Customer-obsessed marketing

Agency Layoffs Or Agency Calibration?

Jay Pattisall
Principal Analyst
January 16, 2018

Layoffs Are A Reality Of The Agency Business

Each January the industry weathers account losses, budget cuts or contract changes that result in  layoffs. Last week four agencies announced post-Holiday staff reductions:

  • Grey Group reduced 2.2% of staff.
  • Ogilvy reduced 2.8% of staff.
  • BBDO reportedly reduced nearly 30 staffers.
  • TBWA reportedly reduced approximately 10 staffers.

Individually, each fit a familiar pattern of account losses or organizational changes leading to a down-sizing. Grey is a result of the Papa Johns loss. BBDO is a result of the Lowes loss. TBWA traded up talent. Ogilvy shifted management.

Agency Layoffs Or Agency Calibration?

Collectively, four layoffs at large agencies in the same week raise questions about whether this is an inconvenient reality of the business or a sign of something else? Approximately 110 agency professionals lost employment, roughly the size of a mid-sized agency or small network office. The emotional toll of a layoff equal to the size of an agency closing is hard to dismiss as just a cyclical event.

The pattern behind these account losses is troubling. Lowe’s abandoned the creative agency of record model in lieu of project relationships. Lowe’s and Papa John’s new CMOs intend to shift strategy away from television and in favor of digital experiences. Both should sound familiar: Digitally-centric marketing leaders establishing different creative relationships.

So, the question becomes: “How should agencies retool their resources to meet the needs of today’s CMO?”

One answer: examine the characteristics of the players winning creative assignments for digital experiences. Tech consultancies like Accenture Interactive, Deloitte Digital, IBMiX and PwC are successful with system integration and digital experiences. Their combination of data, strategy, implementation and creative is a potent offering for marketers. Yet, their ability to capture the essence of the brand is still developing. For agencies – large or small, public or independent – brand creativity is differentiating.

To better understand this watch out for my coming report, Consultancies Change The Game For Agencies And Marketers.

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