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Friday, October 22, 2010

Mid-Sized Malaise--Part Two

This is the second installment of a series that I am writing on Mid-Sized Advertising Agencies.

Staffing and Compensation

Here is an area that may get less press than other agency issues but, to me, appears to be the biggest source of frustration.

A longtime agency CEO put it bluntly—“including me we have four senior people left and about 45 kids. There are a few old clerks in accounting but almost everyone else is under 30. Those of us who are senior are really stretched. The kids are eager and some have great potential. But one of us graybeards has to be at virtually every meeting. We are tired and too old for this stuff.”

The idea of having a handful of old pros and a large roster of rookies percolates through many conversations with agency chiefs. Advertising has always been a young person’s game but now many shops do not have the next generation of top managers waiting in the wings as they cannot afford to keep them on staff. A few admitted that there is not going to be a next generation unless things change and quickly.

With money tight, raises are getting really scarce except for those at the very bottom of the pyramid. One chief said “Raises? Forget about them. I haven’t had one in years and all senior people have been frozen for several years as well. This may sound cynical but where can they go? We are virtually the only game in town and our competition, if you want to call them that, is in worse shape than we are. I would like to give increases but we are barely breaking even these days”. A few others told me that they and their partners have all taken pay cuts but kept the employees salaries flat.

The feeling of being trapped is very real. A copywriter in his 30’s told me “my boss is a liar. He tells new employees, interviewees, and school groups that he has never cut anyone’s salary. That is not the whole story. Four years ago I had a $60,000 salary and a $15,000 bonus. He told me that I had a bright future. So, with pressure from my wife and in-laws, I bought a nice house. The next year my bonus was $5,000 and I have not had one since. There is no other place in town that I can work and get my current salary. I can’t move as I am under water by $100-120K on my mortgage. So he has me right where he wants me. I know he is not totally to blame but I feel as if I am in prison”.

The feeling of indentured servitude is surprisingly widespread. A radio rep with whom I am quite friendly may be the dean of all salespeople nationally. He told that when he started over 50 years ago in newspaper sales, there were dozens of agencies in his fairly large city with meaningful billing. Today, he says, there are only five left standing and only one media director who knows what she is doing. Others echoed similar comments particularly those from the Midwest. One cable executive called it “The Incredible Shrinking Agency Base.”

Hiring youngsters makes sense from another perspective. “We don’t pay re-location expenses anymore for anyone. Maybe I would for someone I hand picked to replace me”, said a CEO. “Taking on young kids is great. They fill their car full of stuff and maybe have a U-Haul attached. I pay for their gas. They get a small apartment and if they get a chance somewhere else, they leave. Or, if it doesn’t work out, they do not have to worry about a mortgage. Our local talent pool is pretty slim, but there is no shortage of people wanting that first break with us”. Many people echoed this sentiment.

Salaries are interesting. A few recruiters and CEO’s told me that some jobs are paying 65-70% of what they did several years ago. And, there is no shortage of applicants. The problem said one is that “you get a kid who is not ready for the job, someone with a family who is desperate but bitter about the low pay, or someone on the skids who cannot possibly work out.”

Another whom I have known for years told me that the quality of candidates is declining. “Too many young people have not fully embraced their discipline. They are bitter that they cannot move up the ladder and, along with their seniors, have adopted a hunker down mentality. They have lost any sense of vision that I saw in people years ago. If you want to staff an agency properly you need to get into peoples' hearts and heads. Today, many candidates know enough buzzwords to fool the H.R. person and sometimes the CEO. This is especially true in digital. Out of 100 people that I speak with, only 3-5 really know the nuances of new media”.

With several people I raised the issue that has bothered me for the last five years. Young people come for informational interviews or are my students at the two universities where I am an adjunct professor. They ask me about a future in advertising. It is a tricky issue. How do you answer an earnest young person honestly? They almost definitely cannot have the kind of career that many of us have had nor is it likely they will have anywhere near the fun that I and many of you have experienced. So, I have been guarded and say that starting in advertising will teach you a lot about sales, marketing, being able to handle pressure and to stand on your own two feet. But, I never talk of the long term.

I posed this issue during an interview with someone who I admire tremendously. He gave the best answer that I heard and an honest and practical one at that. “I would tell them to go to work for a mid-sized agency. If you are any good, they will get you in the mix fast and in front of the best clients they have. You will learn a great deal. After a few years, I would encourage them to go client side where things are really happening these days.”

A few people admitted that they could lose some great people if the economy bounces back and bigger shops will raid them and offer a great deal more money. But the consensus was “I don’t see that happening for several years.”

All of this is typical of America today. Teachers, police, fireman, civil servants, bankers, and scores of fields have seen wages stuck for the last few years. Advertising was always different. Talent and achievement were rewarded early and often. Not so any longer.

For those of us with a long term view, it is clear that the people in advertising have changed. During the Mad Men era, many of the best and brightest went in to the ad game. When I started in the early ‘70’s, management at many shops was full of Ivy Leaguers or those from the top NESCAC schools (Amherst, Williams, Colby, and Bowdoin). Copywriters were erudite and quietly working on novels on weekends. Advertising was very lucrative, sexy, fun, and considered important. Today, the cream of the crop goes into investment banking or law.

To be continued—look for the next installment in about 48 hours

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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