Agencies have suffered layoffs and furloughs this year largely due to Covid-19, which spurred many brands to cut, reduce or delay marketing spend.
A report from market research firm Forrester estimates that a total of 35,000 agency jobs will be cut this year in the U.S. as a result—and that 17,000 more will be gone in 2021.
Jay Pattisall, a principal analyst at Forrester who worked on the report, said he’s tracked 35 agency layoffs this year. He found that agencies, on average, have laid off 11% of staff since March.
Separately, the report predicts that 11% of digital, creative and media agency tasks in the U.S. will be automated by 2023.
“Agencies will become smaller yet smarter as machine learning and robotic processing automation help plan and buy media, create and produce content, measure and adjust marketing, develop products and experiences, manage operations, and select talent,” the report states.
Pattisall said he expects automation to completely transform the advertising industry.
“The industry is not fully aware of the level of transformation that’s going to happen,” he said, explaining that automation will impact “pretty much every department” at agencies, ranging from creative to production.
“Machines are doing a tremendous amount of production retouching and asset production,” he explained. “The amount of automation that’s built into some of their flagship products, like Illustrator and Photoshop, just underscores how much of a role technology is going to play in the production side.”
According to Pattisall, creativity isn’t immune to automation either, but is perhaps being affected on a smaller scale.
“Creative is still largely a human exercise, but it’s being assisted by machines,” Pattisall said, pointing to companies such as Persado, which uses artificial intelligence to help marketers craft effective copy.
“In the end, we’re talking about fewer people in smaller agencies,” he added. “But they’ll be smarter because of the technology that’s in place to help the people still there. It’s a workforce transformation. It’s not something that happens overnight necessarily; we see this happening over a decade.”
Where do agency staffers go?
Despite Forrester’s bleak outlook for agency employment in 2021, Pattisall said there are opportunities for people to go elsewhere.
“In-house operations are pretty substantial these days,” he said, citing a Forrester survey conducted last year in partnership with the In-House Agency Forum that found 72% of companies have some form of in-house agency capability, a 68% increase over the last decade.
Greg Paull, principal and co-founder at marketing consultancy R3, said he too thinks brands will continue to bring agency capabilities in-house.
“We also see an increasing drive for in-housing,” Paull said, noting that brands with first-party data might want to bring media and data-related work in-house, while others may start by creating social and digital internally.
What’s unclear is whether in-house agencies will begin to automate their capabilities as well, leaving employees back at square one. The Forrester report says the “gig economy” could potentially benefit from a talent exodus. The report’s authors say they “anticipate at least a 5% increase in small or midsize startups” that offer marketing services.
“At the core of their offerings will be creative problem-solving skills; unencumbered by legacy structures, they will be free to find creative solutions in a nimble, cost-effective manner,” the report says.
There’s also the reality that some of the people who were laid off as a result of Covid-19 could make their way back into agencies. When calculating how many jobs may be lost due to automation, Pattisall said that he did so under the assumption that roughly half of the positions lost because of the pandemic will come back.