Why Agencies Could Win the Talent Fight with Startups
Agencies are competing for digital talent with an ever-growing list of startups — and frequently losing out as candidates opt for the larger salaries, offers of equity and the challenge of building something new. What’s more, working for a startup is far cooler than toiling for an agency.
But the conditions appear set for the pendulum swing back to agencies as venture capital money gets harder to come by and as startups themselves are placed under increasing pressure to generate revenues and find sustainable business models. Pretty soon, the cool startup becomes another small business under pressure to make payroll.
As investor Chris Dixon wrote in a much quoted blog post earlier this year, “Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending.” Consumer startups now need closer to 10 million users than 1 million users to make attractive series A investments, he said.
Added to that recent IPOs of mature startups such as Zynga, Facebook and Groupon have fallen short of expectations, leading many investors to reevaluate their potential upside in the sector.
The effect is that startup life, in many cases, is getting tougher. Though he expressed frustration at the fact his employees are frequently approached by startups and tech firms, Roundarch Isobar CEO Geoff Cubitt predicts this trend could ultimately be drawing to a close. Soon, those who ditched their agency gigs hoping to help build the next Facebook or Twitter might find that the grass once again looks green in the agency yard as their days get longer and their search for revenues becomes more desperate.
“I wouldn’t be surprised if we see things start to swing the other way,” he said. “As funds for some of these startups begins to dry up, so will this insatiable appetite for agency talent. The other thing is, these companies become less attractive places to be as the pressure increases. I think we’ll see a little bit of a recoil.”
Cubitt runs an agency, of course, so that could be wishful thinking on his part. But in support of his argument, these trends are, to an extent, cyclical. Five or six years ago it was fashionable to work at an agency, but now those at startups are widely regarded as the “rockstars” of digital. That momentum could easily shift back in the other direction.
“To me, it’s mostly one of those cyclical things,” said forester analyst and former agency employee, Jim Nail. “Mobile is going through that stage right now, for example, where people have the stars in their eyes and see this pot of gold at the end of the rainbow. If they can’t cash in on the bonanza, or if it doesn’t work out, I can see them becoming disillusioned and opting back in for the regular agency paycheck.”
Nail pointed to the social space as one area in which that shift might already have begun. There have been some big acquisitions of companies like Buddy Media and Radian6, but activity in the area seems to be slowing down, he suggested. Meanwhile, agencies are building out far more robust offerings of their own.
There remain, however, plenty of startups and technology companies out there looking for agency talent, and an increasing number of senior agency execs are jumping ship to start their own endeavors, often with former staffers at their sides. Former SapientNitro global strategy director Freddie Laker is one example, having left the agency to start a stealth-mode social TV startup called Gui.de. Agencies remain, he says, “training grounds for startup talent.” Bant Breen is another, who left behind a long agency career to create a personal identity management platform called Qnary.
So if the talent pendulum does, in fact, begin a swing back towards agencies, it is difficult to see it happening any time soon.
Why companies are using virtual concerts to introduce their users to the metaverse
Music is a spectacle, but it’s also a deeply social experience, a pairing of traits that experts believe make virtual concerts a perfect fit for companies looking to showcase the metaverse to skeptical users.
Member ExclusiveMarketing Briefing: ‘Not a hypothetical problem’: ANA CEO Bob Liodice on why there needs to be a unified effort to combat hate speech
This week, GARM and the ANA announced they are working with Pernod Ricard to scale that initiative working with brands and social platforms as well as small and medium-sized businesses.
‘The data strategies of these companies aren’t progressive enough’: 10 Confessions on the pivot to privacy
An inside view of how privacy changes are having big consequences throughout advertising.
SponsoredHow retailers can be ready for holiday shoppers this year
Suchi Sastri, managing director and partner, Boston Consulting Group As the holiday season approaches and the pandemic continues to evolve, retailers want to know what to expect. Will e-commerce continue to grow at the rate it did last year? How big of a role will in-store shopping play in holiday shopping? While it’s still early, […]
As non-endemic brands eye the gaming space, a lack of industry standards is delaying their arrival
The caution with which some brands still approach the gaming industry -- and the need for better industry standards to help brands feel more informed -- were recurring themes at last week’s Digiday Gaming Advertising Forum.
Cheat Sheet: How Apple’s ATT is giving it more influence over ad dollars
The signs that Apple is building an ads business is there — here is what we actually know.