Britain’s advertising agencies are continuing to pay the price of
the last recession. That much is clear from the Willott Kingston Smith
study revealed to Campaign readers last week. It told a story that
senior agency managers everywhere already know by heart: salary costs
are getting out of hand again and are hurting profit margins.
The root of the problem lies in the short-sightedness that afflicted the
industry during the last big squeeze of the early 90s. As the business
contracted, agencies became obsessed with firings to such a degree that
they forgot all about hirings. Now, the failure to remain committed to
recruitment and invest in training is taking its toll: there is a skills
shortage at the top and, as a consequence, inflationary pressure on
These are the facts and there really isn’t much anyone can do about
But already a new recession is looming. Agencies would do well to
reflect that, while they can’t do much to prevent its immediate impact,
they can ensure that the hangover doesn’t last as long. Good recruitment
practice, however, is not the complete remedy. Just as important is the
issue of staff retention: the ad industry still loses a frightening
proportion of its young recruits and part of the reason for this is
surely the over-cautiousness shown, particularly outside the creative
department, when it comes to giving important tasks to ’rookies’.
The industry’s status is such that it continues to attract bright, young
people. The big challenge - which is even bigger during hard times, when
mistakes can be so much more costly - is to use them. If it doesn’t, the
industry will lose them and will be much the poorer for it. Again.