gravity. The cuts followed two quarters of poor earnings results across the tech sector, attributed to the war in Ukraine, inflation, targeting challenges as a result of Apple’s tracking updates and competition from TikTok.
This confluence of factors also triggered layoffs at Snap, Netflix and Microsoft in the past year, as overinvestment during the pandemic and failure to predict a downturn led to a rightsizing across the sector.
Then, yesterday, seemingly untouchable Amazon became the first company in history to shed $1 trillion from its market cap, and Big Tech’s tumble took on a new tone of gravity.
Ad buyers tell me advertisers are becoming cautious, but a broad pullback in investment hasn’t yet happened. Recent earnings reports from the major marketing services holding companies reflect that reality, with the “big six” posting growth across the board. Publicis even doled out a 50,000 euro bonus to 45,000 staff members to help them cope with skyrocketing living costs.
But recent events in Silicon Valley are a dark sign that the uncertainty that’s percolated in the market for the past few months is crystallizing into a serious downturn.
Layoffs at Big Tech companies are an especially wary sign for agencies because these businesses aren’t just massive advertisers in their own right, they are also giant ad platforms. In other words, the health of their businesses indicate the health of the digital ad market overall.
Big Tech’s layoffs are driven by a confluence of factors, from over-hiring during the pandemic, to increased competition from new players like TikTok, to, in Meta and Twitter’s cases, massive hubris and visionary bets that have no clear payoff. Still, agencies are no doubt on high alert about what these culls mean for their own businesses, as typically, marketing budgets are among the first to get slashed when companies tighten their belts.
For many firms, the stark reality is that layoffs in the coming months will be inevitable. Some have already gone down that path.
But the sector cut bone deep too fast during the early stages of COVID in 2020, and was unable to win back talent when the market rebounded — leaving already burned out workers understaffed and underpaid.
I hope that, this time, agencies learn from what they experienced in the past few months and aren’t so quick to turn to layoffs as the first or only cost-cutting option. Doing so might make their numbers work in the short term, but long term they are digging themselves deeper into a hole and putting themselves on the back foot when it comes to talent acquisition, which is already a struggle for many.
Smart, creative marketers have more viable career paths than ever before — from working in-house at a brand, to working for a tech company (although maybe not right now), to converting their side hustles as creators into a full-time gig.
Keep that in mind when it comes to staffing decisions over the next few months. And remember: without good people, you can’t sell good ideas.