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Why are adland staff levels booming?

The IPA has found that, despite the economic climate, agency numbers have spiked. By John Tylee

Changing profile: agencies are turning to younger, cheaper workers. Credit: Kevin Meredith

Changing profile: agencies are turning to younger, cheaper workers. Credit: Kevin Meredith

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Trade body Paul Bainsfair, director-general, IPA

"The fact that the figures now include agencies that would not have been IPA members a couple of years ago is bulking up the numbers, giving the impression that they are more like-for-like than they really are. The idea of the IPA becoming a ‘big tent’ is actually happening. But it’s also true that there are more young people in the business because agencies seem be trying to get the job done more cheaply. Also, internet activity needs a lot of manpower. The rising numbers certainly don’t seem consistent with the economic outlook or client demands that agencies should mirror their own lean marketing operations."
 

Headhunter Gay Haines, partner, Grace Blue

"The rise in agency numbers has to be down largely to the number of new disciplines. Once it was just creative and media. Now the industry encompasses every specialism from direct and digital to experiential and shopper marketing. Nevertheless, middle managers are really suffering. Stripping them out is a cheaper and easier option and creates a lot less noise than getting rid of your managing director or head of client services. But I don’t think a reduction in middle management will impact on the succession management at agencies. The brightest young talent will shine through just as it always has."

Agency chief Nigel Jones, chief executive, Publicis Groupe UK

"I would not have expected the numbers to have increased. Quite the opposite, in fact. Our revenues have gone up, but not our staff levels. And that reflects the general trend in the industry not to increase costs per head ahead of revenue. Perhaps a lot of digital agencies are employing young people on low salaries. But I think what’s happening has a lot to do with agencies changing their structures. The most casualties have been among middle managers. Many of them are never going to make it to the top, so taking them out doesn’t affect things too much."
 

HR specialist Belinda Kent-Lemon, founder, Occam HR

"Agency numbers have been boosted because more people, particularly those in senior positions, are working four-day weeks and because agencies have realised that if they can’t get clients to pay for the talent they need, then they must pay for it themselves. What’s more, changes in taxation rules have had a significant impact on any agency that relies extensively on freelancers. As a result, those agencies have had to put some of their long-term freelancers on the staff. I’m also finding that there are quite a few jobs available for good senior people, particularly if they are willing to travel."

If the latest IPA Agency Census figures are a true guide to the advertising industry’s future fortunes, it is a wonder that a few choruses of Happy Days Are Here Again are not ringing out from boardrooms across the country.

In a finding that seems to defy all logic, the census suggests that the figure of 20,491 people working in almost 300 IPA member agencies as of 1 September 2012 is not only above pre-recession levels but the highest in more than half a century.

Taken at face value, the finding runs counter to all the anecdotal evidence suggesting agency bosses are not letting staffing costs run ahead of revenue.

And it was little more than a month ago that the IPA’s Bellwether Report revealed that marketing spend has been revised downwards for a second succes-sive quarter amid declining client confidence.

Perhaps the source of the ap­parent disconnect is to be foundin adland’s age profile. The IPA survey reports that 45.1 per cent of those working in agencies are 30 or under and that the average age of a media agency staffer is 31. Just 5.5 per cent of agency employees are over 50.

Some suggest this may reflect the growing influence of digital, a discipline dominated by twenty­somethings. "Digital agencies need a lot of very young people," Mary Budd, a former IPA employment affairs advisor, says. "Not many of them are highly paid."

Another theory is that agencies are taking on high numbers of young people because they are relatively low-maintenance. A typical graduate trainee at a top-20 agency is paid around £20,000 a year, rising to between £25,000 and £37,000 after training.

A number of other factors may also be fuelling numbers. They include high numbers of agency start-ups and new agency categories.

Roger Ingham is the IPA’s research consultant who collated the figures. He suggests much may be down to agency groups ending their recruitment freezes, resulting in more graduate trainees being hired, mainstream agencies staffing up for digital and more jobs emerging as media agencies start hiring creatives.

At the same time, numbers are being boosted by more part-time roles as agencies do more to accommodate working mothers and agency freelancers seek greater financial security by opting for full-time roles.

However, the overriding reason for the rise may be that the industry has to adapt to match the demands being made on it. Agency chiefs are said to be stripping out layers of middle management because clients are refusing to pay for it.

"Agencies don’t invest in middle-level people as they once did," Belinda Kent-Lemon, an outplacement and talent management specialist who works with many of the leading UK agencies, observes. "It’s either at the top or bottom."

Nigel Jones, the Publicis Groupe UK chief executive, says: "Agencies used to be structured like pyramids. Now they are more like hourglasses. Clients don’t like deep layers of middle management, so that’s where the cuts are being made."

But Nick Grime, a partner at the headhunter LIZH, fears this is short-term expediency that may lead to long-term problems if there is no middle management through which succession management can evolve.

"We saw what happened as a result of the last recession when few planners were trained," he says.

"Now it’s creatives and account handlers who could get lost in the middle."

This article was first published on campaignlive.co.uk

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