Ogilvy and M&C Saatchi make a number of redundancies as 2023 uncertainty and wage over-indexing hits
Ogilvy Australia and M&C Saatchi have both made a round of redundancies, Mumbrella can reveal, with more agencies tipped to follow as client spend pulls back and over-indexing on wages catches up.
It is understood that locally Ogilvy has made between 10-25 roles redundant, however, the agency declined to confirm the exact figure.
A spokesperson told Mumbrella: “Ogilvy Australia confirms a small number of roles within the business were recently made redundant. It follows an evaluation of current client demand against required resources, made as part of Ogilvy’s normal business processes. It was a difficult decision and out of respect for those involved, we have no further comment to make.”
CEO of M&C Saatchi Australia, Justin Graham also confirmed to Mumbrella that there were a number of “isolated redundancies”, while not confirming a figure, saying it was in the region of ten, as he added it was part of a restructure.
“As we look at our revenue going into next year, candidly, we’ve had to restructure around the cost base to serve that as well.”
He added that this also comes within the context of working towards a more connected model at M&C, which Graham spoke about on last week’s Mumbrellacast, but that the agency is also not immune to the slowing of the market the industry is experiencing going into next year too.
Speaking to Mumbrella, headhunter Nick Williams of Williams International said while part of the cuts is par for the course around this time of the year, it is also reflective of what is happening with the economy.
Williams says economic conditions are exacerbating what is a fairly normal yearly event
“Marketing spend is always one of the first things to be cut by big businesses, and the rise in interest rates and potential downturn in the economy has come a lot faster than people have realised.”
“Some are predicting another four interest rate rises in the next nine months, after five or six already, which has a massive impact on consumer spending and as a result, company revenue.”
Speaking at the IAB’s Measure Up Conference last month, CEO of Mutinex Henry Innis said his company has already seen brands cut up to 15% of marketing costs.
While Williams did say multinational agency groups use this time of year to get staffing costs in line, as they have a sense of what Q1 revenues will look like, the downturn in the economy has made it “particularly rife” this year.
“There isn’t much confidence in how 2023 is going to turn out, and that’s why some of the independents might ride it out, because you don’t have international paymasters saying your talent costs to revenue ratio aren’t at what they need to be.”
Lodge says over-paying mid-weight staff during the talent crisis is catching up with agencies
Belinda Lodge, CEO of iPopulate, another headhunting firm said however that the cuts would still impact the indies just as much, as she added they are able to be more subtle in the way they handle it.
Lodge’s reasoning however is slightly different to Williams’, as she said that a number of cuts across the industry, and ones that will follow are the result of agencies “over-indexing on mid-weight talent over the last few years”.
Last year Lodge told Mumbrella that there was a lack of talent currently in the market for mid-weight roles (then roughly in the $75-150,000 region), resulting in agencies significantly overpaying for potentially underqualified talent in order to bring them into such roles, or to retain them.
Now, she said the mid-weight talent barely exists: “a lot of the mid-weights are anecdotally on 25-30% over the market rate”.
She added as a creative now you’re either a graduate copywriter or a senior copywriter.
“Agencies are now clearing the decks to get in the fittest position possible for 2023 and a new economic cycle,” she added.
Graham: Agencies are stuck between a rock and a hard place
Graham agreed that anecdotally there have been conversations within the industry that this has been the case, as he suggested that agencies have been stuck between a rock and a hard place, “because you are promoting people too early to keep them, or you are letting them go and they’re taking promotions to get pay rises to go somewhere else because they can”.
The issue is, Graham said, is that it will come back to bite, as the talent might not be at the level they’re expected to be at from clients and colleagues around them, and the other is that “we’re coming out of an environment where we haven’t had the apprenticeship nature of our business, because not everyone is in every day, and we had large periods where no one was in the office”.
“So you’ve got people in new roles, getting paid more but somewhat isolated as well,” added Graham.
Another contributing factor, Williams said is a shift towards in-housing also has an impact on agencies, taking away a significant amount of the “grunt work” creative agencies have previously been responsible for, “and the stuff that can be really profitable”, such as production work on major campaigns.
Earlier this year, Ogilvy client Suncorp opted to move all of its creative production into a centralised hub in WPP’s Hogarth, while keeping revenue within the walls of the global holding group, taking away from individual agencies, another being Publicis’ Leo Burnett which shares the account with Ogilvy.
M&C Saatchi client, Woolworths also took the decision to move its creative production into Hogarth earlier this year too, in a move that eventually ruled WPP out of Coles’ agency pitch.
Towards the end of this year the media and advertising industries have begun to see a wider trend in contractions, with reorganisations meaning huge amounts of cuts across Meta and Twitter, with the former thought to be a precursor to more in the advertising industry.
Prolonged impacts from COVID are rearing their heads now in the industry locally too, with VCCP pulling out of Australia, and independent agency Lionize filing for insolvency, both citing the pandemic as contributing factors. A “restructure” at Hearts & Science has too this week seen the agency deem its managing director role not necessary, making Wendy Gower redundant.
“We still have a structural shortage of talent in our industry though, Williams said. “We don’t recruit enough at entry level and we lose a lot to other industries, small businesses or to overseas.”
For now, it is not all doom and gloom, as Williams said the outlook for talent and wages remains “pretty robust”, with quality talent still in high demand, with the influx of international talent arrivals still yet to return to pre-pandemic levels.
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Calum Jaspan was news editor at Mumbrella, based in Melbourne. He was also the producer and host of the Mumbrellacast. He left Mumbrella in May 2023.
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Belinda Lodge
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iPopulate
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Ogilvy
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