Marketing recruiters set to benefit as confidence returns - City Comment
24 October 2013
While the UK exited the last recession by 2010, it has taken some time for confidence to return.
Thu, 24 Oct 2013 | By Adrian Kearsey, equity analyst at Hardman & Co
While the UK exited the last recession by 2010, it has taken some time for confidence to return.
This partly reflects the relative shallow recovery in GDP. It also reflects the realisation by most UK employers and employees that the government’s austerity cuts are likely to remain a feature of the political environment for some time to come.
This lack of confidence has meant that even when there were available posts to fill, many candidates felt too nervous to move. As a consequence, many staffers have found that candidate churn has (until recently) remained elusive, even though the UK is in its third year of positive growth.
That said, both business and consumer confidence is building across many segments of the economy and this is beginning to translate into higher levels of job switching. This is especially important for the perm staffers since they are more interested above job switching than absolute levels of employment. It is the switch that creates the fee.
So which parts of the economy are growing?
On 14 October Michael Page updated the market for the third quarter. UK net fee income (NFI) was up 5%. Unsurprisingly, property and construction were doing well. However, the company revealed it was seeing growth in its digital marketing disciplines.
The recent trading update from Hays (10 October) painted a similar picture, with NFI rising 8%. Property-related disciplines were strong. Sales and marketing disciplines were also growing. Given housing price trends, positive property and construction trends are well documented in the press. However, the upswing in marketing is less well discussed, especially within the context of the staffing market.
The prospects for a sustained expansion in the marketing industry are improving. Late in August WPP, the global advertising-marketing conglomerate, raised its 2013 sales target, reflecting higher spend by UK and US clients. On the 17 October the Q3 Institute of Practitioners in Advertising Bellwether Report provided further evidence that the advertising-marketing markets were getting materially stronger. The Q3 report showed that a net balance of 12.3% of companies were planning to increase budgets in the coming three months. This is up from 7.3% Q2 and the fourth consecutive reading above zero. Internet marketing is set to be the strongest segment of the industry and we are increasingly expecting digital marketing roles to be in high demand.
Within the staffing industry there are a number of different strategies involved in digital marketing. Many of the larger staffing firms have marketing sector teams. However, they are typically only a small part of the overall group. One of the more pure plays in this space is Nakama (the old Highams business). Full-year results to March 2013 showed the group was just the right side of break-even; in time we would expect the profitability to improve. Also given the emerging trends within digital marketing, we anticipate the management team will be providing an upbeat outlook assessment when it reports interim results sometime in November.
While the UK exited the last recession by 2010, it has taken some time for confidence to return.
This partly reflects the relative shallow recovery in GDP. It also reflects the realisation by most UK employers and employees that the government’s austerity cuts are likely to remain a feature of the political environment for some time to come.
This lack of confidence has meant that even when there were available posts to fill, many candidates felt too nervous to move. As a consequence, many staffers have found that candidate churn has (until recently) remained elusive, even though the UK is in its third year of positive growth.
That said, both business and consumer confidence is building across many segments of the economy and this is beginning to translate into higher levels of job switching. This is especially important for the perm staffers since they are more interested above job switching than absolute levels of employment. It is the switch that creates the fee.
So which parts of the economy are growing?
On 14 October Michael Page updated the market for the third quarter. UK net fee income (NFI) was up 5%. Unsurprisingly, property and construction were doing well. However, the company revealed it was seeing growth in its digital marketing disciplines.
The recent trading update from Hays (10 October) painted a similar picture, with NFI rising 8%. Property-related disciplines were strong. Sales and marketing disciplines were also growing. Given housing price trends, positive property and construction trends are well documented in the press. However, the upswing in marketing is less well discussed, especially within the context of the staffing market.
The prospects for a sustained expansion in the marketing industry are improving. Late in August WPP, the global advertising-marketing conglomerate, raised its 2013 sales target, reflecting higher spend by UK and US clients. On the 17 October the Q3 Institute of Practitioners in Advertising Bellwether Report provided further evidence that the advertising-marketing markets were getting materially stronger. The Q3 report showed that a net balance of 12.3% of companies were planning to increase budgets in the coming three months. This is up from 7.3% Q2 and the fourth consecutive reading above zero. Internet marketing is set to be the strongest segment of the industry and we are increasingly expecting digital marketing roles to be in high demand.
Within the staffing industry there are a number of different strategies involved in digital marketing. Many of the larger staffing firms have marketing sector teams. However, they are typically only a small part of the overall group. One of the more pure plays in this space is Nakama (the old Highams business). Full-year results to March 2013 showed the group was just the right side of break-even; in time we would expect the profitability to improve. Also given the emerging trends within digital marketing, we anticipate the management team will be providing an upbeat outlook assessment when it reports interim results sometime in November.
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