Yesterday I posted about older employees being unceremoniously dumped by their agencies and that transitioned into another post about older execs calling it quits way too soon. I’ve gotten quite a few responses to those posts. It’s a highly discussed issue.
AgencySpy reader dotsie1 had a lot to say about one of those post and what she said was very compelling–
“Another key element is the money. The financial model for the business is quite broken, especially for the media agencies. The margins are so low on individual pieces of business while the EBIDA earnings required for the subsidiaries within the publicly owned companies are so high that it is a perpetual leaky budget scenario. It is simple arithmetic: a contract might be negotiated corporately (i.e. holding company level) with a 10-12% profit margin while the same holding company demands at least 20% return to shareholders…something has to give.
Thus, new business revenues plug the dike of old business leaks and the dike springs new leaks and the review process continues apace.
My own sad, but not unusual story…ran the largest revenue producer and team in NY media office and negotiated an increase in FTE fee….management ran the business at a 45% profit directly to the bottom line, did not fulfill hiring requirements per compensation agreement, lost the business, laid me off, and hired my “replacement” at half my pay rate…not a pretty day.
For me the big question that I’m struggling with is why and if I want to stay in this business.”
These lay offs are leaving people in a lurch. And agencies seem to have little consideration for what they are doing to people’s lives and livelihood. Where is the respect for those that created a foundation for how these shops are run? And where is the regard for what these “lifers” have offered and often sacrificed for the good of the agency? Not to take away from the dedication that the fresh crop is offering. Most people working in advertising do it because they believe in what they are doing. But is the same loyalty there?
What is the state of the industry? What are your thoughts?
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