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Tuesday, January 3, 2017

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.

20 comments:

  1. Paul:
    Not to toot our own horn, but the 4As has a wide selection of training programs available to the industry. The overview can be found here: http://www.aaaa.org/home-page/your-career/training-programs/

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    1. I know this. However, it should be supplementary to what the agencies do. My impression is that only a select few employees are sent to the 4As.

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    2. Just for the record ... First, you have to join the 4As to access their resources and most small agencies can't/won't afford the membership fee (many thousands of dollars). Next, "train" for what with the 4As? They're clearly behind the curve. Last, if you need a trade association event or seminar to know what's going on, you're already too late for the game!

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    3. Addendum ... Like Eli Manning going to the NFL or 4As for "tips" against Green Bay this Sunday? LOL ... Bill

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  2. I think there's a lot to unpack here. Agree that agencies don't invest in training. At all. I've been in the business for 25 years, and I can vaguely recall Ogilvy having an Account Management training programme in the late 80s / early 90s. They discontinued it as I recall, but to be fair, they were training a group of people who were immediately targeted by competitors once they completed the training. Who can blame them. On the margin question, yes and no. Agencies won't necessarily do anything to win an account, and they'll be looking at top and bottom lines carefully. But they tend to do the opposite of what you've indicated. They price with a few key people, and over-staff with lesser qualified, lower-cost resources. This is where things tend to go off the rails rather quickly. Having run agencies, I can tell you that margins will dramatically differ per account, some being healthy, some running at a loss. Important to understand the net-margin position across the book and take in new business that you have a good shot of retaining through balanced staffing. To your point about learning, junior staff do need opportunities to cut their teeth on real work. Last point, though you haven't mentioned it but one I'd like to point out. Despite the low pay and lack of training, there's considerably less patience amongst younger talent these days. Pay sucked when I started too, but I didn't have an entitlement perspective. Agree more needs to be done to attract and develop the best and brightest, but the best and brightest need to understand that they're not going to be SVPs after having shot one commercial.

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    1. The market determines pay - not entitlement

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    2. The market is the entire ad business. It pays juniors badly intentionally in order to be able to pay more senior executives better. But juniors are entitled to better pay. This policy actually costs agencies more in the long term.

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  3. Great comment. I am sure you are right.

    I recall the Ogilvy training program; it was very good and envied by other agencies. I once had a head of HR at a major agency tell me that they were stopping their training program because only a small percentage of the people who started in year one were left by year two or three. I explained that that small percentage was who the program was for. I also explained that the agency should be paying better and doing more to retain its people, but that fell on deaf ears.

    You are right about balanced staffing. My point is that agencies have to figure out how to give its younger people the experiences they need.

    In terms of entitlement, much has been written, including by me. Lack of training is contributing to the lack of patience. I think some young people, who, granted, get bored quickly, figure that they might as well be bored for more money somewhere else.

    Ad agencies need to establish policies and programs which make people want to stay.

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  4. Entry level pay has always sucked -- particularly in creative. I freelanced nonstop my first few years in the business as did most of the juniors I worked with. It was one way to get work produced as well as make the rent.

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  5. Junior people/senior people? Walk around any NY agency and they're all junior people. An SVP and EVP title used to mean something of substance - credentialed, top tier education (humanities, philosophy), critical thinker, understood all marketing disciplines cross-departmentally. This was certainly partially due to training programs; and, partially due to a firmer command of the broader culture.

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  6. I was fortunate enough to go through the JWT "Professional Development Program" which included incoming Account, Creative, Research (in the days before Planning) and Media folks. We worked together on projects, learned a little bit about each of the disciplines, and learned about the industry as a whole and how to succeed at JWT.

    It was incredible training, and when I talk to/interview young agency people now it's so surprising to me how little training they've received.

    Went client-side 8 years ago, but that was the best training I could have received and I still remember the tips from the "How to give presentations" class that I continue to use.

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    1. My training program was all so wonderful. It was at my dad's agency, Gumbinner-North, and I spent a month actually working in each of the departments that you mentioned, so that it was a total of about four months. It was also supplemented by outside people who came in and taught us things like presentation skills. Those skills are still with me.

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    2. My training program was all so wonderful. It was at my dad's agency, Gumbinner-North, and I spent a month actually working in each of the departments that you mentioned, so that it was a total of about four months. It was also supplemented by outside people who came in and taught us things like presentation skills. Those skills are still with me.

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  7. Sorry Bill. Disagree with you. I worked in the 4As Training Department for several years so I can tell you from first hand experience that 4As has implemented many new training initiatives. From online training to webinars to seminars et al. And for the record, non-members are able to participate in many of the events offered.

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  8. My agency Momentum has training programs and they run all the time. Also has best HR department Ive ever seen in an agency.

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  9. I have had the great fortune of working with brilliant minds at NYC agencies - HR, Training, Strategy, Media, Digital, Research, Data/Analytics and Creative. My "training" was staying late to participate in the new business pitches, writing creative briefs and leading brainstorm sessions, making war rooms for all to learn from. My expectation in my career was always and still remains "just do it". I never expected to be spoon fed. There were terrific seminars at local universities (NYU, New School) to take on the weekends, there were management conferences to go to, and there were always research papers and best selling books to read. Networking was another opportunity to learn. Why fault an agency? Desire to learn should help lead a career in the right direction. I may also add that one of the most damaging career conversations I ever had was with a recruiter who was extremely egotistical and had no time to review my talent or career ambition. What role do recruiters play in the market salary for junior staff I ask you? I agree with other comments about profit per account and have lead plenty of teams where junior team members thrived taking on new projects and wanting to learn more.

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    1. Of course there are alternatives to internal training. The problem is that juniors already work 70 hour weeks. Besides, wouldn't it be better if agencies trained their own employees in a way that is customized to their work and culture?

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  10. My 31 years in the business have been most successfully profitable as a ghost.
    None have mentioned the vital experience agency cross-pollination that only occurs through compelling the essential change that clients NEED.
    Training programs versus on the job learning/trial by fire are most prosperous to weed out the preponderance of dead weight entry/low level hires without genuine industry dedication/interest.
    I have experience on-site full time most of my 31 years with industry leaders in sales, agency, client, research in a vast breadth of consumer, technical and professional industries with top marks that clients ask my to keep an office at their site.
    Yes, training programs should be for SVP and EVP empirical purposes above the taskmasters who oversee the entry level minions. Truth be told a dedicated advertiser/marketer must be proofed out to show they collaborative and dynamic- the industry is dependent upin

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  11. Ad consultancy Filament Inc. has started a very successful webinar program which was unveiled in October, 2016. A full slate of practical skills webinars will be posted at www.filamentinc.com during the next few weeks as the webinar program is taking a summer hiatus. The Fall schedule will begin on September 19. Check it out.

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I would welcome your comments, suggestions or anything you would like to share with me or my readers.

 
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