Commentary
Solving Advertising's Talent Crisis
- by Matt Straz , January 17, 2012
Advertising is a massive human enterprise. The top 10 advertising agency holding companies employ a combined 370,000 employees worldwide, with thousands more employed as consultants, freelancers and outsourced team members. All of this talent is a major investment for the agencies. Sir Martin Sorrell, CEO of WPP, estimates that his company spends $9 billion each year on employee compensation. The other holding companies spend billions more on top of that.
Despite this, the industry is in the midst of a major talent crisis. Here are four signs:
Competition for talent is fierce. “We need to fight with startups, technology and platform companies for talent, not just banks anymore!" Maurice Levy, CEO of Publicis Groupe, recently said. Venture capital-backed startups have added a whole new dimension to the talent crunch that advertising agencies are now facing.
Turnover is high. It's estimated that advertising agencies have an annual employee turnover rate of upwards of 30%. To put this in perspective, only the hospitality industry – made up of people who work at hotels and tourist attractions -- has a higher rate (37%). As a result, agency executives are constantly working to retain talent and recruit new employees. “Talent is the single most important thing that I do,” Miles Nadal, CEO of MDC Partners, remarked last year.
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Open positions are numerous: I recently spoke to an agency executive about a large account that had 17 open positions. Mid-level positions seem to be the hardest to fill.
Poaching is rampant. At the 4As conference last year, agency holding company CEOs acknowledged that they cannot continue to just steal each other’s employees. As John Wren, CEO of Omnicom, remarked, "We've gotten way too comfortable poaching, effectively.” He added. "Episodically Omnicom has gone to campuses, but we don't stay there... we pretend to stay there, but we don't."
Clearly as an industry we need to address our talent issue in order to continue to grow. There are at least four steps that we should take to address this situation:
Outreach. Last month Digitas hosted its first-ever University Open House at it New York offices. Over 125 current and recent college grads from over 30 universities came to hear Digitas leaders like Joanne Zaiac, Matt D’Ercole and Carl Freemont talk about advertising and media as a career. The students met one on one with over 60 Digitas employees and also had access to a recruiter to help with their resume. This is exactly the kind of outreach that we need to do more of.
Technology. After speaking with HR directors at major agencies, it seems clear to me that existing talent management systems do not meet the needs of advertising agencies.. My company has found that professional services companies like advertising agencies are structured very differently and require unique, account-based HR solutions.
Training. Often advertising is more of a guild than a profession. And while it’s great that many of us in the industry learn from the people we work with, it’s clear that training needs to become more formalized. We need to achieve a level of training on par with the large consultancies.
Diversity. A workforce that is more diverse leads to a stronger and deeper talent pool. The industry is making progress to diversify, at least in terms of gender. Media agencies, in particular, have a good male-to-female ratio, especially in the junior to mid-level ranks. Some agencies still do not have enough double “X” chromosome pairs represented in their executive ranks, however. This will hopefully change in the coming years as many of the women hired during the 1990s and 2000s work their way up the agency ladder.
While the advertising industry has a serious talent crisis on its hands, I’m certain that it can be solved through a combination of outreach, technology, training and diversity.
Interesting post. I recall hearing agency execs lament about the talent challenge years ago when I was client side, but it seems to have taken on new dimensions recently.
To increase the industry's appeal, it appears to me that agencies need to examine their comp plans. Money talks, after all, and if startups, consultancies, tech (etc.) pay better then agencies will always find themselves struggling to find and keep the best talent. What can be offered beyond base pay and bonuses? Stock options/incentives? Paid sabbaticals every X years? A promise to respect employees' nights/weekends by limiting the amount of email/work that would impose on those time periods?
Managing through the soft periods is also important. We know that agencies adjust staffing based on account wins and losses. To your point about training, to attract and keep smart people, agencies should ensure their people are trained to work on any account in the shop. Agency executives also need to find ways to keep smart people in house when spending declines, or when accounts leave. Is unpaid time off -- though with insurance benefits -- an option?
Agencies also need to be viewed by clients as fulfilling a more integral, strategic role. This is a long-standing challenge. Some clients view their agencies as an extension of their organizations, and I would suspect that retention on those accounts is above average. But where a client views its agency as the firm that "just" produces advertising or other marketing communications, the agency's staff staff won't feel valued, and its people will eventually leave for other positions. Of course, this also means that smart advertising professionals must take the initiative to find ways to make their employers, and themselves, more valuable to their clients.
This is a sad commentary especially given the high unemployment rates in this country. There are, however, solutions:
1. Offer many, many more internships. Getting them in early is only good
2. Make the first job to second job a promotion and not a move. Don't keep newbies locked in peonage too long. Titles and a small raise can do wonders for morale
3. Reinstitute training. We can accelerate the growth process by building a formal training program. This is especially critical in areas like media where entry level jobs can be mind-numbing
4. Formalize mentorship. Every new hire should be linked immediately to a senior level mentor. Taking people to the top of the mountain and giving them a peek at what's there is a great way to keep them occupied while their minds are being shaped.
5. Don't confuse long hours with learning. Somehow some agencies have come to believe that it is vital to keep the 'kids' at their desks until 9, 10, 11 o'clock. While I too, in my youth, put in ultra long hours, it was done because I had a vision of where I could go, a timetable that seemed reasonable and all the support that bosses and mentors could provide.
There is no shortage of great talent. Go to www.realcreatives.com. All the great Creative and Media networks across the world use RCG: realcreativesglobal. The best talent signs with RCG across the world. The best agencies get their best talent from RCG. Don't be so glum guys. Just come to RCG.
This is excellent advise and I have passed this on to someone who is the college graduate without a line to use their degree. However, I also added that the jobs are not available in the area in which she lives and that entails increased housing costs. Most of the major agencies are located in more expensive metropolitan areas. Help finding housing on the income they are paying would go a long way in attracting more talent, too, plus all of the great suggestions by J. Shereshewsky and H. Harteveldt.
Is it also possible that the most relevant work isn't happening at large agencies? If a talented person entering the industry wants to get the most out of their career, they now have myriad choices, from in-house teams to small, more nimble creative/tech hybrid firms (often with much more digital and customer experience talent at the top). Lastly, younger people are looking at senior leadership of agencies and wonder how much they have to learn from them (about advertising) vs. how much these executives actually need to learn from them (about technology and UX). These are weird times.
I’m having déjà vu all over again – and again and again.
How can the ad business compete for top strategic and analytical talent when they pay 40%-50% of the going rate for top grads? When was the last time an MIT or U of Chicago stats grad opted to go to an agency for 1/3 of their potential salary somewhere else? And when is the next time? (a linkedIn search found 7 MIT grads in the Marketing Advertising category – non started in advertising after undergraduate graduation)
This business can sell the heck out of itself but when it comes down to making $35K or $80K for an equally interesting job – they will go for the money – and why not? And you may get them to take it to start but most will be gone in two years.
And it’s not just an entry level issue since for the first 10 years in the business – money is the single most important factor in luring people from their current employers. In fact, the only way for someone to position themselves as their career develops is to make moves that pay more.
Year after year we talk about the same old problem and it remains unsolved. Unfortunately with the current state of client/agency compensation agreements and holding company profitability goals – it can’t be solved.
To quote ad legend Barbara Ames: “advertising is a great business if your parents can afford it”.
It’s déjà vu all over again – did I mention that already?
Interesting question. But far too many of these problems are created BY the industry. Everything about most advertising agencies encourages rapid turnover - but I think it starts with burning people out when their entire careers depend on whether bosses "love" their latest stuff instead of basing advancement on something rational. As noted in "Shop Class as Soul Craft"... When you make a metal part, the boss gets out the calipers and it's either right or wrong. But we have an entire business where MOST agencies base success on transitory opinions of creative bosses - yikes.
This would all be helped tremendously by adding solid evaluating rationale to determining which creativity really IS great - instead of subjecting the talent pool to 60 hours of work only to be fired based on someone's mere preference. No matter how much creative bosses THINK they're independent, their opinions generally flap in the wind.
Not only do these factors present a huge challenge to the health of the industry, but also the nuances of Millennials being addressed in an “old-school” way in the work environment. We, as players in the advertising industry, need to get creative in how we bridge new talent into the profession. At the American Advertising Federation, a core part of our mission is to develop unique student programming that enables agencies and clients to create a pipeline of diverse talent. AAF’s Most Promising Minority Student Program has jump-started the careers of over 500 young industry professionals, not to mention the impact of the National Student Advertising Competition opening doors for both recruiters and young adults alike. Recently, we conducted research on Millennials through our Though Leadership series in regards to advertising messaging, media content and entertainment, and from this, it’s very transparent how this group wants to be treated in their daily work environment. This has inspired the AAF to launch a think tank of AAF student members in partnership with a large agency to further explore the Millennial footprint as the industry progresses forward.
The industry's only way out of this predicament is to end the 'churn-and-poach' cycle. The fact that the churn rate of senior creatives rivals that of motel maids is an embarrassment to the business. Job One of agency management has to be to stem the churn. My (not-so-simple) prescription for this is: 1) hire great people, 2) provide them the perks that make them want to stay, 3) let them do what they do without the micro-managing subjective oversight, and 4) don't work them to the point where they feel like a carcass being picked over by a vulture.
For the most part, the people in this business LOVE this business. They most likely, however, do not love their employers. Agencies have to earn that.
http://www.quisenblog.com
I'll take technology for $1000 Alex! It will be funny looking back on the state of things in comparison to 5 years from today. Outreach and diversity should work but no one wants to burden themselves with those tasks. Formalized training like the large consultancies will ensure that the quality of your work sucks beyond belief. Think about the last time a large consultancy trained person impressed you with anything creative. The key to success is giving talented people the tools and time they need to think. The work will be top notch and cheap. Yeah I said cheap. Compare the cost of doing something that makes sense to the cost of pissing tons of money away on strategies that don't work and you'll say the same thing.