Perceptually, advertising has always been a business where people in it
did well financially, especially during the Mad
Men era. But the truth is that advertising was never a business that people
entered to actually get rich; people sought
careers in advertising because it was creative (and fun – since there was
always an element of show business in it), with a chance to do well. Careers in
advertising mostly came about because people had talent for it and loved
it.
Advertising executives were never paid
as much as lawyers, finance people or manufacturers.
It may be true of all business, but especially in advertising, nearly
everyone exaggerated their own salaries and believed that everyone else was
making far more than they actually were.
When I became a recruiter, I learned the hard truth – it just wasn’t so. There was once a time (Mad Men Days), when account executives made considerably more money
than their client ad manager and brand manager counterparts. It was so much so that we were counseled not
to discuss our pay with our clients. The
concern was that the disparity would cause unnecessary conflict.
Not so any more. Starting in the eighties, when fees started to become prevalent, clients actually cut the salaries of people who worked on their account by lowering the blended rate (that is the aggregate and average salary of all people working on an account). Today ad
agencies pay far less than their clients. At more senior levels things tend to even out, but companies, on the whole, do still pay more.
Entry level in most big city agencies is still
mostly in the $30-40,000 range; MBA salaries are not much higher. Outside of these markets, starting salaries
are much lower. Most of the major
advertiser companies have starting salaries now in the $60’s or higher (I
believe Procter is now paying $90,000 plus for MBA’s. I have written before about the late,
great Harold Levine, who spent ten years and his own money trying to
recruit minorities in the business. As
he told me the story, one MBA at Howard University was, at the time, offered
$40,000 (which was comparatively high) to start at Y&R but several of the
good package goods companies offered him more than $80k to start, leaving him
no choice. Sadly, this MBA candidate had
always wanted to be in advertising.
Companies paying so much more at entry level causes a huge schism in the business (and diminishes the value of the people servicing their accounts).
Companies paying so much more at entry level causes a huge schism in the business (and diminishes the value of the people servicing their accounts).
It isn’t that advertising pays badly.
It is merely a business which pays its senior people well (but mostly
not extraordinarily). Its juniors have to really want to be in the business and
are willing to pay their dues for fifteen or more years before they get senior
enough to be paid well. And that
requires a true commitment and love of the business. Few people at most agencies consider themselves to be rich.
Rich is a relative term. In the
research I did for this post, I found out that people making $50-100,000
consider rich to be making $260 or more.
But only 28% of people with net worth of $1,000,000, consider themselves
to be rich. There are many people making
$200,000 a year who are actually in debt and broke.
Most executives in the business end up doing relatively well if they stay with it,
but they are, to my thinking, not rich. In
fact, really rich is the millions of dollars made by the officers of the
holding companies. Wealthy is the
$6,000,000+ made by Michael Roth of Interpublic or the $3 plus million made by
Maurice Levy at Publicis (these people also get huge other financial perks and
incentives on top of their salaries). But these people are not really
advertising executives, they are mostly financial people. In fact, many of them
do not even have advertising backgrounds. In terms of the ordinary employees of the
business, writers and art directors tend to be higher paid than other
advertising people. But even the most
successful creative people are lucky today if they make around $300k. I know many senior account managers and
worldwide group account directors who make far less.
Now, don’t get me wrong, at $3-400,000 one can live well. But few of
these people will tell you that they are rich.
Advertising was once a place where people, especially those who owned
the agency, could make lots of money. People
know that Bob Jacoby pocketed $100+ million when he sold Ted Bates to the
Saatchi’s or that Donny Deutsch sold his agency for $250+ million when it was
purchased by Interpublic in 1999. But
these people became the owners of their own independent businesses and spent
years successfully building them so that the holding companies would eventually
pay to buy them, often overpaying. Today
there are very few independent agencies which have achieved that level of
financial success (The Richards Group, Wieden + Kennedy, Cramer-Krasselt, Droga
5, to name a few) and, interestingly, that I know of, none of these agencies
are yet for sale, although every holding company has tried to purchase them).
The bottom line is that if you want to get rich these days, you have to own your own shop and it has to become big enough to be attractive to the large holding companies.
The bottom line is that if you want to get rich these days, you have to own your own shop and it has to become big enough to be attractive to the large holding companies.
In the meanwhile, we would all like to see salaries increased, especially at entry and
mid-levels so that ad agencies can attract the best talent. But for the time being, we will have to accept
that people who stay in the business merely do so because they love it.
To my readers: This will be my last post for about a month. I am taking some much needed R&R. See you at the end of July.
To my readers: This will be my last post for about a month. I am taking some much needed R&R. See you at the end of July.
