Too good to be true?

Last year may have been disastrous for the dot-com sector, what with many start-ups failing spectacularly, but it was a remarkable one for marketers.

The promised disaster of the Y2K bug did not materialise as the new millennium dawned. Instead, freak weather conditions swept the land and the dot-com bubble most definitely burst. But 2000 was a boom year for the job market and a successful one for marketers – particularly for those willing to embrace change.

The healthy British economy inspired a level of optimism within the marketing industry reflected in the Marketing Week/Ball & Hoolahan 2001 Salary Survey. But should the industry be wary of overconfidence? The start of a slowdown in the US economy suggests tougher times may lie ahead as we enter 2001.

The background to an amazing year for the marketing community was the total non-event of the Y2K bug, a buoyant UK economy and the entrenchment of the Internet in everyday life.

Planes didn’t fall out of the sky, unemployment in the UK hit a 30-year low, inflation remained firmly under control and the average British family had so much spare cash it spent more on leisure and entertainment than on food.

The Internet bubble, which sparked so much entrepreneurial interest in the second half of 1999 and created overnight dot-com millionaires, finally burst in April 2000 as commercial reality set in. Some dot-com entrepreneurs worked 16 hours a day, seven days a week to launch a fledgling business only to watch it fail and private investors lost a small fortune, real or otherwise, by speculating on the stock market.

Nothing ventured, nothing gained

The rest of the year saw consolidation in the e-commerce sector but, having arrived, the Internet is not going away. Venture capital for online businesses became more difficult to secure but bricks and mortar companies continued to invest in the Internet.

The convergence of technologies continued to encourage the development of new entertainment-based, e-commerce opportunities for consumers while business-to-business services, particularly information supply, thrived. By the end of the year, 100 million Europeans were online and 100 billion e-mails were sent daily.

Against this background marketers had one of their best years, especially for those with an entrepreneurial streak. New and interesting challenges for marketers arose and those with the right skills are in great demand.

New roles were created, primarily in the Internet sector, but also in the service sector. Media in particular persuaded marketers to move out of traditional marketing departments. This created widespread vacancies in the more traditional packaged goods and consumer brand marketing departments which, because of the buoyant economy, were also recruiting.

As a result, a severe talent shortage prevailed. But as the year progressed, and the incentive of stock options in dot-com circles became devalued, there was a trickle of movement back to more traditional environments.

The 2001 Salary Survey confirms that average salaries have grown 8.7 per cent – above expectation and at more than twice the rate of inflation. But it could be said that this is not excessive given the buoyant market.

Ball & Hoolahan believes significant efforts have been made by the UK’s blue-chip companies to retain good staff. This view has been supported by significant increases in salary and benefits, but does not seem to have been borne out in the salary survey. On the contrary, there is an air of “steady as she goes” in both the stated increases received and expectations for 2001.

Perhaps the explanation lies in increasing interest in the overall package rather than salary. Although more junior marketers are concerned about their bank balance, and although cash remains important as marketers become more senior, the overall package has become a major consideration.

It is noticeable that almost 70 per cent of survey respondents receive discretionary performance-related bonuses, some element of contributory/non-contributory pension (NCP) as well as a car, car allowance and ancillary benefits such as share options.

Establishing the value of the car or the size and likelihood of the discretionary bonus or the NCP (also a net benefit that needs grossing up) are just as important in assessing a fair salary as the actual salary itself.

This can be illustrated by looking at marketing directors’ bonuses. Almost 50 per cent of marketing directors achieved discretionary bonuses of more than ten per cent, but 29 per cent achieved bonuses over 20 per cent and 20 per cent achieved bonuses over 25 per cent.

Similarly, of those marketing directors who have an NCP, almost half receive a contribution of ten per cent of their salary or more, but the top 15 per cent get more than 15 per cent.

Of those marketing directors with company cars, over 40 per cent have a car worth more than £25,000 and, of those who receive a car allowance instead, more than 40 per cent get over £500 a month. Applying the above to a marketing director earning a salary of £60,000, the average across the sample, or £90,000 in the top ten per cent, we generate interesting variations.

All to their benefit

It is clear that in some cases basic salaries are likely to be only two-thirds or even as little as 50 per cent of the total package value and that is before all other benefits that are given in addition to these main ones – particularly as one gets more senior – are added. This highlights how important package calculations are and indeed two or three factors have contributed to a heightening of awareness of this in 2000.

Firstly, the big blue-chip companies have excellent benefit packages and one way marketers have been persuaded to resist joining the entrepreneurial start-up, dot-coms has been to highlight and strengthen these benefits.

Typically, a start-up venture has offered higher basic salaries plus simple benefit packages and seemingly very attractive stock options. However, these packages often turn out to be fool’s gold.

If individuals had been more aware of what they were earning as a package, they might have negotiated harder in the first place.

Secondly, the talent shortage has helped fuel the phenomenon of contract working and outsourcing to bridge the gaps caused by the boom in jobs, to cover maternity leave and career breaks, and to source expertise for a limited period.

How an interim contractor in a marketing environment should be remunerated raises many complex issues, primarily centring on the spirit of the contract and the loss of “full time” benefits and security.

Although the nature of the contract is interim, marketing departments do not want contractors to clock watch and do time sheets – it runs contrary to the spirit of marketing leading the business by example – and so a salary equivalent needs to be agreed rather than a daily or hourly rate.

But, as the contract is only for a short period of time, there is not the security of a permanent job or the normal benefits that go with it. So in theory, a distinct premium to the basic salary pro-rata equivalent needs to be included to recognise this.

Many organisations find this all a bit too challenging to accept at present, as apparently it creates very high basic salary levels (albeit for an interim short time period). Hence an awareness of the total value of the package of a permanent employee has become critical to agreeing a fair interim contract rate. This is true for both employer and employee.

Thirdly, the Government is increasingly focusing on taxation. So far, pensions are an area it is supportive of and so there is a trend to increasing pensions as part of a package of benefits, while the company car is increasingly under threat.

Size does matter

The size of the marketing department and its budget are definitely seen to have a material impact on salaries at most levels, with the larger-scale departments paying more. Similarly, London commands a premium in comparison with other regions, as one would expect, with the not quite explicable sample quirk of Yorkshire.

Salaries paid to marketers in US-owned companies continue to be higher than for their peers in UK-owned companies with a six per cent differential. The top ten per cent of marketers enjoy a salary differential of eight per cent.

The salary differential between men and women continues unabated, although women received comparable salary increases. At the level of the top ten per cent of marketers, and even top 50 per cent, women are distinctly discriminated against. However, the top ten per cent of women had salary increases averaging 11.5 per cent.

The industry sectors that appear to pay better this year have been packaged goods, drinks and healthcare. This perhaps endorses the view that many blue-chip companies have made a conscious effort to pay more so as to retain good staff.

Unfortunately, the salary survey sample is not sufficiently robust in the media, TV and Internet sectors to make broad generalisations, but there was some evidence of very high basic salaries being paid to offset the lack of supporting benefits other than stock options.

A wealth of opportunity

The year 2000 has been an incredible year. The Marketing Week/Ball & Hoolahan Salary Survey does not fully capture the extraordinary number of vacancies that have been created in both traditional brand owners and the newer sectors, which have desperately needed marketing talent.

Within the marketing community there has been a shortage of the “right skills” across the board. Recruiting brand marketers, market researchers, direct marketers, sales promotion marketers, trade marketers or retail and consumer marketers has not been easy.

This has given rise to growth in the interim contract sector, within which there has been an astonishing number of Australian, New Zealander and South Africans “helping out”. Given the shortage of appropriately qualified European talent within the marketing industry, there have been many more “sponsored” recruits.

While this does not sound too good for home-grown talent, the plain fact is that the market is operating at the very highest levels of employment opportunities and it is no coincidence that the marketing trade press has enjoyed a record year in the number of advertised vacancies.

Two other trends that contribute to this already dynamic picture are company restructuring and flexible working. Restructuring is a constant feature of all marketers’ lives. Almost 70 per cent of the survey sample experienced restructuring during 2000, the same as the year before. Similarly high levels are anticipated next year.

The drinks sector has clearly been experiencing restructuring at higher levels than most. However, packaged goods industries have been getting their fair share as organisations continue to wrestle with global/local brand issues, central marketing versus local customer-focused marketing, and how to handle new product development.

While restructuring can be very disruptive, many marketers have found it can also be very lucrative. Redundancy no longer carries a stigma and, in this market, very little risk.

In fact, immediate availability can be a positive selling point in this labour market. For many who have experienced restructuring during the past year it has been a positive career opportunity with no real downsides. Apologies to those who may have had a different experience; it can of course still be a shock to the system.

The other trend, towards flexible working, seems to be at odds with a market suffering labour shortages, but possibly a recognition that employees are calling the shots more often.

If it is easier to work at home, or if you want a career break, more employers are listening and proving flexible, partly because improved technology enables more flexible working and partly because it’s easier to keep employees – even if they want a four-day week – than it is to recruit another individual.

Significantly, home working has a very high level of take-up as a form of flexi-working in London, perhaps reflecting the worsening conditions of the transport system.

Changing tack

The confidence being experienced in the market is confirmed by the fact that about 60 per cent of the survey sample expect to change jobs before the end of 2001, and by the low priority given to job security in assessing their current employment.

Marketers rate a friendly environment at work as more important than job security, with challenging work and appropriate financial remuneration pretty much equal top priority. With such a successful year behind them, marketers can be forgiven for adopting a confident and optimistic outlook. It is difficult to foresee the talent shortage being resolved in the short term.

But, 2001 will see a new US president in the early stages of his tenure at a time when there are serious concerns over a stalling job market and economic slowdown in the US. Similarly, the UK is looking at an early election.

If there is an international economic downturn, the challenge for marketers in 2001 will be to ensure that the marketing opportunities created over the past 12 months do not disappear.

This means there is a responsibility to assert and maximise the relevance and effectiveness of marketing roles not only in the traditional brand sectors, where roles are being redefined, but also in the new sectors which range from dot-com companies and technology to publishing and broadcast media. This is a fortunate position to be in and for future marketers the opportunity to broaden the scope and range of marketing involvement in industry seems better now than it has ever been.

Hilary Hoolahan is joint managing director of Ball & Hoolahan

Key Points

– Average salary increases at 8.7 per cent across the industry, up on 2000 and ahead of expectation and inflation. This does not seem excessive given it has been a “sellers’ job market”

– Expectations for 2001 and beyond are optimistic but conservative, with more than 60 per cent expecting higher than five per cent increases. Such conservatism may reflect a realisation that the basic salary is only part of the equation

– Marketers in UK-owned companies still lagged behind their peers in US-owned companies, with differences of six per cent and nearer eight per cent when looking at the top ten per cent in performers

– The average marketing director earned £61,670 but, like last year, the top ten per cent at this level earned £90,000-plus in salary alone

– Average salaries for marketing directors and marketing managers rose in proportion to the size of the department and marketing budgets

– Overall package considerations, rather than mean salary have been highlighted by start-up companies offering high salaries and stock options and no other benefits

– Differentials still exist between men and women in terms of salaries, except at the junior end. The top ten per cent of workers certainly enjoyed above average salary increases

– A remarkable 58 per cent of the survey believe they will move jobs by the end of 2001 – reflecting how upbeat the market is and the mobility of the marketer. The inclination to move quickly is more marked at the junior end

– The biggest pay rises went to the people in shortest supply, notably product managers although marketing directors also earned higher than average increases

– “Challenging work” and “financial reward” and even “friendly environment”, far outweigh “job security” as key requirements in job criteria

– Flexible working practices occur within 50 per cent of marketing departments, with the most common still being home working, flexitime, hot-desking and career breaks. (see chart 10)

– The top ten per cent of those with only five years in marketing continue to be able to earn £50,000-plus. Restructuring occurred in almost 70 per cent of marketing departments for the second year running

– The sectors seen by marketers as most attractive are marketing consultancy, travel, and leisure, closely followed by new media and the Internet

The Marketing Week/Ball & Hoolahan Salary Survey 2001

The annual salary survey, of which this is the 18th, has always been acknowledged as an authoritative and unique guide to pay and benefit, conditions and expectations in the marketing industry. As well as acting as a benchmark to marketers of their earning power, it is a valuable tool for employers who wish to recruit and retain marketing professionals.

Research was carried out by Compass Data Services. The questionnaire was mailed out in

October 2000 to 12,000 Marketing Week readers. A deadline for responses was set at November 10 2000.

The final response rate was 12 per cent, yielding 1,434 responses.

The sample was split 47/53 men and women.

One per cent of respondents held the most senior positions of chairman/managing director/ general manager, while eight per cent were marketing directors. Marketing managers made up the main job function covered (35 per cent), indicating the breadth of roles that this title covers.

The next largest groups were product/ brand managers at ten per cent of the sample, senior product manager (five per cent), assistant product manager (one per cent), group product managers (two per cent), direct marketing managers, research managers and graduate trainee/marketing assistant (under one per cent). Trade/retail marketing manager, category manager and research assistant/executive title each represent less then 2 per cent of the sample.

Thirty-five per cent of the sample were aged between 27 and 30 years, while 29 per cent were between 31 and 35. Fourteen per cent were between 36 and 40 and seven per cent were 26 and under.

In the main version of the survey, there is a full set of charts including numerous cross-tabulations and covering areas such as using the Internet which have not been discussed in the article. Specially tailored analyses are available on request from Hugh Pinnock (01722 325983). See the order form below for a copy of the Marketing Week/Ball & Hoolahan Marketing Survey 2001.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here