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1,000 ad men face threat of losing jobs

BS Marketing Bureau

The top 40 advertising agencies of the country employ some 9,000 people. A year from now, they are not likely to have more than 8,000 on their rolls. Downsizing is staring the Rs 80 billion industry in its face. While many of these 1,000 people will be handed out the pink slips, others who leave on their own will not be replaced.

But quiz any agency on downsizing and it will tell you that it's the rival agency, which is sacking people. "Yes, downsizing is happening but not in our agency," is the common refrain agency after agency, be it Lowe Lintas & Partners, Hindustan Thompson Associates, McCann-Erickson, Grey Worldwide, Leo Burnett, Everest or TBWA Anthem.

Though top officials at the agencies deny it, reports suggest that while Everest pruned over 50 jobs and shut down its Hyderabad operations in past sometime, Lintas has shown the door to about six people with another 30 in the pipeline.

Lintas VP (HR) Sujaya Bannerjee, though, claims the agency has hired 50 people in the last three months. HTA insiders admit that 10 to 15 people may have lost their jobs in its Delhi and Bombay offices. Enterprise Nexus, on the other hand, has shut down its direct marketing division.

Neither advertising experts nor headhunters have any estimates of the total number of jobs slashed in the industry, but if Euro RSCG's CEO Ishaan Raina is to be believed, the situation could be serious.

"Downsizing seems to be on a pretty big scale this year. The industry went through a bad phase in 1996, but one did not hear of such lay-offs," he says.

Adds McCann-Erickson's president, Nikhil Nehru: "The information is not corroborated but one hears of agencies slaughtering jobs."

Though Grey Worldwide's CEO Nirvik Singh admits to lay-offs in the industry (not in his agency, though) he prefers to call the exercise "rightsizing". "It is for the first time that the industry has undertaken a workforce 'correction' exercise," he says.

Everest Advertising, is said to have fired people in big number but, a Bombay-based vice president of the agency says the figure being attributed to it is highly exaggerated. "There's been a bit of rightsizing and we've weeded out a few non-performers. That's about it," she says.

The advertising industry needs to resort to stringent cost-controlling for several reasons. Thanks to an economic downturn, clients are pruning advertising budgets. Consequently, the advertising industry is expecting an average growth rate of barely 5 to 8 per cent this year.

Secondly, the agency margins are getting squeezed as clients are shifting from the generous 15 per cent commission system to a fee-based remuneration system. Also, as international partners increase their equity stakes in the Indian agencies, any global realignment of business affects the Indian operations too.

On an average, the wage bill contributes to between 40 to 50 per cent of an agency's total cost, the rest being that of the office space, infrastructure, communications etc. Small wonder the industry is suddenly monitoring this cost closely.

Though, the agencies are pruning jobs across the board, the worst hit are media operations, finance, creative and design departments.

A senior Lintas official explains: "As clients farm out media buying to independents like Carat, Starcom, Mindshare etc, the role of a media operations person in an agency loses relevance."

Earlier, a media operations person negotiated rates with the TV, press and outdoor media players. It is learnt that a few media operations people at Leo Burnett and HTA have lost their jobs.

The digitisation of the design studios has also lead to surplus manpower and now, the agencies require fewer layout artists, designers etc. To keep cost under control, agencies are also de-listing freelancers and retainers from their panels.

Lintas, for instance, apparently had close to 60 freelance story-board writers, scriptwriters, copywriters, visualisers etc. It has pruned the number by 50 per cent now.

Besides firing people, agencies have also frozen increments and recruitment. HTA and Contract have frozen all increments this year as a part of its parent company WPP's cost-cutting drive.

While O&M and Rediffusion are said to have offered very nominal increments this year, the Lintas media specialist, Initiative Media, is not hiring as it faces the uncertainty of losing some of the Hindustan Lever's buying business to Mindshare.

But if a Leo Burnett insider is to be believed, "the scale at which the industry has been hit, hasn't reached its real size yet. It will get worse."

In other words, you have seen nothing yet.

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