Storyboard18 | Why are ad agencies losing talent to startups, streaming platforms?

Amidst the struggle of keeping business afloat and chasing growth in a post pandemic world, preserving talent has emerged as one of the key challenges for advertising agencies.

Shivangi Malik, 29, recently made a shift to a leading over-the-top (OTT) video streaming platform from a creative agency where she worked as a copywriter for the last five years. Malik made the move to expand her writing skills and become a part of an industry which is growing at a fast pace.

“… apart from the creative expression, I was desperately looking for growth both creatively and financially. I have been working in the same ad agency and that has not been rewarding for me money wise and therefore I decided to try something different,” she says.

Malik is among hundreds of creatives who are increasingly looking at greener pastures beyond the ambit of advertising, often landing jobs in new age internet companies and video streaming platforms that are scooping up talent from ad agencies.

What’s on offer are better pay packages, work-life balance and far better growth opportunities.

There have been some of the senior level movements from agency to new age companies as well. Netflix, for instance, has managed to hire senior talent with an advertising industry background. It includes Pritish Wesley who heads creative marketing production in India. Nitasha Seth, who joined Netflix in 2018, having started her career with media agency MEC India, while Swati Mohan, with an advertising background, also joined the streaming firm as marketing head back in 2018.

Senior creative leader Mayur Hola, who quit Havas Creative as the national creative director, has been associated with hospitality startup OYO Hotels & Homes as head of global brand.

Advertising industry experts believe that while movement to client side (advertisers) is not a new phenomenon, large scale exodus of sorts especially at the junior and mid-senior level has started to weigh heavily on ad agencies.

Amidst the struggle of keeping business afloat and chasing growth in a post pandemic world, preserving talent has emerged as one of the key challenges for advertising agencies.

There's no denying that the pandemic has pushed employees to reassess priorities, the work-life balance and their threshold of stress levels.

“...employees are citing high stress levels and work pressure as key reasons for quitting and post Covid-19 individual priorities have also shifted to opt for more stable and less stressful roles,” says a senior HR executive of an ad agency on condition of anonymity.

Ashish Khazanchi, managing partner of Enormous, a leading creative and digital agency, admits that attrition rate has hit advertising hard. Khazanchi runs an independent homegrown mid-scale agency across Delhi and Mumbai with a total strength of 70 people.

“…we do end up losing at least two people every month. It is sufficient to say that the attrition rate has been “worrisome” which is a case in almost most agencies,” he notes. “Attrition is relatively higher in creative than planning function which is much more stable. We have lots of startups and OTT hiring which would account for the next avenue for advertising talent.”

Fundamental loopholes  

Arun Iyer, founder and creative partner, Spring Marketing Capital, says that fundamentally, there is something broken in the advertising agency ecosystem. Iyer used to be Lowe Lintas’ chairman and chief creative officer. In 2019, he quit the legacy ad agency after 16 years to start Spring Marketing Capital, a skin-in-the-game marketing consulting firm, along with Raja Ganapathy, former chief of marketing of Sequoia India, and former DDB Mudra Group CEO Vineet Gupta.

According to Iyer, advertising is under so much duress as a business that just passes on to the people working in the organisation. The result is absolutely no work-life balance apart from abysmally low pay scales which is forcing people to look out for better options. These options have increased significantly with the rise of fast-growing homegrown and international brands.

“The fact of the matter is at one point of time advertising was a desirable business and the truth is it is no longer a super desirable business,” he notes. “Agencies used to be marketing partners and now they have become marketing vendors. If agencies don’t have an attractive culture to offer for the generation of today then it's only a matter of time they will move out.”

Flushed with funds, startups can also offer undeniably attractive packages to young advertising talent. Enormous’ Khazanchi thinks that people are moving to new-age companies not because of a better culture or because they are getting to express their creativity but because advertising is not one of the most high paying jobs.

“Startups can afford to hire people at 1.5 or 2X pay scales. These companies are hiring advertising resources for jobs such as moment marketing and real time responsiveness,” he adds.

Creating better culture, reward system

Industry executives unanimously agreed on the importance of creating a rich culture at the organisation which motivates people to stick and stay loyal to the organisation. Dheeraj Sinha, the CEO and chief strategy officer – South Asia, Leo Burnett, says that people gravitate towards culture rather than just salaries.

“It boils down to the kind of culture where people wish to work. You can buy talent but you can’t buy culture. Therefore, I’m focussing on building a culture of collaboration and doing best quality work at Leo Burnett,” he says.

Sinha talks about how earlier value was being created by large monolithic legacy companies now it is being created by a bunch of talented individuals.

“One has to create a reward system around that. We have developed a transparent reward management system. Our KRA’s (key responsibility areas) are clear and quantified. For example, if an employee is really good he/she can take 100% or 50% increment. We are building a culture and reward system which is highly native to ‘winner takes it all’ philosophy. There is a big shift in how we are looking at talent and rewarding them,” he explains.

Khazanchi also highlights the importance of creating a system of mentorship/apprenticeship which might not be readily offered by new-age companies where quick deliverables overtake the culture of nurturing and mentoring talent.

“At the end of the day, high impact advertising is largely coming from ad agencies and not from the client side. In house creative shops (at most new age companies) might bring speed to the process but not necessarily hone one’s craft. That is a critical point that young talent needs to pay attention to,” he concludes.