A Quest Called Tribal

There’s little doubt what the big news has been in agency circles this week – the acquisition of Tribal’s advertising business by TMP for the princely sum of £1. So Tribal joins the list of big agencies who haven’t been able to make it work in this brave new world. 2009 saw the demise of Barkers; 2010 was Lee & Nightingale and Pearsons’ year; and 2011 was barely out of nappies when Tribal joined the club. Will they be the last?

First and foremost, our thoughts are with those who have immediately found themselves out of a job in an industry that’s contracting as if it had just jumped into an outdoor swimming pool in January. Many will have to seek their next career step in a different industry – we wish them well. For those who have managed to keep their jobs, a huge period of uncertainty follows. (Though be assured that you haven’t really earned your stripes in this industry until you’ve been bought out by TMP, at least once.) For some it will be a great opportunity, others will decide it’s not for them. So be it. A lot of comments on Ri5 (the industry’s online talking shop) have been directed at TMP and their alleged ruthless commerciality. I have to be honest and say my immediate reaction to this is ‘wake up & grow up’. There isn’t a business out there whose prime motivation isn’t making as much money as possible. If you’re working in an organisation where this isn’t the case, I’d recommend you keep your CV up to date. And in the case of those who are making the transition across from Tribal, I would suggest that you should be glad that TMP have stepped in, as Tribal’s advertising business had failed. In 2010 they made £37k on turnover of £39m – there was never going to be a 2011.

So what does this all tell us about the future of recruitment advertising? One thing’s for certain, it’s going to be a much smaller industry. And it reaffirms the fact that the old model of agency remuneration is broken. Traditionally agencies have earned the bulk of their money from media and clients have paid little (or even nothing) for their agency’s services. So, as in Tribal’s case, when clients’ overall media spend plummets, all of a sudden you’re working for free. At some point in the process clients are going to encounter the law of diminishing returns – you can’t expect the cost of media and the cost of agencies’ support to both decrease indefinitely. Something’s got to give.

TMP will make the Tribal business work for them. They’ll eliminate costs (which won’t be pretty, but is clearly necessary) and really push the public sector clients to make more strategic use of online. Some clients will decide that it’s time for a change and seek to work with smaller agencies (Hallo! We’re over here!). But for many others, recruitment will have fallen so far down their list of priorities that the demise of Tribal will hardly register. The real danger is that some organisations will decide that they don’t need an agency; that technology has made it possible to do it themselves. And you only need to look at the quality of job postings with which recruitment consultancies flood job boards to see where that takes us.

RK 15 Feb 2011.

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