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Pace of Ad Agency Layoffs Slows; Is This the Bottom?

The pace of layoffs at ad agencies appears to be slowing. While there are no signs of mass rehirings at agencies, there are some signs that the headcount situation appears to be stabilizing. BNET's Ad Agency Layoff Counter climbed over the 33,000 mark this month. The counter records publicly reported layoffs at agencies, and thus significantly under-counts the actual numbers of jobs lost.

The difference between layoff notes coming in Q2 2009 and those seen six months ago is that over the summer, layoffs were reported in the low dozens at various smaller shops, such as WongDoody (17) and Tribal DDB in Dallas (10). That's still depressing news, but it's not the wholescale chaos that swept Madison Avenue in the winter when the big networks like Omnicom laid off 3,500 people and WPP axed 7,200.

The next question: Have we hit a bottom from which the industry can rebuild? This recession has been so dramatic that to say "yes" flies in the face of common sense. Interpublic media buyer Magna just forercast that spend will decline nearly 15 percent this year and recovery won't be seen until Q3 2010. Even WPP chief Martin Sorrell has been openly negative about signs of recovery -- there aren't any, he says.

A lot will depend in Q2 results -- due to be reported over the next few weeks -- at major advertisers and agency networks. Revenues will likely be down, depressing stock prices and ad budgets further. We may yet see another "correction" in the agency employment market in Q3 as a result.

There is some potential good news on the horizon: Q3 and Q4's numbers will be comparable to the period last year when the market started to collapse, and so will start to look a little better than the current quarters which are compared to the period prior to the crash. Numbers will look increasingly positive after that due to those comparisons. That may instill clients with enough confidence to increase their budgets.

In the meantime, prepare for the slowest summer ever.