Marketers are prioritising capabilities over capital, as staff shortages in the industry beat out inflationary pressures.
The start of 2022 saw a historic high of 4,412 people employed in Australian media agencies. At the same time, the job vacancy rate hit 12%, double the normal level of 6%.
The demand for talent is now shifting priorities in the pitch process, as marketers drill down on supplier capabilities.
Enth Degree partner Peter Coffey said clients are appointing best-in-breed suppliers, regardless of agencies pushing a full-service model.
“Post covid lockdowns, we are seeing clients emerging with different priorities and market challenges and this is leading them to question their supplier’s capabilities. Hence, we are seeing an increase in pitch activity from both a creative and media perspective.
“While it might be a surprise to the market, we are rarely approached by a marketer who is dissatisfied with price, it is always a dissatisfaction with service and quality of output.
“This service aspect is exacerbated by staff shortages affecting all suppliers. This often leads to inexperienced or underqualified staff taking on responsibilities beyond their capability.”
According to IAB Australia’s inaugural Industry Talent Report, the market entered the year with double the vacancy rates in digital advertising and adtech roles at 9%.
This surge, according to the report, was driven by a combination of strong market growth, changes in visa rules, lack of new talent entering the market due to border restrictions and the entry of new large global organisations into the Australian market.
Hustle director Ed Womersley said in the race for digital capabilities, it’s ROAS over retainer billings that are the key cost consideration.
“With inflation starting to kick in and iOS14’s impact on ROAS, companies are asking more from the pitch process with hyperintensity around value and return on ad spend.
“Many of the eCommerce brands that boomed during COVID are now facing crunchtime as discretionary spending goes back into travel and experiences. This has put pressure of digital agencies to deliver stronger results and that scrutiny is being seen in the pitch process.”
The latest results from the Independent Media Agencies of Australia (IMAA) Pulse Survey found that while 85% of independent media agencies will grow staff by up to 25%, more than half say that the quality and depth of the talent pool is still poor.
The depth is being exacerbated by scope, with pitch doctors reporting a widening demand for varied skill sets. Trinity P3 ANZ business director David Angell said marketers are thinking harder about an agency’s place in a broader roster.
“It’s no longer just about strategy, creative and media - it’s about data and analytics, performance media, CX capabilities, digital animation and various other areas, all of which means that we need to think harder about which agencies to put on a list. Our clients are generally embracing this and we think that’s a good thing both for them and for the agencies.
“The biggest mistake for marketers, if we enter into the predicted recession, will be to avoid going to market hoping for a lower cost agency solution. As the last decade has shown, lower cost invariably means lower quality and compromising effectiveness.
“Agencies are already struggling to attract and retain the quality talent they need, without advertisers continuing to demand the agency delivers more for less.”
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