ax may be cutting
too close to the bone
Loss of media people may hurt agencies in time
By Kevin Downey
Call them the lost generation.
Anyone familiar with the recessions of the early 1980s or early '90s can tell you about them. They were the media planners and buyers who lost their jobs when agencies instituted widespread staffing cuts.
They are called the lost generation because they were the junior-level staffers who were gaining the experience to move into management, and when the economy recovered, it did so without them. Most had moved on to other careers.
The effect: Agencies found themselves without that critical level of experienced media people to run departments or handle the most demanding clients.
The concern now is that history is about to repeat itself.
Since the beginning of the year, and even before, agencies across the country have been slashing jobs. While the cuts are coming at all levels, many being shown the door are people of several years experience.
Executive recruiters say that if the cuts continue much longer, agencies will again find themselves in time with a shortage of seasoned planners and buyers.
"I wonít be surprised if the same mistakes are made again," says Linda Schaler, principal of advertising and media at the Gundersen Partners recruiting firm.
"Agencies are not known for providing strong career-path management, meaning identifying their key players and managing and training them even in thick and thin," she says.
"There are implications if this goes on too long and reductions are too steep. It will be very tough to find the talent, and they will end up paying more than they should to get the good people."
Amy Hoover, vice president of recruiting at Talent Zoo, agrees.
"If it stays stagnant for a fair amount of time and young kids canít get into the business, and young kids who are getting laid off canít find jobs, they will go to other industries.
Job cuts in media departments have numbered in the hundreds since around December and January.
McCann-Erickson Worldwide Advertising cut 3 percent of its staff just this week, including media people at Universal McCann, and True North Communications' FCB Worldwide recently made cuts.
Others that have made cuts include Grey Global Group's Mediacom, BBDO North America, GSD&M and IPGís Lowe Lintas & Partners.
The job cuts followed the first signs of a downturn in the economy that was signaled by the crash of the dot.coms in the latter half of last year.
When the dot.coms were surging, they lured staff away from media departments with inflated salaries and perks. Agencies and media companies competed by driving up salaries. Less than a year ago, there was a mad scramble to hire just about anybody to fill vacant slots in media departments across the country.
When the crash finally came, it came fast and hard. Ad dollars fellĖby 8.5 percent in February, according to CMRĖas clients began pulling back budgets.
Those cuts trickle down to the agencies, which reduce staff to remain profitable.
But there are other factors contributing to the cuts as well, notably agency consolidation.
"The business has gone through such enormous cycles of consolidation, and even if we had a wonderful economy it would have created falloff. You have so many duplicated jobs," says Simmy Sussman of Sussman & Morris Associates.
"A company has to show numbers to shareholders. The financial people have found that this is a way to make the numbers roll. As a result, they have eliminated a lot of people."
The job market for media folks has been pretty gloomy for months and there are few signs of a rebound.
Most recruiters think itís unlikely to happen before the fourth quarter of this year or even the first quarter of 2002.
And even when recovery does come, it will come slowly, which means a slew of jobs won't suddenly become available.
"I donít think weíll see any major upturn in this fiscal year," says Sussman. "My projections take it through the first six months of next year.
"The only thing that may change, because so many companies are down to the bone, is if there should be some onslaught of business, then there will be some hiring."
Even the freelance market is getting hit.
Temporary staff donít come with the expenses of a full salary and benefits package and usually pick up some of the slack when permanent staff cuts are made.
But thatís not happening now.
"Itís dried up," says Patricia Sklar from Sklar & Associates, a national recruiting company based in Chicago. "I know of a couple of cases where agencies let freelancers go to save money."
Perhaps the biggest difference between the recession of the 1980s and 1990s and today is that people with a wide range of experience in media are getting the ax.
"Itís group directors to assistants," says Sklar.
"When agencies in New York had layoffs, it was all levels," she says. "Even here, itís been a range. They may consolidate accounts, and sometimes they look at cost per person per spending on the account. If they can consolidate, itís across the board."
Moreover, salaries for media planners and buyers are expected to go down or, at best, remain flat.
"The salaries are being corrected because they were pretty inflated last year," says Talent Zooís Hoover. "Huge amounts of money were being offered to people. And now that the boom is over, theyíre looking at regular, adjusted salaries, and they are taking a bit of a cut."
And the job cuts are also taking place across the country."Itís coast to coast," she says. "New York has seen the slowdown. San Francisco is really in a tough place and L.A. is not producing a significant amount of jobs."
May 18, 2001 © 2001 Media Life
-Kevin Downey is a staff writer for Media Life.