Agency Staff Now Rank Job Security Ahead of Dollars

13 December 2001

Always holiday season required reading on Madison Avenue, the annual Advertising Age National Ad Agency Salary Survey this week revealed a bleak mood among the 262 responding shops.

As the screws of the economic downturn tighten, the usual motivational frontrunners – salary hikes and bonuses – lag way behind job security as the prime concern within agencies.

Since the nation slipped into recession last March, observes AdAge, agency employment levels fell by 6.8% in the fourth quarter of 2001 compared with the same period last year. Meantime, nationwide layoffs widen and, according to some agencies, appear set to worsen until the middle of 2002.

In a snapshot of America’s forty largest agencies [by headcount], between them accounting for more than a quarter of all US agency jobs, AdAge noted an aggregated 7.9% decline in the twelve months to October. Twenty of the top shops are headquartered in New York which is weathering the storm better than elsewhere, restricting the jobs slide to just 5.6% compared with the top-shop average elsewhere of 12.2%.

Of the mainly small-to-midsized agencies responding to this tenth annual survey, 30.8% employ more staff now than they did in 2000, gaining on average six employees. But even more shops (43%) reported headcounts down by an agency average of nineteen.

In line with the general decline, just 48% of the agencies reported growth in gross income for 2001 – down from 75% in last 2000. Just over two-thirds of the sample expect gross income growth in 2002, of which 39% predict a rise of 10% or more.

Given such retrenchment, it is unsurprising that average salary levels in 2001 [for the eleven key agency positions surveyed] shrank across the board from last year's averages. Average pay for a chief executive officer fell from $186,000 to $167,000; chief financial officer from $97,000 to $92,000; and lead account planner from $76,000 to $70,000.

Commented AdAge: “This finding seems highly unusual given that agency demographics basically mimicked the survey composition in 2000 when all positions were up.” This is no quirk of statistics, it opines, having established in follow-up interviews that shops (and staff) prefer salary cuts to layoffs or, in extreme cases, insolvency.

Predictably, across-the-board raises for 2002 are down from 2001 and many staff will receive no raise at all, according to responses from 23% to 33% of the agencies – a range that covers all employees surveyed. But where a raise is on the table for 2002, the average will be 4% for seven key agency positions, down from 6% this year. Over half the agencies surveyed will not award bonuses this year. And for the happy few granted a bonus, this is expected to reach 4.6% of base pay versus 7.7% a year ago.

As the sun rises in the East, likewise does a resurgence of agency confidence. Eastern seaboard shops are more optimistic about growth in gross income than other regions, with 69% anticipating an increase – of whom 49% believe it will ten percent-plus, the most bullish forecast of all US regions. This contrasts with 53% growth predictions by East-based agencies in 2001 and 41% that expected at least a 10% hike in gross income.

Dazed by last year’s dotcom decimation, the Western agency scene “seems to wallow in an ad slough of despond”, according to AdAge. Sixty-five percent of agencies in the West saw their gross income decline this year, and although 67% anticipate gross income growth in 2002, sixty percent of these expect a ceiling of 4.9%.

Employment expectations are at their most bullish in the Midwest and South, where 54% of agencies anticipate a boost in 2002 staffing levels. The reason for this optimism is expansion of existing business. Elsewhere the outlook is less rosy, with just 36% of Eastern and 35% of Western agencies predicting headcount growth. Respectively, forty-six percent and 47% of agencies in those two regions expect no change in headcounts.

Gender appears to play no part in job losses, with the layoff ratio of men to women essentially the same at 11.3 men and 10.7 women in the average agency. This compares with 13.5 men and 12.7 women per agency in 2000.

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