Financial hardships can lead to businesses cutting expenses to combat profit losses. In our article about the Financial Situation of Agencies in 2020 and 2021, we concluded that overall, agencies faced tough financial losses in 2020. This means they had to make difficult decisions.
The UK Office of National Statistics found that redundancies reached a record number of 395,000 people who lost their jobs. Digital marketing agencies are no exception-jobs in this industry have been lost too.
We looked into the agency’s point of view when it comes to difficult decisions on their teams. None of the respondents in the survey had more than 500 employees. Most of the respondents (22%) had only 21-55 employees in total. With smaller, tight-knit groups, it is even harder to let go of employees. Our survey looked into how many agencies reduced their teams, in which area they carried out crew reductions and their plans for expanding their crew in 2021.
🎯 While most agencies kept their teams, 36% of the respondents had to let go of employees.
🎯 Nearly half of the respondents plan on increasing their team in 2021.
🎯 Remote working could be the best solution for both agencies and their employees to create a sustainable work environment.
🎯 Agencies have an increased demand for specific digital marketing experts in 2021.
The majority of agency teams were defended by their leaders. Agency top managers were asked ‘Did you reduce your agency team in 2020?” 63% of them said it did not reduce their team. 37% of agencies had to, unfortunately, reduce their teams in 2020 facing the business results of the pandemic. 32% increased their teams. 12% of the agencies had a 20-30% decrease in their teams. Only one respondent had a 50% reduction in their team, representing the maximum reduction in our survey.
The majority of jobs in digital marketing and advertising companies remained stable. The reason for this comes to no surprise: businesses and consumers alike are relying heavily on digital resources for everything. More and more consumers are shopping online and interacting with social media posts, causing businesses to be in higher favour of digital marketing. The number of independent digital marketing agencies and freelancers has also increased. Therefore, the most likely reason for job cuts was to reduce expenses rather than lack of demand.
Agency employees representing management and client service suffered the most in equal amounts. 38.8% of agency CEOs reduced their teams in these two areas. In contrast, specialists in SEO, digital media, SEM, data analytics, business relations, finances and legal services were the most protected in 2020 from reductions.
In every business, the legal and financial department is crucial to smooth business operation, explaining why none of the respondents reduced their team in those areas. The agency managers in our survey were SME’s, so it also may be that instead of having an extensive in-house team, they have outsourced the departments. This allows agencies to focus more on talent rather than administration.
Unemployment is definitely not easy on the people who lose their jobs, but agencies will also struggle to regrow their team. In a survey “State of the Internet Marketing Agency in 2020”
By WordStream, agencies were asked what their biggest challenges would be going forward (among other questions). 31% of the respondents stated that hiring and training new employees would be the greatest challenge, and 11% stated that retaining their current employees would be the greatest challenge. This suggests that these agencies are still making decisions to cut expenses or give employees enough incentive to stay. Retaining employees is a way of avoiding the challenge of having to train and recruit new people.
One of the respondents said, “The challenge is finding that balance between the short and long term view, between today’s survival and building for the future.” This perfectly describes the situation agencies and other businesses are in regarding job reductions: they have to recover costs for the short term while also avoiding the expense of new recruitments in the future.
This challenge for agencies presents an opportunity for job openings. The same survey suggested that agencies would open demand for full-time employees as they wanted to spend fewer resources outsourcing. This was reflected in our report: 52% of agencies had only 2-5 freelancers working with them. If agencies prefer having full-time employees rather than outsourcing work through freelancers, it could mean fewer job losses.
Increasing Staff in 2021
The future looks bright for employment into digital marketing agencies. 46.9% of agencies wanted to increase their team in 2021. A further 28.6% stated that they would “most probably” increase their team.
Digital skills in 2021 are in heavy demand. LinkedIn posted an article, “Learn the 5 Fastest Growing Skills Since the Pandemic Hit” in which 3 of the skills stated were programming, digital marketing and data analysis.
When asked about which areas agencies wanted to increase their teams in, the most popular answers were client services (34.8%) and business relations (30.4%). Other popular answers were digital media (30.4%), social media (26.1%), and web / app development (23.9%). SEO, SEM, data analytics and strategy were all equally important at 19.6% of planned. ClickThrough reached out to recruiters to find the most in-demand digital marketing skills. Their findings echoed the responses to our survey: social media marketing, data analytics, and SEO were three of the top five skills that recruiters demanded.
It can be safely and surely concluded that digital marketers can look forward to job opportunities in 2021. Digital marketing agencies need to expand their team because they recognize the market demand for these skills, giving an optimistic view of generating more business in 2021. This also shows that agencies are acting to meet the new demands of a market that has been shaped by major global changes.
Building Agency Teams Remotely
One way that agencies, and many other businesses, have found to retain employees is through remote work. A survey by HiveDesk, which is a tool enabling remote work coordination, looked into this. Among other reasons, agencies chose this model of work to reduce office costs. This also meant the agency wouldn’t be limited by what talent is around them; they can recruit the best professional even if the right person for the job may be far away. 20% of the agencies they surveyed were completely remote. All the agencies had saved on costs by working remotely. HiveDesk concluded that aside from cutting expenses, the digital agencies had an even bigger advantage of going remote: they overcame previous limitations to growth such as availability of talent, local market, and lack of flexibility.
Agencies aren’t the only ones in the receiving end of the benefits of remote work. BCG published a thorough study into this in their article “What 12,000 Employees Have to Say About the Future of Remote Work”. They found that 60% of employees wanted flexibility in when and/or where they worked. Productivity was a big concern of working remotely, but statistics have dismissed the concern. BCG’s study found that employees’ productivity increased in individual and managerial tasks in their remote work. Collaborative tasks lacked productivity, but only during transition from onsite to remote work. This is yet another benefit for agency owners: higher work productivity achieved by fewer employee costs.
Most In-Demand Digital Marketing Skills for 2021
Leaders were asked if they were planning to increase their agency staff in 2021. 46.9% answered “yes” and 28.6 answered “most probably”.
In the previous section we discussed how two other reports agreed with our findings on the most in-demand digital marketing skills. We will now take a closer look at some of them.
The percentage of planned employments reflects the needs of agencies to grow and to fulfil the demand of their business clients.
Client services (34.8%) and new business (30.4%): nourishing good relationships with clients is one of the most important effort agencies can make to maintain stable, long-term business with them. Strong business relationships mean that both sides of the party will work together in the face of hardships and put ample effort into upholding that relationship. As older partnerships are secured, agencies need to scale and expand into other accounts to compete and grow.
A respondent on our survey highlighted how better client services give smaller agencies an edge: “Big agencies may be disrupted by smaller more nimble ones since small agencies are fostering relationships with clients and working with them through the journey more and more.” (Ancel Ochino Bwire, CEO and Founder of Ancywax).
Digital media (30.4%) and Social Media (26.1%): The online space for digital media is crowded. Many businesses invested in this media a long time ago, so businesses who have just entered the space due to COVID-19 are at a disadvantage. Due to so many businesses utilizing the online space for their promotion, the competition to stand out is fierce. A report “COVID-19’s Impact on Social Media Usage” showed that social media usage and engagement had increased. At the same time, consumers held brands under more scrutiny in 2020. Brands need agencies to put extra messages in their ethical messaging and the way in which they show their efforts to combat the pandemic. Users valued brand morals to the extent that they revealed they would use brands who responded well to COVID-19 even after the pandemic.
Digital marketing agencies needs experts who can utilize digital media and social media to reach the large demographic on these channels, and to communicate brand values to customers.
Team reductions within digital marketing agencies did take place in 2021 but at a smaller scale than other industries where employees lost their jobs. For example, the accommodation sector lost 18,000 jobs whereas advertising services lost 6,000 jobs in January, as reported by the US Bureau of Labor Statistic in their report “The Employment Situation – January 2021”.
The ability to work remotely has been a great way of protecting digital marketing jobs, as almost all the tools needed to provide services are online.
The natural consequence of the world changing consumer behaviour and needs is that businesses need to change their marketing strategy to fulfil these new needs. They need the services of advertising and digital marketing agencies to help them develop a strategy to achieve this. This new demand has led agencies to increase their teams in 2021, specifically in the areas of digital marketing where there are more opportunities to generate leads and drive conversions, such as social media. There will be a higher demand for digital marketers in these fields to add to agency teams in 2021.
However it is worth remembering that many agencies were in difficult positions on the market, pushing them to make risky decisions. Agencies suffered from reduced turnovers in 2020, as we found in our report “The Financial Situation Of Agencies In 2020 & 2021”. At the same time they endured the expenses of protecting their talent. Many agencies prefered to lose money on keeping their teams rather than make reductions as they expected a growth in 2021 and wanted to be ready to rebuild their business positions fast.
Besides this, hiring the right specialists and their education is costly and demands greater efforts from agency managers. If the economy recovers slower than anticipated, those agencies will be harmed by exaggerated talent expenses and their unmatched budget will be a threat for them.
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