MEDIA PERSPECTIVE: Media shops must pay the price after hiking wage costs

This week's feature on the diary of a redundancy (p24) is written

by a creative agency executive, Matt Pye, but recounts experiences that

are increasingly common among the media community. Redundancy may have

hit a little later on the media side of the business but the blow is

equally crippling.



It has often been said that recessions are quite cleansing, stripping

out all unnecessaries (be they badly run companies, over-generous

expense accounts or people) and heralding a return to the important

basics. In media's case, those basics are the demonstrable and

cost-effective provision of what clients actually want.



Most media chiefs say they are bracing themselves for a difficult few

months of making job losses, slashing bonuses and pulling investments to

meet stringent requirements laid down by their parent companies. For

some this is the first time since selling out to one of the big holding

companies that their cosy family culture is being really undermined by

shareholder demands.



"I'm being forced to cut my training budget," wails one chief for whom

such provisions are a fundamental part of his agency's culture.



Many agencies have already been forced to cull staff and last week's

billings figures from MMS would suggest such measures are urgent. The

figures show five of the top ten media companies losing more than 10 per

cent of their billings, with Universal McCann (down 26 per cent) and

Starcom Motive (down almost 19 per cent) worst affected.



Of course, the natural ebb and flow of business means the billings

figures will only be a snapshot and Starcom Motive has, for example,

added about £25 million of billings since the start of the year,

much of which has probably not filtered through (Universal has won

£12 million but lost £16 million of business since

January).



Not surprisingly, some agencies have been quick to point out that the

billings figures are not an accurate reflection of the state of their

business. Fair enough.



So it's definitely time for media agencies to join the creative

community in releasing their income data so that we can get a clearer

idea of true performance.



In the meantime, the MMS billings figures conjure a bleak picture,

particularly when you consider that media companies are run with

ball-breaking cost management and stripped clean to the bone of the

fripperies that have been known to afflict their sister creative

agencies.



But the one area where media agencies have allowed costs to spiral is in

pay structure, with the frenetic poaching of staff over recent years

driving wage costs to often untenable levels. So it's hardly surprising

that staff cuts are top of the agenda now that income appears to be

slowing down. Surely the wave of redundancies should encourage agencies

to take a sensible view of poaching and salaries once the market picks

up so that a workable equilibrium is reached across the industry.



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