French marketing mastermind Jacques Séguéla had his tongue in his cheek when he titled his book “Don’t tell my mother I’m in advertising . . . she thinks I play the piano in a brothel”. More than 40 years on, however, the difficulties that ad companies are encountering in attracting and retaining staff are no laughing matter.
In one of the tightest labour markets in modern history, advertising is yet another industry struggling with recruitment. Employers in the sector have been asking “where are all the people?” said Helen Kimber, managing director at The Longhouse London, a headhunter. “‘Extraordinary’ is the best encapsulation of it,” she added.
Recent results from several large ad groups show how competition for talent has weighed on bottom lines. Although different companies have different ways of measuring it, the trend for higher salary bills is clear.
Personnel expenses reached €3.89bn in the first half of 2022 at Publicis, the France-based parent of Saatchi & Saatchi and Starcom, a year-on-year rise of 14 per cent assuming currencies were constant. Staff costs totalled £3.93bn at WPP, the London-listed owner of Wunderman Thompson and Ogilvy, an increase of 9 per cent on the same forex-adjusted basis.
At Interpublic, the US conglomerate behind McCann and MullenLowe, salaries and related expenses rose 10 per cent in the period to $3.15bn. Sir Martin Sorrell’s digitally focused ad company, S4 Capital, issued a profit warning in July, citing hiring and staff costs.
“The good — and the bad — news is our people are very talented, which means they’re always in demand outside [the company]”, said WPP chief executive Mark Read.
Payroll expenses have risen in part because of the additional freelancers and staffers agencies have hired to capitalise on a resurgence in client demand for advertising since the depths of the coronavirus pandemic.
Despite mounting concerns about a recession, they kept recruiting over the summer: in New York, according to the US Bureau of Labor Statistics, the number of people the industry employed in July surpassed a pre-pandemic high to hit a record 85,700 on a seasonally adjusted basis.
Although new recruits have been kept busy — higher revenues have accompanied the bigger headcounts — at several companies labour costs have outpaced sales.
At Publicis, they rose from 64.4 per cent of revenues in the first six months of 2021 to 66.2 per cent this year. About two-thirds of employees received at least one salary increase last year, and 35 per cent had several. Since the beginning of 2022, 35,000 have received a bonus and 43 per cent of the workforce another base pay rise.
Salary inflation had been notable recently in the US, the UK and India, said chief financial officer Michel-Alain Proch.
All told, double-digit percentage annual pay rises have not been unusual for some ad workers in recent months.
Even so, recruiters say, agencies still lack the creative talent they need to brainstorm and execute ideas, the account managers to keep clients happy and the tech workers to track results and run digital campaigns.
Many of the recent recruitment challenges in advertising will be familiar to other white-collar employers: some workers have needed time off to recover from Covid-19, while those seeking lifestyle changes have retired early or reduced working hours.
Turnover has long been high in a sector reliant on young employees with a few years’ experience. Yet since the start of the pandemic, such workers have been especially hard to come by. In London, which vies with New York to be the world’s pre-eminent advertising hub, visa complications arising from Brexit have added to the strain.
“There’s no doubt that Brexit has made it more difficult — though not just for our industry,” said Sorrell, whose company S4 has only a small minority of its staff in the UK. “As we look for talent in London, it has been difficult.”
However, in an interview last week, he added: “The economic problems that the UK has are so severe . . . that that’s about to change.”
The worst of the staffing shortages have eased in several markets in recent weeks, according to executives and on-the-ground workers.
Zoe Ellaby, an Edinburgh university graduate who works for the east London-based agency Mother, said she was receiving about one message from a recruiter on social media each week, about half as many as a few months ago.
Sorrell said that while pressure on recruitment was “still there” in digital advertising, it was “not as intense” as a few months ago as employers have grown cautious about the global economy.
Some analysts said that despite recent shortages, ad companies might need to join tech companies and shed workers — as they did swiftly at the onset of the pandemic — if a slowdown takes hold.
Social media group Snap last month set out plans to cut a fifth of its workforce in large part due to a digital ad slowdown. Facebook and other tech employers have also scaled back hiring plans.
Whatever the short-term trends, however, some in advertising say disruption wrought by the pandemic has only exacerbated deeper employment challenges for agencies. Old faultlines between advertising and other industries have blurred as technology has displaced traditional media, giving staff more options to work elsewhere beyond rival agencies or client marketing departments.
Silicon Valley is not the only source of competition for workers: consultancy Accenture has been building data-led marketing services, for instance.
“So many skillsets in our industry now are transferable,” said Victoria Livingstone, chief people officer for Europe, the Middle East and Africa at Japan-based Dentsu, the world’s fifth-largest advertising group. “In the past, if you were losing employees, you were losing them to direct competitors. Replacing people was not the challenge it is now,” she said, although she added that this also meant ad agencies had a bigger talent pool to draw from.
Advertising has never paid as well as investment banking, consulting or commercial law, yet it has long appealed to graduates who yearn to work in a creative environment.
Increasingly, though, other careers promise similar lifestyles, together with larger salaries. At the same time, according to some old hands, advertising has become less glamorous than in its 20th-century heyday.
Ad workers of today are more likely to churn out brief video clips for sites such as YouTube — whose viewers tend to regard them as a nuisance — or targeted marketing emails that aim to generate immediate sales, than to dream up big-budget, brand-building commercials seen by a large chunk of the population.
“It’s not an especially enjoyable job for people who do it now,” said Bruce Daisley, a former Twitter executive and writer on workplace culture. “It’s become far more tactical, performance-based. Advertisers are obsessed with showing a particular ad works [by generating sales] rather than necessarily evoking a sense of the brand.”
“The heyday of great advertising creativity — where there were iconic TV ads that everybody would talk about — that has gone.”
Industry leaders dispute this characterisation. While linear broadcasting and other traditional media had indeed “lost traction”, Sorrell said, the notion that digital, in particular, lacked appeal was “nonsense”. To claim that advertising was less fun than it used to be was to “look at the past through rose-tinted spectacles”, he said, maintaining that digital advertising was a “sexy” career option.
Still, in a sector where workloads can be gruelling, the shift online has also brought with it pressure for measurable results.
“The industry relies on a lot of ‘hope labour’: younger people coming in accept working crazy hours, not speaking up about certain things like bullying or whatever,” said Sammi Ferhaoui, an account manager at the agency Havas.
Many entry-level staff salaries were barely equivalent to the living wage, especially after recent inflation, added Ferhaoui, who was speaking in his capacity as co-founder of the Creative Communications Workers, a union for employees in the sector.
Ad workers have other gripes. Managers report that they are increasingly likely to frown upon certain types of work, such as for clients in oil and gas.
About two-thirds of industry respondents to a survey by the World Federation of Advertisers and MediaSense agreed with the proposition that young people leaving advertising found greater “purpose” in other sectors.
A lack of training and career structure was also among the main factors behind people quitting, said the study published in July.
“There was industry complacency around talent attraction as people wanted to come and work in advertising because it was perceived as cool,” added Dentsu’s Livingstone. “Therefore, there was less focus on offering a structured career development proposition.”
As well as improving pay, agencies are doing their best to address such concerns. Together with a range of initiatives to improve diversity, they are also offering more flexible working, generous parental leave and workplace perks. WPP gave its 109,000 staff a company-wide holiday in July from the evening of Thursday 7 to the morning of Tuesday 12.
And for all its recent recruitment challenges, advertising’s place at the heart of consumer capitalism helps give it enduring appeal as a career.
“Advertising gives you the chance to react to anything that’s going on in culture, in a way that other industries do not,” said Ellaby.
