Ad agencies in flux as brand power shifts

Competition for advertising experts toughens as companies expand their own marketing teams.

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Rebecca Armstrong, managing director at advertising agency North, had to completely rethink the firm’s benefits to attract talented employees. It is the tightest labor market in Oregon on record and demand for creative marketing experts is soaring.

Trends in the advertising sector make this a particular hard time to recruit. More than ever agencies are competing for staff with companies that are building out their own inhouse marketing teams. Often these companies were once steady clients of the advertising agencies.

“A lot of clients are increasing their creative capacity inhouse. They are another competitor for talent,” says Armstrong.

Google and Facebook are actively recruiting from advertising agencies to staff up their own marketing teams, she says. Closer to home, big corporate clients are also building up their own inhouse talent. In the athletic and outdoor apparel sector, for example, well-known names such as Columbia Sportswear are doing more marketing and creative design internally.

Technology is driving the change. The proliferation of media channels and the increased speed with which companies churn out content necessitates that they have inhouse staff to manage their brand.

The change is leading to a power shift in the advertising sector. “Ten years ago, an agency would say, ‘we own the brand’. The power basis has gone in the other direction. Clients are saying, ‘We understand the brand more than anyone else. We will take control,’” says Armstrong.

To compete for talent, North buffed up benefits to entice talented applicants. The agency offers an automatic four weeks paid vacation time rather than after one year of service, unlimited sick leave, and flexible work-from-home benefits.

The skills ad agencies are seeking in applicants has also changed, and in some cases is difficult to find. Skilled technologists are in demand because of the rapid increase in marketing channels. “We need people who have the flexibility and intelligence to work in a whole multitude of media, which is fragmenting daily,” says Armstrong.

Data analytics and digital strategists are in particular high demand. Companies want to be able to analyze retail data, for example, to understand how people shop. Firms want to know how their ads are performing.

Leslie Carlson, principal at Brink Communications, seeks to hire people with good sector-base knowledge. “I am looking for people who understand the political and economic circumstances clients find themselves in,” she says. “We need people who not just write copy but also understand things like the housing market.”

Because companies are developing their own marketing divisions, work that is farmed out to agencies tends to be more temporary, project-based work rather than on a year-round basis. This has upended the way agencies build up a team.

“The cards dictate that you keep a small permanent staff and scale up with freelancers,” says Armstrong.

Paige Campbell, president at Grady Britton, says freelancers, or contractors as she calls them, are in hot demand. “The business is evolving into niche specialization. It requires talent that we won’t staff for on a full-time basis.”

These contractors can ask for higher rates and work for a variety of agencies. Over the past five years, Grady Britton has doubled the number of freelancers it employs, says Campbell. The firm has set up special work stations specifically for them.

“Ten years ago, an agency would say, ‘we own the brand’. The power basis has gone in the other direction. Clients are saying, ‘We understand the brand more than anyone else. We will take control.’” Rebecca Armstrong, managing director at North

Campbell views the move towards clients building out their marketing teams as positive. “We rely on clients to have that infrastructure in place,” she says. “The inhouse staff won’t have the ultimate talent that sets the brand,” she adds.

As technology evolves and companies take on more of their own branding, the close ties ad agencies used to have with corporate clients will continue to erode. The shorter tenures of chief marketing officers contributes to this trend.

Chief marketing officers at large corporate firms are under more pressure to perform these days, says Armstrong, and this main point of contact for agencies changes frequently.

“They are now on average 14 months in the job instead of 10 years,” says Armstrong. “It is the death knell of year-round work.” 

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