Big Tech companies are being forced to make big changes to their business as the economy and data privacy regulations are wreaking havoc with digital advertising revenues.
Companies like Apple, Amazon and TikTok have announced hiring freezes and layoffs to some concern. Shopify is letting go of 10% of its global workforce, online car retailer Carvana shed 12% of its staff, and Meta plans to slash its hiring of engineers by 30%.
The downsizing of the tech industry is described as the result of “company-wide restructuring” and “business re-alignment.” PR catchphrases aside, what’s really happening is decision-makers are turning their attention away from the ad business to focus on more sustainable revenue (Oracle minimizing their digital advertising business to build their health division) and growing areas that provide greater competitive advantage (Google’s focus on engineering).
This means Big Tech will retain talent that contribute to critical revenue-generating products, but shed roles in e-commerce, data analytics, and Web3 as the digital boom dies down. The result? Thousands of people will lose jobs created by aggressive pandemic hiring sprees and there will be digital talent up for grabs in the second half of 2022.
This ‘tech crash’ can be viewed by marketers and agencies as an opportunity to build in-house specialization. Though e-commerce, data analytics, and Web3 will not grow at the rate that Big Tech CEOs anticipated during the pandemic, they are still important because they make up the foundations of modern consumer experience.
Tech job losses also come at a time when holding companies are making up for shedding 24,000 jobs in 2020. Revenues have been strong in the first half of the year for WPP and Publicis Groupe, and client demand will increase the need for resource beyond the 32,000 roles added by the big six agency groups in 2021.
With inflation threatening profits and wages at a high, not every marketer will be able to rationalize hiring more full-time employees. One way in which CMOs can explore the potential of the tech talent market is benchmarking agency fees against project-based, freelance, and full-time in-house expertise. If the pandemic has taught hiring managers anything, it’s just how quickly the demand for talent can expand and contract. Having a strategy to meet short-term needs — whether it is expanding in-house or working with
partners to fill the gaps — and forecasting costs is important.
Here are three principles to guide the process:
1. Have the team for the business you want
It might sound like a lesson out of CMO 101, but most marketers haven’t adjusted the structure of their teams to reflect the impact of social, digital, and e-commerce. Marketing and procurement teams will be surprised to discover they often under-invest in areas that have significant impact on overall performance.
2. Have an agency model that facilitates brand ambition
The right agency model reflects the brand, its ways of working, and future ambitions.
Most major holding companies have enough depth of capability to offer bespoke and integrated solutions, but on occasion, CMOs want ideas from the fringes. Unique and specialized talent in areas like AR/VR, the metaverse, and NFTs can be found in hidden gems, independent collectives, and startups.
3. Have leaders where you want to specialize
It’s not just mid-level roles that are being made redundant in this tech crash. As the organizational chart changes, titles in the C-suite are being merged, morphed, or removed altogether. There will be experienced leaders who have been on the ground and at the forefront of innovation over the past three years who will be looking for change. The challenge for companies looking to capture this talent is having the right structure, the right projects, and the right roles.
Greg Paull is cofounder and principal of R3