Advertising industry growth has not yet stalled, counter to the misguided headlines. Despite rising inflation, concern for recession, and agency and tech company layoffs, US advertising industry job growth remains strong. According to the US Bureau of Labor Statistics (BLS), advertising and related services added 3,800 jobs in June, while the total US jobs market added 372,000. The May BLS data shows advertising agencies at an all-time high of nearly 220,000 jobs, plus continued month-to-month increases in both PR and media buying agency employment.
Advertising Industry Growth Reveals Its Belated Transformation
What’s behind this advertising industry boom? A deeper understanding of the growing and shrinking advertising industry job titles reveals a clear pattern of agencies transforming to become more digital-first and future-forward. Analysis of the BLS’s Occupational Employment and Wage Statistics Survey results from 2019 to 2021 shows which positions are thriving and which are dying. As consumers’ embrace of digital media grew during the pandemic, agencies recruited the data, analytics, design, and PR expertise necessary to meet the “digital or die” imperative facing marketers and brands. The clear winners are:
The job titles that shrank are equally telling in that they represent the subject matter expertise impacted by the pandemic and the back-of-office and process-oriented positions that are more susceptible to automation. The clear losers are:
The Next Economic Disruption (AKA Recession) Will Reveal The Industry’s Unsustainable Labor Model
The stock market and ad market won’t stay at odds with one another for long. Rising interest rates, falling consumer confidence, and inevitable cuts to marketing will eventually catch up to the industry. When a recession does eventually take hold, we anticipate an average agency layoff rate between 11% to 13%, consistent with what Forrester tracked during the Covid lockdowns of spring 2020. This sudden and traumatic cut in labor will undermine agencies’ ability to evolve to meet the needs of the CMO or any exec expected to lead growth amid the unpredictable dynamics in our markets and surrounding customers. Invest in data intelligence to service your brands appropriately. It will reveal that your agency’s real talent crisis is its dependence of abundant, inexpensive labor. Consider these realities:
To stave off the worst impacts of the next recession and advertising layoffs on your company, CMOs and agency executives should shift from a labor model to an outcome-based model. This provides the means for the service providers to be compensated on the results/business objectives they achieve, rather than the number hours billed to a given project.
This post was written by Principal Analyst Jay Pattisall and it originally appeared here.