ad agencies have kept hiring despite tech sector layoffs

While other sectors of the economy are cutting jobs amid the technological disruption caused by artificial intelligence solutions going mainstream, the advertising industry appears to be prepared to increase its headcount in 2023, bucking the broader layoff trend.

According to a Forrester Research report cited by Insider Intelligence, less than 1% of U.S. ad agency jobs will be lost to generative AI and automation this year. Meanwhile, the impact of these technologies is expected to be gradual, replacing approximately 7.5% of positions by 2030.

Generative AI is creating efficiencies rather than replacing jobs. It is helping with routine tasks, freeing up employees’ time for creative and customer-facing work that requires human judgment.

Official employment statistics support this outlook. U.S. ad agency jobs hit an all-time high of 229,900 in May 2023, up 300 from April, according to the Bureau of Labor Statistics. Meanwhile, in June, total employment in advertising, public relations, and related services rose by 2,200 to a record 497,500.

Tech Sector Layoffs Surpass 200,000 This Year But Have Slowed Down Since January

Data from the Crunchbase Tech Layoffs Tracker indicates that 153,203 workers in the sector within the United States have been let go by their companies. Microsoft (MSFT), Evernote, and Amdocs have been the latest firms to announce a reduction in their headcount.

Meanwhile,, another website that has been tracking tech-sector staff reductions this year, has counted 216,910 forced departures performed by over 800 companies within the industry.

A chart provided by the website indicates that layoffs may have already peaked this year in January when nearly 90,000 people were ousted from their jobs by tech companies. Since then, the number of departures has been progressively dropping. Last month, less than 11,000 employees were let go.

tech layoffs in 2022-2023

Alphabet (GOOG), the parent company of Google and YouTube, Meta Platforms, and Amazon (AMZN) are leading the scoreboard in absolute terms as they have laid off more than 10,000 employees each.

The global economic slowdown may no longer be cited as the leading cause for this en-masse headcount reduction, especially at a point when the stock prices of these companies is booming.

Thus far in 2023, the stock price of Meta Platforms (META) has more than doubled while shares of NVIDIA, the manufacturer of graphic processing units (GPUs) and AI chips, have skyrocketed by nearly 200%.

The rising popularity of AI and the market’s positive expectations about what this technology could mean for the financial performance of tech businesses – also known as the AI craze – is now being considered the leading cause for these job cuts as companies are rapidly adopting AI to increase productivity at a lower cost.

The hiring gains come despite declines in some tech and media sectors that rely heavily on advertising. Employment in web search portals and social networks fell between January and May 2023.

This shows the resilience of core advertising roles that require human creativity, empathy, and interpersonal skills that are difficult for AI to match.

What to Expect for Ad Agencies in the Next 7 Years?

Automation could eliminate around 33,000 ad agency positions (7.5% of the workforce) by 2030, with AI causing one-third of these losses. In the long term, employment growth in the industry may slow compared to previous decades.

Still, for now, the recent surge in ad agency hires demonstrates the industry’s positive momentum.

This robust hiring reflects strong client demand for advertising and marketing services, industry leaders say. Digital ad spending keeps expanding, although at a slower pace, as companies keep embracing online marketing due to its fantastic results compared to traditional channels.

The big question is how long this hiring boom can last. The ad industry will need to adjust its business models and workforce requirements as automation reshapes client needs over the next decade. But for now, agencies are benefiting from a compelling hiring environment all their own.