Jun 6, 2007

Hug It Out

This week’s AdAge has an article about ex-BBH chief Cindy Gallop, who is working to revamp a venerable London headhunting (err- “talent recruitment”) agency and turn it into something resembling CAA or the fictional Miller Gold.

The idea is that there’s a lack of talent in the advertising and marketing business and that companies need to look beyond the usual suspects to find the talent they need. And that there’s a perception in the advertising business that actually looking for a job is an act of desperation, that agencies seek out good people and hire them, not the other way around.

So far, so good.

A look at the company’s web site reveals a promise to manage their talents careers and to find out what’s important to them. To put you, the advertising talent, in the drivers seat in terms of job hunting.

Again, this sounds promising. Though I’ve heard it many, many times before. From people who meant it and people who didn’t. I remain skeptical that just saying that you want to put talent in the drivers seat makes it so. Agencies aren’t organized enough to make proactive hiring decisions (freelancing is still the best way into an agency, especially a good one) and high client turnover makes staffing a very inexact science.

Having a global pool to draw from, as Ms. Gallop’s company will, should help, as American agencies still hold onto the belief that hiring someone who’s been a big hit in Barcelona is a lot more glamorous and avant garde than hiring someone who’s been a big hit in Boston.

But none of this actually addresses the industry’s biggest problem: compensation. Or lack thereof.

This is a real issue at the higher end of the spectrum, where CD-level salaries have dropped precipitously over the past five to ten years. And it matters a lot because people get into this business to get rich. Or something close to rich. And if all they have to look forward to is running a creative group for $175K/year, then they’re not signing on. Not when there are so many other, better paying options.

I’m not sure what’s causing the salary drop, but every headhunter I’ve spoken to as of late has commented on it. Big agencies, or big agency networks, are making as much money as they used to while employing far fewer people than they ever did before. The John Wrens of the world are still raking it in (as per a report in Adweek) but people aren’t getting into advertising in the hopes of being one of the dozen people to run a big agency network. Part of the problem is that there are fewer people in the business. Which means fewer CD positions and fewer big agencies who have the wherewithall to pay that kind of scratch. But that's only part of it.

Because what exactly does a John Wren do to deserve $13 million a year?
What kind of value does he add to the agency business?
If you can answer that, you are, like Bob Garfield, a lot smarter than me.


HighJive said...

Can’t speak to the Wrens of the world.

But here’s my reduced two cents on salaries.

Creative salaries are dropping because the perceived (and actual) value of creative is dropping. As I think we’ve discussed in the past, if you’ve got a client who only wants mediocre ads, why pay a big salary to get it? Don’t need a superstar to produce talking heads for laundry detergents. As more clients are satisfied with medium-to-small ideas versus big ideas, look for salaries to continue the plummet, especially when reduced jobs make people desperate and/or willing to work for less.

Plus, the integrated media required shifting of dollars to the other disciplines. And unfortunately, the “newer” disciplines (interactive, guerilla, etc.) have started at low salaries while the “older” disciplines (direct, promotions, etc.) were unable to capitalize by demanding raises (they were probably thrilled just to get a greater volume of work).

The ultimate leveling of salaries may lead to an erosion of the lack of respect between the disciplines; that is, it’ll be hard for the advertising agency types to diss the “below-the-line” guys when everyone’s making the same salaries. The post below this wondered when “below-the-line” salaries would rise to match advertising agency salaries. It might go the other way, where agency salaries drop to match the rest.

(The galloping you hear in the background is the approaching Horsemen of the Apocalypse.)

Toad said...

While I fear you are probably right about creative salaries drift downwards, HJ, my question then becomes "where is all the money going?"

Because agencies don't seem to be making smaller profits these days, at least not on a per-employee basis. So who is keeping all that extra cash?

HighJive said...

There’s really no extra cash. The money is being distributed into a greater variety of outlets. It’s about taking the same lump sum but breaking it into more-yet-smaller parts. And a lot of the money is being allocated to activities that have nothing to do with the offerings of advertising agencies.

Not sure what you mean by “agencies don’t seem to be making smaller profits.” Staffs have been stripped down to the minimum. Administrative assistants are almost obsolete. We’re booking our own travel arrangements. Workers are required to do the same amount or more stuff with fewer people, resources and time.

Toad said...

I said "agencies don't seem to be making smaller profits on a PER/EMPLOYEE basis" - meaning that if they employed 100 people when they netted $100 million, they're employing 50 people now that they're only making $50 million. If anything, the virtual elimination of secretarial jobs and the outsourcing of junior jobs to the ad schools means that there are fewer employees left to split the pot on a PRO RATA basis (as opposed to an ABSOLUTE basis)

So to your point, HJ, if there are fewer people and resources than ever before-- who's getting the profits? My guess would be it's going to the holding companies and to the multi-million dollar salaries they pay the higher ups and also to pay off the parent company's debt.

HighJive said...

OK, I see what you’re saying. But I might also guess that agencies are not making the same profits. Too many agencies are still paying old school salaries even though they don’t have the billings to justify it. Can’t even begin to figure out what the holding companies are doing with the money. Definitely not seeing any of it personally.

Anonymous said...

Where can I get one of those low-paying, $175,000 a year Group CD jobs?

I'm a Group CD and don't make that much. And I work in a major market.

Toad said...

Really? Do you work for a big agency? In general or direct/interactive?

$175K would be more of an ACD or pseudo-CD (e.g. CD title with ACD responsibilities) in NYC.

Having never looked outside of the NYC area, I'm not familiar with salaries elsewhere.

David Burn said...

I've worked in below-the-line shops in small markets for some time now. No CD other than the Executive CD or CCO can expect to make anywhere close to $175. In fact, just getting over $100 can be quite a challenge. Sad but true.

Toad said...

David: Given the cost-of-living in those markets, is $100K actually a decent salary?

My gripe is mostly that while salaries in comparable fields have risen (e.g. law, Wall Street, non-marketing-related Web endeavors) they have sunk for ad creatives. Which makes it harder for us to get quality juniors into the business. No one should feel bad for a CD who's "only" making $200K.

David Burn said...

Well, NYC (and SF) are clearly off the charts when it comes to cost-of-living. I'd want triple my current compensation to move to either one. So yes, it's all relative and $100K in Denver, to choose one market where I've toiled, is nothing to sneeze at.

As for the downward trend in salaries, I'm personally not aware of this issue. Perhaps, it's a NYC-centric trend--and a move to help NYC shops compete with lower cost providers.

Toad said...

I suspect HJ was correct David: it's a reaction to the lower salaries paid at "below-the-line" shops and the greater income disparity at those shops.

That and pressure from the WPPs and IPGs of the world to cut costs by any means necessary.

As for Denver, I wonder if the crash-landing of Crispin Porter in nearby Boulder will have an effect on salaries there.

Anonymous said...

totally agree.

could there be an element of oligopolistic collusion between the holding companies? perhaps not explicitly, but in effect.

as the holding company agencies continue to get hollowed out, the trend for younger, cheaper and fewer senior (more expensive) has been exacerbated. they act like $200K is a big deal.

no wonder all the smart kids want to work for google. pay peanuts, get monkeys.