MediaPost reported Forrester analysts predict that U.S. White advertising agencies will eliminate 52,000 jobs through 2021, with White holding companies dumping 49,000 staffers worldwide. Honchos at WPP probably thought, “Yep, we’re right on track—just as we planned.”
Regarding diversity, expect the following:
1. Shops will use the workforce reduction as a new excuse to avoid hiring minorities.
2. Shops will boast greater minority representation as percentages shift due to the reduction of White workers.
Agencies Will Shed 52,000 Jobs In U.S. Through 2021, Forrester Predicts
By Laurie Sullivan
Analysts at Forrester estimate U.S. agencies will shed 52,000 jobs through 2021, and the major holding companies will lay off or furlough 49,000 employees globally.
The flood of creative talent into the marketplace will spur a new wave of entrepreneurs as many establish their own businesses that deliver agency and marketing services.
Expect also to see niches, from ad technology to creative and search.
Forrester anticipates the industry will see a minimum of a 5% increase in small and mid-sized boutiques and start-ups that deliver marketing, ad tech and martech solutions, according to Jay Pattisall, principal analyst at Forrester, covering creative, media, marketing and in-house agencies.
“These new companies could be specific to performance marketing or ad tech,” he said. “It could be a category like healthcare. I don’t think we will see media buying companies, but rather technologies that work within. Also lots of consulting and marketplace commerce.”
The prediction is based on the revised marketing spend forecast that Forrester prepared in April and May.
The impact of the 23% drop in marketing spend would be felt most directly among agencies. “The marketing spend is highly correlated with advertising, both working dollars and non-working fees,” he said. “The drop would adversely affect the agency’s revenue.”
Forrester calculated what the adjustment would mean for talent, and also tracked press and public releases for layoffs. Most were from agencies.
Analyzing the marketing spend per staff, Forrester calculated what it would mean for 35,000 jobs lost in 2020 and about another 17,000 in 2021, based on the marketing forecast rate of growth.
Agencies like Dentsu, Havas, IPG, Omnicom, Publicis, and WPP will recover in 2021, but don’t expect them to look the same, Pattisall said. Virtual workplaces and an emphasis on digital execution point to combining technology and talent.
Expect to see more start-up and boutique agencies, from search to creative. “When people leave they take their ideas and energy with them,” Pattisall said. “The energy and ideas translate into interesting freelance businesses and boutiques. Certainly in-house agencies will benefit. You have some really good and talented people that shouldn’t have been let go and you’ll see that in startups.”
Some new companies might also focus on artificial intelligence and automation. Forrester has determined the industry will see an additional 11% boost of all digital and creative, and media agency tasks in the U.S. will be automated by 2023, growing to 23% of overall agencies by 2032.