Building a Dream Team: Contingency Staffing Reduces Costs and Expands Talent Base for LOOMIS

LOOMIS President Mike Sullivan shares blueprint for reducing staffing costs, pleasing clients and expanding the LOOMIS talent base.

How can ad agencies possibly deliver on client expectations today? Clients demand agency talent that builds the top line without breaking the bottom line. They demand proven ROI and exceptional value. They want the best minds focused on their business, but they’re budget-constrained.   It’s a hard equation for agency leaders to solve.

If it wasn’t clear before the economy tipped over that the traditional ad agency staffing model had become unsustainable, its obsolescence is obvious today.  Client budget pressures translate to compensation plans that often don’t leave much room for essential players, let alone a deep bench.  The largest variable expense for agencies is employee cost, which can consume 60 percent or more of gross revenue.  Global players like Omnicom managed to squeeze this percentage down with roll-up strategies through the last decade, but share prices for those firms are showing there’s no longer strength in numbers.  Nowadays, it simply isn’t enough to acquire stand-alone agencies and eliminate back-office costs. Hence, the smoke has cleared and all’s quiet on the mergers and acquisitions front.

Clients walking agency halls are now acutely aware that the people they meet are being paid with their marketing budgets. While it may be hard to resist the sex appeal of a big agency with a great address, a suite at the stadium, and legions of sharp dressers, the cost that comes with the “Mad Men” model of yesteryear doesn’t make business sense today.  Not for the agency, and not for its clients.

An Emerging Model

The mandate to deliver high-level expertise at a reduced cost has required ad agencies to do what they do best—think creatively. The impetus for LOOMIS to begin examining nontraditional alternatives for cost-effective service delivery began back in 2006 when we took note of an interesting workplace trend.  Staffing and recruiting firm Spherion Corp. released a study commissioned by Harris Interactive revealing that 60 percent of workers prioritize time and flexibility ahead of compensation and other traditional retention factors.  Spherion dubbed these people “emergent workers” and noted that only 19 percent of U.S. firms had embraced the progressive mind-set, organizational structure, and policies necessary to benefit from the trend. 

In response to staff requests, LOOMIS had already begun incorporating this strategy into our own practice on a limited basis. As we learned how to successfully manage the team’s newfound flexibility, we also became more adept at incorporating and managing freelance talent.  Most agencies use freelancers, but few have defined plans for formally incorporating this flexible resource into their staffing strategies for maximum efficiency and return.

Human Resources Strategist Dr. John Sullivan noted in an article for Workforce Management that, “Contingent labor utilization is so ad hoc that more than 70 percent of firms cannot accurately account for total spending on it even though it represents 18 percent of the workforce.”

When Less Becomes More

LOOMIS can account for our contingent workforce. In fact, it has become a critical part of our service delivery model.  While the agency enjoys a retention rate double that of the industry average, natural attrition over the years has allowed us to further experiment with contingent staffing.

In the past five years, LOOMIS has built a formidable base of flexible creative, media and research talent around a cadre of long-tenured, full-time, senior-level team members.  Many of the members of our contingent team are former full-time LOOMIS staffers who’ve elected to work freelance exclusively for the reasons cited in the Harris study. Account service positions do not lend themselves to this approach and are the only functions not represented on our contingent team. A small group of LOOMIS creative directors manages a flexible group of 16 creative people just as they do the internal staff. The agency’s internal media team uses its nine-member contingent team the same way.  Research resources are directed through senior-level LOOMIS account team personnel.



Making it Work

Beyond thoughtful organization, appropriate systems, and tight processes for workflow management, making this approach succeed requires nothing less than a completely transformational cultural shift.  Traditionally, ad agencies pride themselves on showing off “their work” and are loath to credit external teams with the inspiration for ideas that clients like.  As a result, many agencies use freelance talent to fill in gaps on work full-time staff find less interesting.  It’s the traditional strategy for agency leadership challenged with keeping notoriously restless advertising people engaged and in their seats.  But, it’s an approach that leaves a lot of creative firepower untapped and sitting on the sidelines.

We’ve found the unlocking move is to adopt the model British ad agencies began incorporating into their organizations more than a decade ago.  As Tim Elliott, creative director for Jack Morton Worldwide based in London, suggested, “There is a lot to be gained from treating casual staff as part of your team and learning from the vast pool of talent that is out there.”

We couldn’t agree more.  In fact, cultivating a learning environment was an unexpected benefit of our shift to the new model.  It’s no secret in the agency world that the primary reason people leave—especially creative people—is boredom, and legitimate concern for their own professional growth.  Our model allows our core team the opportunity to collaborate with a variety of peers and share new ideas. Even the most experienced of us benefit from seeing how other people work.  It takes us back to learning fundamentals, and challenges us to reconsider our own practices. And, as the industry continues to change and fragment at a breathtaking pace, the model’s flexibility fosters collaboration with others who have developed specific areas of expertise on new fronts.

The Bottom Line

The move to a well-conceived contingency staffing model can result in considerable cost savings. Our approach leverages the talent of key senior players on a full-time basis and allows us to scale as necessary to pace with client workloads.  Clients benefit from a staffing model that doesn’t hit them with the cost of a team member who is baked into their compensation plan but may or may not be fully engaged at any given time due to workload variation.  And, it helps us meet the client challenge to keep costs in line while maintaining ready access to talent on demand.  The agency wins because we can keep costs down and manage for profit. Our clients win because they get value that the traditional staffing model, replete with fully loaded costs for a fleet of full-time staff, simply can’t deliver.

As Kimberly-Clarke CMO Tony Palmer put it, clients want “seasoned impact players on the front line focused on deploying their creativity on ideas that drive business.”  They want value creation and collaboration.  Our contingency staffing model delivers consistent senior team member interfacing and cost-effective delivery of services as dictated by workload.

A Final Thought

In November, Fast Company Magazine featured an article titled, “The Future of Advertising.”  In it, the author describes the practice of advertising as being “like a beetle preserved in amber … virtually unchanged for the last half-century.”  He was describing pre-1960 creative execution, but he could just as well have been referring to agency organization from its inception through today.  While virtually every client industry has been subjected to dramatic changes in work practices, ad agencies have clung stubbornly to an outmoded staffing model that is no longer sustainable. 

As Kraft Brand Manager Marshall Hyzdu said in the very same Fast Company article, “For an agency to be on the cutting edge, it must either have heavy overhead or create an approach that uses a lean team focused on new ideas.  I wonder if that becomes the new model.”

We sure think so. And so do our clients.

About LOOMIS

LOOMIS is a full-service advertising agency that specializes in defining and leveraging strategic advantages for challenger brands competing for share against category dominators. Our expertise extends across multiple retail categories and includes mid-market franchised and corporate-owned restaurant chains, home services companies, banking and financial institutions, and more.