Online Advertising’s Jobless Recovery

Ever since things started going south, I’ve heard the rebound is imminent. This puts me in mind to bound about the streets in a red wig, singing, “Recovery! Recovery! You’re always a quarter away!”

OK. Not really true about that last part. But enthusiasm for boom times dies hard and slowly. That’s the tough part about so many of those turnaround projections. They appear to be based on nothing but the hopes and dreams of those stuck in the bad times.

I certainly won’t knock hope; in many ways, hope is the lifeblood of the marketplace. But when hope is the sum total of the drive toward recovery, well, I don’t hold much hope for it. Hope must compel behavior: buying, building, innovating. There hasn’t been much of that. Instead, there’s been lots of stagnation.

That said, I think current rebound rumors are different. I won’t speak for the market at large, but in my corner of the world (which has been severely damaged by the last few years) things are moving forward not just with hope, but with actual plans!

Online advertising is getting better and better for brands, publishers, and agencies. Not because of a strong desire for good times, but with actual evolution and maturation of the marketplace and techniques for using the Internet to achieve business goals. It’s great! We’ve moved from innovation for the sake of making the medium cooler to innovation for the sake of helping companies. From what I hear from publishers such as MSN and Yahoo, brands are taking notice.

Now, the Bad News…

Those of you at interactive agencies, I salute you. Agency business is a tough life. You’re always looking for your next meal, work is consistently undervalued, and you often fight bigger agencies for your share of the idea. To make things more difficult, the last five years have seen agencies shoot beyond the stratosphere in terms of revenue and street cred, only to find both dashed on the sidewalk.

Agencies in the late ’90s were magnets for amazing groups of people from many disciplines who worked collaboratively. In the shop where I worked, we had MBAs, stand-up comics, physicists, and amusement park designers working together, developing campaigns to sell bubbly sugar water. Amazing!

I don’t have to tell you what happened. You probably saw it (or lived through it) yourself.

A lot of shops weathered that storm and emerged battered but tougher — and definitely leaner. Now, faced with a resurgence of the Fountain of Request for Proposals (RFPs), they have a chance to ascend to their former stature. Sort of.

I recently conducted some research with agencies that provide interactive marketing services regarding new business practices. Only a quarter of agencies expect to receive fewer RFPs this year than last; the rest expect to receive as many or more. Good news.

But when asked how they plan on staffing the new business they hope to win, only about a third said they plan to hire new, permanent positions. The rest mostly plan on bringing in contractors to work on individual projects or spreading the work around current staff.

You can see the rationale, especially if you went through that process of hiring and firing. Not only were managers in the unpleasant position of having to let go of people they brought into what was seen as a family atmosphere, they had to live through seeing their names (and often, private email messages) posted on the Web, broadcasting their sins.

Culturally, agencies are hesitant to bring on a new batch of personnel. Economically, they’ll try to pour any new revenue back into the company and into the bank. Either that, or pay off creditors.

The Jobless Rebound

All this echoes what we hear at the national level: The rebound will happen, but it won’t create new jobs in any significant way. Agencies, whose most valuable assets are the people they can staff a project with, will seek to leverage those assets as much as possible.

Advice for agency job-seekers? Think contract work. Understanding the agency’s reluctance to hire while selling your skills might be just the thing for people who need to restart their own revenue streams.

Agencies, understand an increase in contractor reliance necessarily means an increase in project management hours. One of the great project managers I used to work with routinely boosted her budgeted hours when a contractor was brought on board. When someone is not directly tied to the success of a project and is potentially serving more than one client simultaneously, expect you’ll work harder to ensure work quality remains high.

Advertisers, this is big. Demand to know who’s on your team. There’s nothing inherently wrong with having a contractor work on your project. But there is a special kind of risk he may not complete the work or could potentially not be under the same nondisclosure agreement (NDA) or noncompete clauses you demand from your agency.

The good news is agency life has a way of stabilizing. Memories aren’t infinite. Though this jobless recovery may mirror the rest of nation, if the business keeps flowing in, expect contractors will be offered permanent positions.

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