Recessions, The Gig Economy & Motion Designers

By Michael Jones

Share

Share on facebook
Share on twitter

Tuesday, Sept, 10th, 2019

Our good friend and mentor Ryan Summers put out a fascinating twitter thread asking about recessions and what it would mean for our industry. It sparked a great conversation and it sounds like an eventual podcast, but I wanted to share my thoughts on the subject here.

Ryan Summers' tweet on recession and gig economy

Recessions are hard to predict, but they are an inevitable part of the business cycle. After expansion comes contraction, and with it, pain for businesses and workers alike. What would the next recession mean for Motion Designers and other creative service providers like studios and ad agencies?

What does history tell us?

History tells us that during a recession, brands will spend less on advertising. This, of course, directly impacts those who make the ads, like motion designers, animators, film-makers, etc…

In the last recession, overall ad spending dropped by 14% in the US. That’s a pretty big drop which surely impacts creatives who are deriving their entire income from those ad budgets.

Recessions, The Gig Economy & Motion Designers - Ad Spendings

Source: From Ad Age Marketing Fact Pack 2019.  Figures include internet, TV, radio, newspaper, magazine and out of home. U.S. averages for 2020 and 2021 based on average of Magna and Zenith. More info: groupm.commagnaglobal.comzenithmedia.com.

However, overall ad spending includes traditional print media, which impacts designers, photographers and art directors, but won’t mean much to motion designers’ bottom line. When you pull apart the numbers it becomes clear that old media is taking a bigger hit then new media formats, like digital (where video is becoming dominant). 

Recessions, The Gig Economy & Motion Designers - Historical Market Share By Media

You can see that the great recession bent the curve on all forms of advertising, but print media is the one area that really took a nosedive. Digital media budgets barely dropped at all, mostly holding steady from the previous year. Digital media continued its growth just one year after the recession. Broadcast TV did take a significant hit in 2009, but Cable TV proved more resilient and mostly held steady. 

There is no doubt that a bad recession would decrease the available supply of money for creatives who make advertising, but if you’re creating for TV and Digital, you’re likely to be in much better shape than those focusing on print media. Of course, this has been true even in the expansion, as new media presents a better ROI and is gaining market share.

The past doesn’t predict the future.

The last recession was bad. Really bad. One of the worst in the history of the United States. The next recession may be nothing like it. If the next recession is closer to the average recession, then far fewer people will lose their jobs. 

Recessions, The Gig Economy & Motion Designers - Recessions comparisons

So even if we look at data from the great recession in advertising, there is hope that the next recession may not be as bad. If that’s true, then those working in digital or broadcast may not see a dramatic shift in their prospects to find work.

Full time vs gig workers.

If the next recession does indeed put a lot of pressure on creative budgets, who will suffer the most, full-time employees or freelancers? 

It seems logical to assume that project work will be preferred by brands over larger, multi-year deals with agencies. The scope of projects seems likely to narrow, and agencies will be asked to do more with less. The staff at Ad Age (online publication) recently put together a piece on this very topic and had some useful insights.

From Ad Age : 

Agencies could lose 3 percent to 30 percent of their revenue during a recession as brands shift to more project work, says Keith Johnston, global CMO practice leader at Forrester. “The needs of the clients shift drastically in a recession,” he says. “There’s already a call for more efficient, measurable media. There’s going to be a greater squeeze on that.”

Also from Ad Age on the positioning of smaller shops in a downturn : 

Smaller shops see a potential downturn as a chance to prove their flexible, nimble models. Jordan Warren, CEO of the 14-person San Francisco-based agency TBD, says “clients are under even greater pressure to do more with less, which is what small agencies are used to and where we can really shine.” 

The existing trend of pressure on big firms, coupled with an economic downturn could spell job losses at big agencies. It could also mean new opportunities for smaller shops and freelancers, who are nimble with low overhead, to win some new clients.

Freelancers might be particularly attractive in a recession becuase they represent outsized value. Instead of an agency with a beautiful office, you get a talented motion designer working from a spare bedroom. Instead of a 30% profit margin add-on, you get a small team billing you for accumulated day rates. Freelancers and small, distributed teams offer a ton value to brands, and during a recession, everyone will go looking for value.

Recession-proof yourself.

We can’t predict the timing of a recession, however, we can prepare for its inevitable arrival. Whether you are a full-time employee or an independent contractor, it’s always wise to save during the good times to prepare for the hard times.

It’s also wise to make yourself as valuable as possible so that when job cuts or budget cuts arrive, you’re not the one sweating it. Even during the great recession, overall ad spending dropped 15%, which means 85% of the existing money was still there. So even in hard times, there will still be opportunities to work.

It’s also important to keep a proper perspective on who hurts the most during a recession which is unskilled laborers working retail or service sector jobs. 

Skilled labor is always in a better position, so do your best to always grow your skills.

Let us know what you think about this topic, join the conversation on Twitter and tag us with your thoughts.

Newsletter

Don't miss out on our future posts!

Scroll to Top