The six major global agency groups rebound by creating 32,000 jobs in 2021
According to an analysis of Countryside.
The 8.5% increase in headcount underscores the speed of the advertising recovery and the resilience of the agency sector after a 6% decline from 400,660 in 2019 to 376,516 in 2020 (see chart below).
Most of the “big six” groups – WPP, Publicis Groupe, Omnicom, Interpublic, Dentsu and Havas – had forecast that it would take two years or more for revenues to return to pre-pandemic levels.
WPP, the world’s largest employee group, was the biggest recruiter. The UK-listed group added 9,552 jobs in 2021 and employed 109,382 at the end of the year, after cutting 6,956 in 2020.
Publicis Groupe, the second-largest in terms of headcount, increased by 7,950 employees to around 87,000, according to the company, which has not yet released its annual report with an exact figure. The French group cut 4,184 jobs in 2020.
The American company Omnicom has increased its global workforce from 7,600 to 71,700 after losing 5,900 positions in 2020.
Interpublic, which is also listed in the United States, added 5,400 positions to bring its total workforce to 55,600, after a reduction of 4,100 a year earlier.
Japanese company Dentsu said it ended 2021 with around 65,000 employees, although it did not disclose an exact number. Previously, the group employed 64,533 people at the end of 2020 after cutting 1,867 positions. This suggests it added around 467 jobs in 2021.
Havas, a subsidiary of Vivendi, added 1,037 people to bring its global workforce to 19,839 in 2021, after losing 1,137 positions a year earlier.
The increase in the workforce does not fully reflect some of the levels of employee turnover in 2021, as the job market has come back to life in much of the economy – a trend dubbed “The Great Resignation”. Dentsu said 17,000 new employees, more than a quarter of its workforce, joined last year.
Ian Whittaker, longtime advertising analyst and founder and managing director of Liberty Sky Advisors, who writes Campaign of The Investor View column said: “Agency groups have rebounded much stronger from the pandemic than the consensus expected. Problems remain in areas such as pricing, but the pandemic may prove to have been a blessing in disguise in that it has proven the value of agencies for clients.
“There are short-term pressures in hiring and compensation, but a longer-term question for groups is whether they should rethink the ‘sack-start’ policy of firing people when a cyclical downfall only to rehire them later at great expense.This can avoid many personnel problems.
Agency executives have previously defended their decision to cut so many jobs — particularly in the second quarter of 2020 when the ad market crashed — and then rehire a year later.
Mark Read, chief executive of WPP, said Countryside during its 2021 annual results in February, that the company “has taken numerous steps to limit the number of people we have cut” by asking staff to make voluntary salary sacrifices and not cut jobs based the magnitude of the decline in income.
Some of the job growth in 2021 has occurred in “new areas” that are different from areas where there have been layoffs, Read added.
Similarly, Philippe Krakowsky, the general manager of Interpublic, insisted on Countryside last year that he tried to protect jobs in a “strategic” way during the coronavirus crisis.
IPG and the wider industry are “evolving” and the roles that were lost were not replaced “like-for-like” when IPG started hiring again, Krakowsky said, explaining that there had been “a shift in skills and talent” that customers needed.
Major agency groups reported organic revenue growth of 10% or more to their 2021 results and forecast further increases of between 4% and 6% in 2022 – but that was before the Russian invasion of Europe. Ukraine, which affected global investor sentiment.