After an era of recession and consolidation, ad agencies are looking for a few good account people.
Call it the lost generation of Madison Avenue: Ask most industry recruiters about the ranks of seasoned account candidates out there right now and they will lament a dearth of talent that may be unequaled in recent times. In an industry where payroll is one of its greatest fixed expenses, there hasn’t been much latitude in managing through the last decade of agency consolidation, client budget cutbacks, fee renegotiations and unexpected recession. Ironically, it’s only with the return of good times that the real tally of the human costs of that survival strategy is becoming painfully apparent.
“The rebound in the advertising business is outstripping the talent available, and the business today is suffering because of it. Thanks to events of the past 15 years, we don’t have the kind of upwardly developed people populating the advertising industry like we used to,” observes Dick White, a BBDO veteran of 29 years and now a senior director with recruiters Spencer Stuart, Stamford, Conn. “Agencies were forced into staff reductions–at the middle to upper levels–that have come back to haunt them.”
“Jobs are sitting open for months at a time; agencies can’t find anyone,” notes New York headhunter Bob Herman of Robert Herman Co. “Every time a recession hits this business, people fire and don’t rehire. We’ve murdered our own.”
It’s not just the loss of promising middle- and upper-level account executives who were sacrificed to the new realities of a publicly held industry focused on the bottom line. Those who remained were forced to do more with less, at a time when new multidisciplinary demands introduced additional career pressures. While such account executives were expected to acquire broadened marketing skills, their agency power base–strategy–was being encroached upon by account planners. All of these new challenges were rewarded with compensation delays of 10 to 18 months. It’s easy to see how many of the bright lights were lured away by competing professions. Fellow business strategists at consultancies could not only get salaries of up to three times more than agency counterparts, they also enjoyed the benefit of ongoing professional development through expensive training programs. Agency account managers who made the jump to client companies could also expect higher incomes and a more management-oriented work environment.
For all these reasons, it’s not surprising to hear industry recruiters these days complain about a brain drain within the current pool of desired account management candidates. “You don’t see the same quality of people out there,” states a prominent Chicago headhunter. “The current generation is holding body and soul together just to get the work out.”
To be sure, excellent account managers still thrive in the business and they can write their own tickets when it comes to advancement. But as some recent situations show, even executives with a demonstrated track record find that past success is no guarantee for the future. Last month, when Susan Gianinno abruptly exited as chief executive of J. Walter Thompson, New York, after just seven months on the job, the departure proved an unexpected turn after a high-flying career at BBDO and Young & Rubicam. Likewise, last January Y&R, New York, president Steve Davis left after eight months in his job, originally hired for his successful work at the helm of JWT, Chicago, where he put out fires on accounts such as Miracle Whip and won new business from Kraft Foods and Kellogg Co. Months earlier, Saatchi & Saatchi Worldwide president and chief operating officer John Fitzgerald abruptly left the company after seven months–exactly the amount of time it took outside recruiters to select him for the post. A month before joining Saatchi, Fitzgerald had been promoted to chairman of McCann-Erickson’s Tokyo office, the largest outpost in the agency’s network.
The circumstances surrounding those situations are unique to each individual and agency involved, of course. But a common underlying challenge in taking on such jobs may, in part, be that the industry consolidation and business growth of the past decade have made for large, strongly institutionalized agency cultures, not necessarily welcoming to, or easily assimilated by, outsiders.
“Big agencies are getting bigger; it’s harder to find people to manage them. And because there are so few good people out there, they cost more than ever,” says New York recruiter Bonnie Lunt of Bonnie Lunt Management. “You hire them and they’re not given enough latitude or time to perform. Because margins have shrunken so much, no one has the fiduciary patience to stand behind them.”
“More than ever, [agencies] are quick to pull the trigger on people,” adds a search competitor. “Forget about the days when you could start in the mailroom and work your way up to chairman.”
In that fatter industry era of 15 percent commissions and automatic inflation-triggered media spending increases, rise-through-the-ranks executives gained from the luxury of training programs, where they rotated within agency departments to get a broad overview of the business. Top agency leadership invariably came from within. All that changed with leaner times and the elimination of much of the industry’s investment in training programs. In recent years, more agencies are looking outside for the credentials perceived to be lacking in their own corridors.
“When you’re going outside the agency, it’s usually a high-expectation recruitment. Making that more precarious is the fact you’re bringing someone in over insiders who believed they were contenders for the job,” says Liz Glatzer of Liz Glatzer Associates, New York.
Why shouldn’t more insiders feel they have a genuine shot at coveted agency executive positions? Reduction in training programs only partially explains why agencies often doubt their resources. Many advertising executives contend the industry in general has failed to prepare its own for the new challenges inherent in Madison Avenue’s growing global reach, sophistication and diversification. No small part of that may lie in the industry’s narrow definition of a successful career path.
“In advertising, as opposed to other businesses, the tendency is to view the only real indication of career success by client services people as the attainment of an office management or agency management position,” argues Brian Brooks, group director of human resources at WPP Group, New York. “The ability to succeed in those roles requires different competencies and client management skills. We thrust terrifically talented account people into jobs they’re not suitably trained for. Consultancies have recognized this sooner, and they’ve tried to instill a dual career track: people with client responsibility and people with office management responsibilities.”
Echoing Brooks, another recruiter points out that other industries better identify and groom young talent with skills beyond the narrowly focused industry expertise: “In
other corporate environments, people are recognized early and tapped five levels below and then trained for a top job,” she says.
In advertising, that’s not necessarily an easy task. “In a well-run agency, top management works with senior account people as far as allocation of manpower is concerned. Those senior account people have to make their profit targets, after all. But that’s the extent to which account execs manage the business as opposed to managing an agency,” says Spencer Stuart’s White. “Unless you build an echelon of defined management executives, it’s hard to find people trained to run an agency business. One way is to farm out good people to a smaller office or to another part of the world. But if you take rising account stars out of, say, New York and send them to Europe or Asia, you’re putting them in an unfamiliar culture. You could send them to Atlanta or Chicago, but they won’t go because they’ll feel out of the mainstream. On top of that, their clients become protective and don’t want to lose them. The rising stars have done well because of their client relationships.”
The fact that women make up a majority of the ranks of account management adds further challenges. “Sixty to 70 percent of account execs are women,” notes one recruiter. “If there’s a talent drain in the business, it’s because we haven’t found the right ways to develop them. If a woman has children and a husband, she can’t just pick up everything and move to a European or Latin American office to learn management skills.”
Ogilvy & Mather came up with an interesting alternative when it wanted to train a New York agency up-and-comer, Shelly Lazarus, for a top management job. Lazarus, a mother of young children and married to a doctor with an established practice in Manhattan, moved over to run O&M Direct without having to leave the city. Given O&M Direct’s prestige internally, the shift was viewed differently within the company than by agency observers, who dismissed it as a lateral move. The end result, however, has paid off for Lazarus in more ways than one. Now chairman and chief executive of O&M Worldwide, she’s one of the few in her position with genuine integrated marketing experience.
Madison Avenue has also lost its pull with young MBAs in recent years. “Look at the country’s top-five MBA programs,” says one headhunter. “In each recent graduating class, the bottom 50 percent choose to go into marketing, and of that group the bottom 50 percent go into advertising.”
Brooks claims WPP is the only marketing services company to actively recruit on campus and target MBAs, since Leo Burnett ended its efforts last year. “The lack of industry recruitment is sad. It says something about where we see the next generation of agency management coming from.”
In so doing, WPP is up against the deep pockets of management consultants trolling for the same young talent. Brooks estimates that as a percentage of their revenues consultants spend three times as much as ad agencies on training. In addition, he says, agency revenue per employee is one-half of what consultancies make. Still, consider the change in the agency business: In 1958, there were seven to eight people employed per $1 million of billings. Now, there’s one or less per $1 million of billings.
One way to develop better industry efficiency might be to break down some of the absolutes about account management roles within agencies. “We’re a labor-intensive business. We’re less efficient than consultants,” Brooks says. “We’re not exploiting the full potential of our creative people. They should be more involved in the stewardship of our clients’ brands. We need more people like [president, worldwide brand services] Steve Hayden with IBM. Or [newly named O&M/New York co-president] Rick Boyko, who reinforces the point that we believe he can contribute more as a business partner to our clients than just as a creative person.”
New York recruiter Susan Friedman of Friedman Ltd. extrapolates further. Not only is that way of thinking good for account managers in existing jobs, she says, it’s beneficial for those building a rƒsumƒ. “More people are looking at their careers in nontraditional ways,” she explains, pointing to more career crossover within the industry–creative people moving into account work and planning; account people becoming planners.
If times are difficult for agencies seeking those gifted account professionals, it’s never been better for the best of the available talent in the marketplace. Magdol & Ross’ Leslie Ross says her greatest frustration is prying loose candidates. “Talent is not being compensated as highly as comparable people in other industries, so most of the good people available are demanding a lot of money,” says the New York-based recruiter. “It’s hard. We’ve extended six offers in a row, and none of the candidates left because of counteroffers. Some of the people we’re dealing with are getting offers from three companies at once. I have one junior person who’s just increased her salary from $58,000 to $72,000 just by staying in her job.”
“Good candidates today get three to four job offers,” adds fellow New York headhunter Herman. “You have to understand the costs to the company. They’ve already trained these people three to four years ago. Now they have to either let go of them and pay for a recruiter to find a new person they’ll have to take time to retrain, or pay $5,000 to $10,000 to satisfy [staff] candidates’ needs.”
Not surprisingly, all this leads to confusion about traditional compensation levels for account execs. “Many of my clients ask, ‘What are average salary levels these days?'” says Ross. “Because the agency human-resources people I deal with aren’t allowed to raise salary caps, they have to get the CEO to come to terms with the fact that the agency is going to have to pay more.”
John Karrel, owner of a New York- and Stamford-based recruitment firm, believes in the vitality of the industry, even in the face of fierce competition, past layoffs and flagging corporate loyalty. “This is not a bad time to be in the business. There’s more demand than supply,” he says. “I field as many calls a day from people trying to get into advertising as people trying to get out.”
WPP’s Brooks acknowledges the industry’s current shortfalls in account management, but he, too, takes an optimistic view. “It’s quite astounding that we still have such bright, committed people in the mid-ranks,” he says, “considering we’ve had to hire through such industry upheaval and considering our pay levels compared to consultancies.”