According to the most recent Kingston Smith report on the financial performance of marketing services companies in 2015, the creative industry has recovered well from the recession of 2008. All sectors experienced both income and profit margin growth with the majority of sectors experiencing year-on-year growth. However, there are only so many ways the industry can maintain this growth and continue to evolve at such speed, and one of the ways – acquiring more talent – is beginning to dry up. The 2014 WPP annual report summed it up nicely stating “supply exceeds demand – except in talent” and this theme was reflected throughout the Kingston Smith report where it was acknowledged that talent management and addressing the skills gap was essential for the future success of the industry.
The Kingston Smith report also touched on the resulting impact this talent shortage has on the industry. The biggest concern was the pressure that was placed on wages as those with the most in-demand skills were able to command a higher price – stressing the marketing place as well as individual employees. When you combine this with the changing nature of client billing – moving from retainer to project based work – and the ever-increasing property costs, it makes building those margins increasingly difficult.
Furthermore, another issue is the expanding skills gap between older workers and the new generation entering the workplace – particularly when it comes to understanding and using digital. In fact, a recent report by ClickZ and Deltek noted that social and digital mediums have changed what it means to work within a creative industry and “even as agencies struggle to attract young people with the digital skills necessary for survival, the skillsets of their most senior colleagues have been rendered obsolete”.
The final industry concern is the growing trend of freelancing. Significant numbers of creatives are making the move from the stability and security of agency to the more flexible and often better-paid freelancer lifestyle. However, this trend has the potential to destabilise the market and present a challenge for agencies looking to strengthen core teams.
While we don’t profess to hold the answer to all of these issues, there is a short-term option that can ensure an agency doesn’t suffer while a more long-term solution is developed. It does require agencies to put aside the initial concern as to why there is an influx of freelancers, but there is no denying that better utilisation of freelancers can ensure gaps are filled within core teams efficiently. In fact, one respondent in the ClickZ report hit the nail on the head when they said “there is a general lack of skills in the industry. I think we need to see greater support and organisation around the interface between freelancers and agencies”.
It is often not that simple though as there are a lot of challenges associated with using freelancers. The skyrocketing day rates means that agencies that don’t have a strong grasp on resource management are doomed to watch their profits walk out the door with their freelancer. Additionally, freelancers tend to increase the administration time as more people get involved with the agency. Freelancers are still arguably the best way to combat the talent shortage in the short term though so it important agencies are able to effectively manage and utilise the resource.
This is where technology comes in. Embedded in almost all facets of the business landscape, agencies are no different. An agency management system will provide granular insight into resource allocation and management, as well as tracking capacity and work across teams to ensure projects are delivered on time, to budget and at the highest standard. Additionally, a management system enables closer monitoring of upcoming work and new business opportunities providing agencies with real-time data around when teams need to flex up or down, and where the skills gaps are.
An agency management system and freelancers present the prime opportunity to slow down the damages of today’s talent shortage. For the industry to continue growing at its current speed and for agencies to capitalise on this – turning growth into revenue – it is important to move quickly.