The impending recession continues to send shockwaves across the tech industry. As with any major socio-economic event, predictions have been circling, and the small stones that start the avalanche have begun to shift.
Speculation has been rife around the potential implications that this will have for the channel, with many commenting that, as a performance-based industry, it is a safe bet for advertisers. However, marketing budgets themselves are shrinking, meaning investment in the wake of this inflation will be down. Back in July, we discussed the impending recession and the difference in effect this one will have, compared to that of 2007-2009.
Despite the increased adoption of the pay-on-performance model, this industry is not immune. We have already seen a smattering of layoffs in the tech sector over in the US, and it’s expected that this pattern is set to continue.
In a recent statement, David A. Yovanno, CEO, and Per Pettersen, Co-Founder of impact.com, have made the difficult announcement that there will be a 10% global reduction in the company’s workforce due to market conditions and the incoming recession.
The statement reads: “It is with sad hearts that we inform you that we’ve had to make organisational changes and reduce the staffing level of the company. We developed a very ambitious plan for impact.com at the start of this year based on both our vision for the business as well as what the market was rewarding at the time.
“Halfway through our fiscal year now, it is very clear that macroeconomic conditions have changed in a once-in-a-generation way; therefore, we must change how we are operating the business going forward if we are to fully realise our vision of becoming the global standard platform for partnerships.
“As a result, we will eliminate roughly 10% of current positions in the company, and we feel compelled to share more information about how we arrived at this decision and what our employees should expect next.”
They go on to describe how, earlier in the year, the impact.com leadership team set aggressive hiring and growth targets, to achieve exponential scaling of the company through growing and building out new teams, opening shop in new regions, and acquiring new businesses.
In hindsight, it seems the decisions made to significantly increase investment in hiring was ‘the wrong choice’, as, in David’s words, they “…could not have predicted the full effect of the macroeconomic conditions we are all experiencing right now.”
With a 4.6 rating on Glassdoor, it is clear to see that impact.com makes it priority to take care of employees and that multiple measures were taken first – from significantly slowing hiring, reducing discretionary and overhead expenses, limiting travel, along with a 15% pay cut for executive leadership – however, all of these reductions were not able to fully counterbalance the worsening market conditions.
Employees are being supported with severance benefits, and the leadership team is said to be helping with career advice, alongside writing letters of recommendation, and acting as references upon request.
The company is also offering a number of displacement services and will also reach out to colleagues outside of the business to help colleagues secure new jobs.
David and Per invite the industry to do the same. This is hugely important; the partnership marketing channel is built on relationships and support, and this is all the more important in times of difficulty.
This industry is lucky to be extremely saturated with talent, so it would be hugely positive to see this being recognised with the coming together of individuals and companies to provide support and relief.
There is a thread in the Partnerships Lounge which can be used by those affected to find new opportunities and for others to post about any that may be available in your company.