Due to plummetting demand, online ad startups such as AdBrite, Heavy.com, Imeem, and Zillow, as well as Web ad giants like Yahoo (YHOO) will soon lay off parts of their ad sales forces. A Razorfish executive told us last week that “dozens and dozens” of ad networks will go bust in 2009. Soon, hundreds if not thousands of talented and experienced ad execs will be on the street or working for failing firms.
It’s great news, several online advertising pollyannas told AdAge‘s Michael Learmonth.
Their take: all the blood in the water means there will finally be an end to a talent shortage that has been hampering the online advertising industry for years. They gave three reasons why:
- An end to outsized salaries. After years of double-digit growth for the industry, AdAge says account executive salaries have grown from around $150,000 to a bloated $300,000. With so many laid off sales execs to choose from, new hires should cost much less for healthy firms. Says Platform-A boss Lynda Clarizio: “I do expect it to be easier to recruit and hire people in this industry.”
- Less quantity means higher quality. Racing to meet client demand, interactive agencies probably overstretched their human resources. Bant Breen, president of agency Initiative’s digital side, says it takes 2.5 times more people to create a digital campaign than a traditional one. Agency exec Michael Lebowitz says that digital campaigns haven’t been getting as much attention as they need. “All this money was pouring into digital, and there weren’t enough people to do it. That led to mediocrity, and mediocrity didn’t help the market at large,” he said. “A slowdown of cash and slowdown in the need for talent will give this industry a bit of space to breathe; too much too fast is bad for a company and bad for an industry.”
- Stars will coalesce around more successful firms. As publicly traded online ad firms begin to lose value, their most successful ad people won’t be content to take their compensation in stock-based compensation anymore. More successful firms might suddenly find poaching them easier. “We prefer to hire during the downturn,” video-ad network BrightRoll CEO Tod Sacerdoti told AdAge. “Superstars tend to get dislodged during these times.”