This piece was first reported on, and published by, WorkLife sibling Digiday
Economic headwinds are gathering and casting a specter over the balance sheets of companies across the industry.
In such a climate, terms such as layoffs, restructuring, or “reduction in force” are (tragically) all too common with such measures taking a human toll, and predictably, the trickle of “RIFs” that emerged in Q3 is turning into a downpour as we close out the year.
The current round of layoffs is notable given that some of the industry’s household names — read Big Tech — are also letting people go in considerable, some would say unprecedented, numbers. For some, this is a marked indication that the pain of the downturn to come is likely to be felt far and wide.
After all, industry watchers have grown used to reports from outfits such as Facebook and Google that their revenues have defied gravity during earlier economic downturns. Although, the last round of quarterly results from such players demonstrated how the halcyon days of the duopoly’s dominance of the ad industry are on the wane. Albeit, they do still represent the majority of the market.
Data compiled by Compensate, a start-up that provides HR-related services, suggests that Big Tech players have laid off close to 25,000 employees in the last number of weeks, as the markets brace themselves for tough times.
The direct reasons for these cutbacks vary on a case-by-case basis with Meta and Snap’s recent layoffs deemed to be directly related to the impact of Apple’s spate of privacy overhauls in recent years making it difficult for advertisers to target and track iOS device users. Meanwhile, the goings-on at Twitter is a more root-and-branch, not to mention chaotic, affair but nonetheless, advertisers are turning away from that platform (even if it is just temporarily).
Sources told Digiday that Amazon’s reported 10,000 cutbacks in headcount largely hasn’t impacted its burgeoning advertising division. Microsoft, which had a less severe trimming of its workforce recently, is also understood to have plans to grow its ads division, albeit rumors persist that Google-owner Alphabet may also look to trim headcount.
These measures serve as a stark contrast to late 2020 and early 2021 when the Covid-19 pandemic accelerated the “digitization” of economies across the globe and demand for employees in the media sector was rampant.
Swollen talent pool
And now many are beginning to question just what impact the influx of 25,000-plus former Big Tech employees will have on the talent market. While a tenure at one of Silicon Valley’s household names will stand out on any resume, some question how those candidates will be able to perform outside of the industry’s largest players?
After all, the pool of available talent is simultaneously being swollen by former employees of smaller outfits that similarly have fallen victim to the drive for “corporate efficiencies” as outfits such as Amobee, Infosum, LiveRamp, NextRoll, Permutive, Quantcast, Taboola and VideoAmp have all made similar cutbacks recently.
Digiday understands the cutbacks at Big Tech was spread across a number of departments, impacting engineering, product management, and sales teams. And while engineering talent at such outfits is always in demand, separate sources told Digiday that the skillsets developed within the apparatus of a Big Tech player may not necessarily be applicable when operating at a less well-resourced outfit.
Even before the competition for talent in late 2020 and 2021 introduced a level of intensity to the market, the dominance of Big Tech players meant that the likes of Facebook, Google, and Twitter could pay top dollar for staff, particularly sales staff.
Given the recent round of layoffs, this may lead to what some may define as a “correction” in the market. “The likes of Facebook and Twitter led to a lot of salary inflation; there will be a big reset in 2023,” said one start-up CEO who declined to be named.
Jay Stevens, a veteran executive of the digital media landscape whose resume includes the names of large corporates and startups, told Digiday the current state of the market is comparable to the aftermath of the burst of the dotcom bubble and financial crisis of the 2000s.
“Engineering talent will always be popular,” he said, adding that those with marketing skills may have to wait a while for the market to recover before appropriate roles will be available.
Multiple sources noted that even as far back as the early 2010s, competing with Google et cetera for staff was expensive, especially for aspirant companies.
Stevens, who was the international managing director of Rubicon Project (now known as Magnite) during its hyper-growth phase during this period, said recruiting staff from outfits such as Google was difficult because “they were extremely well compensated” but the market has a totally different dynamic now as the growth of digital advertising starts to plateau. “A lot of these people coming out of Facebook [as part of the layoffs] are probably going to have to take a cut in their salaries,” he added, “there will be some deflation for sure.”
Meanwhile, Dan Goldsmith, managing director at 3 Pillars Recruiting, said, “I have never seen a dynamic quite like this. He then compared it to the state of the market a year ago when competition for talent sent salary expectations soaring among candidates. “A lot of people are about to experience something they have never experienced before which is career adversity,” he concluded.