The Real Problem In Advertisers' And Agencies' Battle For Talent

Last week, Nancy Hill, of the 4A’s, wrote an op-ed on Wall Street Journal’s CMO Today blog explaining why agencies are not in a position to attract and afford the kind of talent Wall Street and Silicon Valley can. She noted that the average annual starting salary in an advertising or media agency is between $25,000 and $28,000, while Google, Microsoft or management consulting firms pay between $70,000 and $90,000.

The problem, according to her, is that clients keep squeezing fees. She asks marketers to stop this trend in order for agencies to have a better chance of competing in the battle for talent.

It took Bob Liodice from the ANA less than 48 hours to write a punchy reply saying that, actually, agency groups are making money, despite the fact that marketers and their marketing procurement people are turning on the thumbscrews ever tighter.

He demonstrated that the estimated 2014 sales and earnings growth of the major agency groups outpaces that of their clients by quite a bit. Therefore, perhaps the agencies should not blame their clients for a lack of funds to attract talent.

The problem is, both parties have to become more competitive because they both need the kind of digital MBA tech natives that are currently so in demand. And those natives are not that into us (agencies and traditional marketers).

In response to marketers’ distrust of agency holding companies and their ability to make a lot of money, marketers are taking a growing number of agency services in-house. More and more marketers, for instance, are setting up their own DSPs. And a 2013 World Federation of Advertiser’s study stated that more than two-thirds of the industry (marketers, agencies and media owners) expected direct media deals between marketers and media owners to increase over the next few years. So it’s not just agencies who are competing with tech companies hiring smart digital natives with an MBA -- but marketers, too.

What agencies have going for them is that, for the most part, they are based in attractive cities and represent a perceived “sexy” industry. Marketers, by and large, less so.  Let’s face it, if your company is based in Battle Creek, Bentonville or even Cincinnati, it will be a struggle to convince the smart kids to move if the alternative is to live in Brooklyn or San Francisco.

Marketers are trying, however. GE just sunk a cool billion dollars in a new Big Data facility and decided to build it close to Silicon Valley. Anheuser Busch (from St. Louis) has part of its media team in Palo Alto, and is opening an office in Chicago.

When you’re 25, a high salary in a “sexy” industry impresses and there is nothing shallow about that. Today those high salaries with great perks are offered by big-name companies in innovative industries and attractive environments, which mostly does not describe you (just look around you right now). So good luck with that!

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2 comments about "The Real Problem In Advertisers' And Agencies' Battle For Talent".
  1. Paula Lynn from Who Else Unlimited , August 18, 2014 at 3:45 p.m.
    1 + 1 = 2. 1,000 + 1000 = 2000. The formula is the same. Those 25 year old expert number crunchers who have no connection to the product/service and the customer relationship to them are responsible for multi-million dollar spending will produce the same results as the media buyers whose post buys were awful pre big data. It doesn't even matter now if agencies are dropped and added due to a lack of response to a campaign. Ownership of the major agencies are the same and the top layer makes their profits regardless. The more complicated the services become, the more profit and more it will cost the client and the consumer. Someone has to pay. (As for salaries, that is another conversation.)
  2. Maarten Albarda from Flock Associates (USA) , August 19, 2014 at 2:02 p.m.
    To place the advertisers push-back in context: Martin Sorrell earns 780 x times the average WPP salary... http://www.mediaweek.co.uk/article/1308155/martin-sorrell-earns-780-times-average-wpp-employee