Tuesday, June 26, 2018

Getting Rich In Advertising

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).

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.

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.

Tuesday, June 19, 2018

Five Things Lost For Candidates And Companies With Online Recruiting

With the advent of online recruiting, actual recruiters have often been cast aside by companies. While they are saving money, there is a huge hidden cost.  Here are five things that are being lost both for companies and people.

1)    The Quality of candidates is suffering
The best candidates often are not online and do not use the online recruiting sites. So, for the most part, companies only receive the résumés of the people who are actively looking online.  Recruiters often know the wishes and desires of their best candidates and only send them when the most appropriate jobs show up.
Although I have not seen empirical evidence, I will bet turnover has increased.

2)    Mentoring
Over the years there are dozens, if not hundreds, of candidates I have been       able to guide and help.  It is one of the joys of recruiting, especially for a single industry recruiter.  There are people whose careers I have actually managed – both junior executives and those well into their careers., including presidents and CEO's. 

Because companies have cut back on the use of recruiting, this benefit is unknown to many young people.

The corollary to that is that many recruiters have left the business and companies have lost the counsel of many who knew their companies well.

3)    Long-term relationships with management have been hindered
Recruiting is a relationship business – both with candidates and companies.
Good recruiters know the principals and hiring managers of many of their clients.  Consequently they know who fits and who will succeed.

Human resources and the network owned company managers, because they are not allowed to use recruiters, are often precluded from taking advantage of this valuable service. 

When a great candidate is spotted for a likely company, it is becoming more and more difficult to market them to that business.

4)    Working with résumés
Effective recruiters can maximize people’s candidacy by interpreting, explaining and often rewriting (or directing the rewrite) résumés.

5)    Recruiters know and understand jobs
Working with recruiters speeds up the recruiting process.  They are familiar with companies and hiring managers and often know the ins and outs of specific jobs so that they can quickly access appropriate candidates.  

Online listings rarely contain enough information and, as a result, companies may receive dozens, if not hundreds, of inappropriate résumés which have to be screened and interviewed.  This is time consuming and costly.  And it often costs companies exceptional candidates. 

Good recruiters are also objective about salaries and are most often able to make deals that are fair to both sides.  People don't like to negotiate for themselves, finding it uncomfortable.  Recruiters can negotiate appropriate salaries commensurate with the job.  This may help lower turnover.


Creative Commons License