Why is the Indian ad industry witnessing high churn & talent exodus?

Industry observers indicate people moving to newer sectors, non-existence of an entrepreneurial culture and lack of investment in nurturing talent as some of the reasons leading to the situation

e4m by Misbaah Mansuri
Updated: Feb 7, 2020 10:54 AM

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ad world

Ad industry leaders are leaving the industry in droves and agencies seem to be having no idea how to stem the flow. To be sure, the industry has been in a constant state of flux. Top industry leaders have been moving at speeds we can barely keep up with.

This week the industry witnessed the exit of adman Sonal Dabral who quit Ogilvy India as its Chief Creative Officer South & South East Asia and Vice Chairman.

Other big movements witnessed in the last couple of months include Saurabh Varma quitting as Chief Executive of Publicis Communications, Vikas Mehta stepping down as CEO of Mullen Lintas to join Ogilvy Africa, Neeraj Bassi calling it quits as Publicis India's Chief Strategy Officer & Managing Partner and Chief operating officer, Vandana Verma parting ways with Publicis Groupe’s ARC Worldwide and the exit of Amaresh Godbole, MD, Digitas India.

While the circumstances could be different and personal for every departure, industry observers discern a wider theme on the possible reasons for this high rate of churn that the industry is grappling with.

According to Tarun Rai, Chairman and Group CEO, Wunderman Thompson South Asia, while there exists ‘good attrition’ as well as ‘bad attrition’, in the middle to senior levels, there has been a larger incidence in the industry of ‘bad attrition’ of people leaving because they were dissatisfied with their current advertising jobs. “In fact, recently we have seen a lot of senior industry people quitting. A few months ago I was on a panel with some industry stalwarts who had quit their jobs to start something on their own. The reasons they mentioned for leaving were to do with the lack of an ‘entrepreneurial’ culture in their organisations, too many approvals required to do anything new and a very short-term approach to decision making,” Rai observed.

To be fair, the Ecommerce-digital technology cocktail has had that effect on a myriad of industries but losing talent to the newer sectors comes as a surprise for agencies which have been gearing up to handle these very businesses.

It becomes even more challenging to retain talent as industry leaders watch consultancies and other disciplines enter their world and sway them away. Rai acknowledged that the industry has been competing with lots of new players which makes it imperative for companies to try and retain their best talent. “Young advertising people, especially, have many more opportunities outside the advertising industry. Content, Digital, Media, Platform owners, Consultants… are all looking for good people from our industry. In fact, many new companies are in-housing advertising and are also looking to hire people from our industry. It’s not that these people are unhappy in their current advertising jobs. However, to retain them we have to offer them more reasons to stay. More training, career growth opportunities, and yes, more money too,” he established.

For creative agencies, holding on to a client may be easier than holding on to talent. Estimates show that annual turnover rates are upwards of 30 per cent, making advertising the industry with the highest talent turnover rates, second only to tourism.

Rai revealed that at Wunderman Thompson they have managed to keep the attrition levels at around 25 per cent. “I am okay with this number. Half of this is planned attrition where the ones who are not pulling their weight need to be replaced with people with better, newer skill sets. And the other half, around 10-15 per cent is unplanned attrition where people are leaving not because we want them to leave. I do believe that most of this unplanned attrition is ‘good attrition’ in our case – something I can live with.”

According to Heather Gupta – Group HR Director, MullenLowe Lintas Group, "In my 15 years heading HR for advertising agencies and media companies in India, the churn has been pretty consistent. We’ve always seen relatively high attrition rates in this industry, and this can be attributed to a number of factors – people jump for more money, they think they need a break, they relocate, they decide to switch industries.

"I don’t think we have any more of a retention problem than any other industry, overall. It is true that the younger generation are becoming more impatient for advancement and financial reward, but this is cross industry. In terms of advancement, of course the pyramid gets narrower, the higher you go, but those employees who are motivated, managed well and given the opportunities to learn, grow and perform, will definitely advance whether internally or even externally."

After all, in a service- and relationship-based business, an agency’s offering is only as good as its people. Subhash Kamath, CEO and Managing Partner, BBH India, is of the opinion that a part of the reason is that advertising agencies haven’t invested as much as they could in nurturing and mentoring talent.

However, he added that it can’t be just one but a combination of reasons for what’s leading to this churn. One of the reasons being that the attitude to work has changed with youngsters today wanting to experience newer things and not being afraid to change jobs quickly to get a new experience elsewhere. “I’ve seen resumes of people who have been through 6 to 7 jobs in as many years. Loyalty and sticking to one organisation through ups and downs isn’t a virtue anymore,” he noted.

Kamath also observed that choices have exploded for talented people in the industry. “Advertising isn’t the only option. Now you can move relatively easier to the client side, join a media house, work in content and films, launch your start-up etc. It’s a braver, more adventurous and more optimistic lot, compared to the previous generation. So they’re willing to take a risk. On the other hand, training budgets are inevitably cut when revenues are slow. Everyone works for growth, appreciation and reward. When an agency doesn’t focus on giving its employees these, churn is bound to happen,” he explained.

Recent research from LinkedIn and 4A’s also show a “25 per cent net talent loss at ad agencies” compared with other industries, and that the turnover rate had increased by 10 per cent from the year before.

Raghu Bhat, Founder, Scarecrow M&C Saatchi, believes that the churn is a domino effect of the slowdown. “The churn is not just in advertising but everywhere. Questions are being asked - how can we do this cheaper? It's true that there is a shortage of good writers and scriptwriters in content. But apart from a few, not many ad guys are venturing into content. That's because it requires a different mindset and the money is also less, at least in the beginning (unless it's a supervisory or executive role),” he asserted.

Bhat’s sense is that this is an indication of us moving into the performance economy wherein every person will have to demonstrate ROI. “There will be greater demand for people who really add value commensurate with their cost,” he explained.

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