A Bigger, More Blended Industry

A quick search on craigslist San Francisco for jobs that include the keywords “Internet advertising” yields 460 results. OK, there are a few odd things in there (like an HR manager for Guide Dogs for the Blind). But, for the most part, the industry is hot on the heels of talent: account managers, new business people, and project management in particular.

Job listings are always a lagging indicator of strength in the agency space. That is, the number of open positions reflects the amount of business an agency’s won, because agencies wait until there’s work in the shop before hiring anyone. Makes sense, really. There’s no inventory or even R & D required for an agency. These are companies that generally perform the work that’s in front of them, while keeping an eye out for what will (hopefully) come next. That’s why a guy I used to work for would say, “The only asset this company has gets in the elevator at the end of the day and goes home.”

New hires are certainly a sign of financial strength. But there are some other effects and benefits that will come with this influx of people. They’ll affect the way agencies operate over the next year or so.

Culture Is Everything

When the Internet economy was just starting to return, JupiterResearch did a survey of interactive agencies to understand their practices and plans. Better than half the agencies surveyed reported they were planning on staffing up in the coming months, but most planned to rely on contract and temporary workers to handle the demands of freshly won business.

The reasons seemed clear: No one was quite willing to believe the rebound was real, so long-term investment didn’t seem practical. Also, many of these agencies had started in the mid ’90s and built up quite a reputation and culture. Built, that is, on the backs of the people who worked there, often around the clock. There was a familial atmosphere at these agencies and often a mystique and a deep feeling of belonging among the employees.

Then a bunch of them were fired. What a bummer. To go from an extended to a fractured family in one afternoon turned off a lot of agencies from growing too quickly or, unfortunately, too closely. Contractors provided a safe remove, as well as the ability to get work done.

Time for Permanence, Time for Innovation

Now contractor gigs aren’t nearly as plentiful as they were. Certainly, agencies will take on a contractor if that’s their best option. But most would prefer the assurance these people will be available over the long term. The promise of permanence has trumped the safety of transience. The simple fact is everybody’s looking for talented people right now.

This is bound to have a positive effect. The people who begin to flow into agencies are bound to bring fresh ideas and new perspectives, particularly those who have been contracting for a while. A seasoned contractor will have seen the inside of many agencies and have experience across a broad range of clients.

Plus, those who join an agency are bound to be interested in new topics and technologies. The best way to boost the overall level of innovation inside a company is to bring in new people with fresh ideas. Smart agency HR people aren’t looking for people who just perform the tasks of an account person, project manager, or information architect. Rather, they look for people with fresh perspectives on the tasks themselves.

The Merger Mandate

Of course, many agencies will find it extremely difficult to staff up as quickly and appropriately as they want or need to. This naturally will lead them to look for a quick, easy way to increase staff size: buying other agencies. During the great ’90s run-up, a handful of agencies famously took this position, gobbling up shops left and right. I imagine we’ll begin to see more of this in the coming months.

This certainly is a great way for an agency to grow quickly, because it can judge an entire group of people all at once based on their work, position in the community, and approach to the business. Of course, blending companies is a major challenge. I’ve been through it a few times, successfully and unsuccessfully. The best approach is to make stability for clients and staff the top priority. Even little things like extranet URLs and navigation systems should be kept consistent for clients.

A Bigger, More Blended Industry

Ultimately, what will most drastically change the agency landscape is the nature of the current growth. It’s not just Web sites. It’s analytic practices like search and high-end creative like video. Not only are existing agencies growing, but totally new players are being considered alongside more traditional players. I’m going to speak at the upcoming ClickZ event on video advertising. The existence of a distinct conference about video online clearly signals that with changing practices come changing skills and changing personnel.

Meet Gary at Online Video Advertising Forum in New York City, June 16, 2006.

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