Ad Jobs (Kind of) Return

Agencies are back—back in terms of marketers investing in their brands, that is. As for agencies investing in their staffs? Not as much.

With many U.S. marketers banking record profits, industry holding companies are reporting year-end numbers that recall prerecessionary times. Omnicom and Publicis Groupe, for example, recently announced 2010 revenue increases of 7 percent and 20 percent, respectively. Further proof: Stocks in holding companies have been trading at near or new 52-week highs.

Last fall, WPP CEO Martin Sorrell boasted at the World Retail Congress in Berlin that WPP’s “revenues have pretty much got back to where we were in 2008, including TNS, but with 8 percent fewer people”.

Amy Hoover, a partner at Atlanta-based recruiters Talent Zoo, said, “Traditional agencies saw a big uptick in hiring in the fourth quarter, [but] they have a lot more ground to make up.” (According to the U.S.

Bureau of Labor Statistics, advertising and related services shed 60,400 jobs from the beginning of January 2008 through 2010, a loss of 11 percent.)

“In three to five years, though,” Hoover continued, “I think we’ll see that some of the recent industry contraction turns out to be permanent.”

Digital agencies, she added, are “back on track” with staffing.

Indeed, the shift in the industry toward digital explains part of the seeming disconnect, as digital shops don’t require the same kind of manpower at the agency level.

However, some of the work, such as the programming, is often done externally. Agencies, for instance, increasingly are outsourcing to places like India and Costa Rica, observed New York industry consultant Joanne Davis. They’re using an “hour-glass staffing model,” she said, with top talent as agency brain trusts and juniors doing the legwork; those in the middle are left feeling the squeeze.

Consider the increased efficiencies at Publicis Groupe, which has increased its digital share of revenue to 28 percent. Over

the past five years, the company’s global headcount has increased to 49,000 in 2010 from 38,610 in 2005, but revenue per employee has risen by nearly 17 percent to $151,020 in 2010. (In 2010 alone it added 3,200 employees.)

Hoover said the first half of 2009 was the low point for hiring during the recession. Digital jobs were the first to come back in the latter part of 2009, and traditional ones picked up late last year.

WPP’s Sorrell recently said it’s “likely” the company will increase headcount by 4 percent this year. (Of course, many observers expect industry revenue growth to be at least 5 percent.)

But Sorrell has also compared the much higher market capitalization of “frenemy” Google, with its lower headcount, to that of WPP, which employs far greater numbers of people who exit the building at night while Google’s machines continue to generate cash.