Sadly Ad Agencies No Longer Invest In Training Talent

Recently, Digiday ran an article entitled, “Paltry pay at agencies leads to millennials moonlighting”.  It reported that 44% of those between 25 and 34 in advertising have second jobs.  That is astounding, but not surprising.

Entry level pay at ad agencies is comparatively quite low.  So low, in fact that ad agencies are no longer attracting the best and brightest talent from either graduate schools or from four-year colleges.  This is not news, so it is not a new problem; it has been going on – and getting worse – for many years. Low salaries paid to juniors almost preclude those except the most dedicated (that doesn’t mean the best) from going into or staying in the business.  

In addition to low salaries, ad agencies have simply stopped investing in junior talent and it isn’t just about salaries.  There are almost no training programs. There is very little advanced training of any kind.  But it goes further. At least one of the top five New York agencies actually has a policy against its junior account people (AAE’s and AE’s) attending television and print shoots, even those which take place locally.  So how are these young executives supposed to learn the essentials of the business?

This has all been brought about because agencies have accepted rather than fighting back against the fee system, as dictated by procurement. Ad agencies, particularly the network owned shops, are so determined to win business at any cost that they have cut their margins to the point that they can barely afford to service an account once they win it. Clients are insisting on being serviced by senior people only and agencies, to their detriment, have accepted that mandate.  As we all know, the problem now is that by short-staffing and under-training juniors, seniors are forced to do work which should be done by more junior members of the team, thus often limiting the people who should be thinking about strategy to spending too much time executing.  

Since clients underrate juniors, so do their agencies.

As evidence of all this, ad agency financial people have mandated that human resources not use  recruiters for junior jobs. They just don’t care about the quality of their new, junior employees. If their young people succeed, so much the better, but if they are not good or fail, they are totally replaceable.  There is a considerable body of evidence which indicates that talent placed by a trained outside recruiter (not the contract employees hired, mostly on a temp basis to fill jobs if they are in a crunch) is of higher quality and stays longer. The attitude of the financial people is that one young person is just like another, so it doesn’t matter if we get the best talent through networking.  In many cases this is also true for senior and management jobs. 

The result is that there is a talent crisis in the business. The best young employees have to figure out their own career paths and how to get the training they want and need.  This causes additional turnover which, for ad agencies, is expensive.

Turnover is at an all-time high. Really good juniors change jobs frequently in order to increase their salaries up to a livable level. And because agencies don’t invest in training, there is low allegiance; one of the things which training programs did was to foster a sense of commitment. Advertising, even when there were training programs, always had high turnover, but there were still many employees who remained for years.  Today, that is becoming rarer.

Financial departments do not count the cost of turnover (other than possible recruitment costs) which is a non-balance sheet item:  lower productivity, training and retraining, lost client relationships are difficult to measure.

Ad agencies need to take a tougher position with their clients when negotiating fees.  Investing in people should be the number one priority.