False dawn or a bright new day?

While there may be signs of a brighter future, caution dominated the sector in 2003. By Hilary Hoolahan and Rob Furber

By Marketing Week 15 Jan 2004 12:00 am

Batten down the hatches was the battle cry echoing throughout the marketing industry a year ago. There was uncertainty in the world at large, coupled with a poorly performing stock market. The result was a general tightening of purse strings among employers. The disappointing news is that very little has changed in the 12 months since. Companies continue to streamline operations and, in many cases, hold off on non-essential expenditure, which has often translated as postponing recruitment decisions.

With the focus on short-term profitability and a general lack of expansiveness pervading the industry, companies are extremely strict when managing budgets and this conservatism is highlighted by the Marketing Week/Ball & Hoolahan 2004 Salary Survey. The average increase in salary last year was 5.8 per cent, marginally better than 2002, but still well down on the 8.7 per cent recorded in 2001.

Economic pressures

This downbeat prognosis is being felt by marketers too, with 42 per cent of respondents stating that economic uncertainty affected their career decisions in 2003, and nearly two-thirds forecasting less than a five per cent increase in salary this year. Expectations have rarely been at a lower ebb.

Ailing company performance often leads to questions being asked about whether a company has too many staff and in 2003, this type of review often led to restructuring. It is, however, interesting to note that as many marketing departments increased in size during 2003 as decreased, hinting that the downsizing trend spotted in 2002 has at least stabilised.

That said, mergers were a major theme last year and some marketers lost their jobs as a result. The days of single-brand companies are probably numbered, and while combining marketing departments can result in redundancies, consolidation may not be all bad news, as long as marketers are dynamic enough to cope with such upheavals.

The message emanating from this year’s survey is clear: marketers need to be more flexible than ever. Arguably, one of the negatives to have come out of all the boom years is that people became too comfortable and, by association, less mobile. By comparison, the industry today is massively susceptible to restructuring – so marketers need to plan for this scenario. With 55 per cent of those surveyed expecting to change jobs in 2004, up five per cent on last year, perhaps this mindset is already setting in.

Facing the challenge

Being prepared to change jobs should be seen as a challenge. It could mean taking a career break, switching sectors, or going freelance, but there is a gamut of options in today’s more flexible market. Indeed, the trend towards employer flexibility continued last year with 56 per cent of marketing departments adopting flexible working practices.

One in four companies now permits marketers to take career breaks, while job sharing and three-day working came to the fore in 2003, a practice seen as a way for companies to streamline operations. This increasing flexibility ties in with the number of women now working in the marketing industry and the requirement to offer maternity leave.

Interim contracting has grown during the past 12 months, largely due to the need for maternity cover. Bringing in a temp is also a lot more appealing to companies from an off-balance sheet perspective as opposed to offering positions to contractors who, due to legislative changes, must now be treated as if they are full-time employees.

In general, it remains a very tough market with companies being more demanding than ever in terms of recruitment. Against that, there are a lot of marketers looking for jobs but with the wrong skills. Senior marketers might also find a distinct lack of senior roles being offered within the industry, especially in the packaged goods sector, where there are plenty of calibre people at the top end but simply not enough jobs to go round.

Demonstrable benefits

With leisure, tourism, technology, telecoms and even media under the cosh last year, brand consultancies, sales promotion agencies and other marketers associated with these sectors continue to suffer, simply because clients are not being expressive in such a stifled, penny-pinching environment. This has also meant there is more pressure on agencies to demonstrate where they can add value.

While overall package considerations have emerged as more significant in recent years, the move away from company cars continued last year. Only 30 per cent of marketers who receive additional benefits now possess a company car.

Another aspect of packages to suffer during 2003 was pensions. This sector has gone through huge upheaval, as shown by the survey. Seventeen per cent of respondents said their company attempted to renegotiate their pension scheme, and while 84 per cent of marketers still hold a contributory pension, a minuscule two per cent hold a non-contributory one, down a massive 30 per cent on 2002.

One positive to come out of this year’s survey is that the disparity between male and female salaries appears to have closed. A typical male marketing director now earns only five per cent more than his female counterpart, compared to 20 per cent in 2002. The industry appears to have at last got the message that such discrimination is no longer acceptable.

Given the week by week uncertainty that has been holding the industry back, the good news is the second half of the year was marginally better than the first, hinting at a recovery. It may be a false dawn, but a few positive signs were spotted. Recruitment advertising in the marketing trade press, always a good barometer of the state of the market, showed signs of an upturn. The decline seen during 2002 certainly abated, with revenues marginally up last year.

But, with no new sectors to get excited about, there remains a distinct lack of creativity – a situation that is hardly conducive to attracting graduates. Indeed, options are thin on the ground for graduate trainees, with fewer brands in the market in the classic training area of packaged goods, and a challenge marketing now faces is getting newcomers into jobs.

There is an argument that the marketing industry is not selling its own story well enough, failing to highlight what the discipline can achieve. An ironic situation considering the very nature of marketing and the fact relatively young marketers now hold senior positions at Boots, Sainsbury’s and WH Smith.

With companies getting back to focusing on the fundamentals of trying to run a profitable business, brands have sometimes had to rethink their entire proposition. The situation has at least been good news for marketers involved in consumer research, one of the few growth areas noted during the year. There are further grounds for optimism with new projects on the horizon such as London’s bid to host the 2012 Olympics. This could potentially provide a massive shot in the arm for UK marketing.

Dire straits

However, overall, the industry finds itself shackled by a creative strait-jacket, odd considering the traditional indicators of prosperity are all in place. Unlike the situation in the early Nineties, the country is hardly in the grip of a recession. People are still spending, interest rates are low, and property values are holding up well. Yet there is a lack of investment and none of the all-important buzz that marketing thrives on.

Admittedly, the market also suffers because comparisons are made to the boom years leading up to 2001, when the stock market had arguably reached an unsustainable level and business confidence was unrealistically high. What the industry desperately needs is for investor confidence to return. But until then, it will continue to be a case of “steady as she goes” in the belief that stormy waters still lie ahead.

Since September 11, 2001, it seems the marketing world has been trying to re-establish a firm footing for itself, but so far without any real conviction – or lasting success. The worry has to be that, if the property market begins to suffer and consumer confidence is shattered the market will flatten out even more. Given the industry’s fragile state, all it would take is another major terrorist action, or an interest rate hike, to cause a further slide.

Given some signs of improvement towards the latter part of the year, it can only be hoped this slow revival carries on throughout 2004. Sadly, as long as companies remain merely intent on survival, the marketing industry will continue to lack the momentum it needs to press forward and re-establish itself as the innovative, creative place it was before 2001.

Key Points

The average marketing director earned &£69,852, and the average marketing manager &£37,147 but the top ten per cent at these levels earned considerably more – &£122,000 and &£59,166 respectively.

The industry’s average increase in salary across last year was 5.8 per cent, marginally better than 2002, but down on the 2001 peak. Nearly a quarter (24 per cent) of those surveyed did not receive a salary review during 2003, revealing that employers are having to maintain a firm grip on expenditure.

Marketers’ expectations for the next 12 months are more conservative than a year ago – 63 per cent expecting less than a five per cent increase in salary. Again, this is an indication of the tough economic climate, with employees aware market conditions are not conducive to significant pay rises.

Only 22 per cent of marketers received a pay rise of between five and ten per cent last year, nine per cent fewer compared to the corresponding figure in 2001. This is also reflective of the fact employers’ funds are far from overflowing, with many companies having to put a cap on salary increases.

Forty two per cent of respondents stated that economic uncertainty affected their career decisions during 2003, highlighting the financial unease that continues to stifle the market.

Women continue to be paid less than men across the industry. The biggest disparity occurs at group product manager level with men earning, on average, 34 per cent more than women. This drops to 11 per cent at marketing manager level. The gap has at least closed at marketing director level in comparison to the previous year. A typical male earns only five per cent more than his female counterpart (compared to 20 per cent more in 2002).

A typical marketing employee under the age of 26 can expect to command a salary of &£23,045 and between the ages of 31 and 35 he or she will be earning, on average, &£39,346. Meanwhile, the top ten per cent at these two age levels earn &£32,142 and &£67,727 respectively.

Fifty five per cent of those surveyed expect to change jobs by the end of 2004, up five per cent compared to last year, perhaps hinting at better times on the horizon with more marketers preparing to move on.

Seventy per cent of marketing departments were restructured last year, as many increasing in size as decreasing suggesting the downsizing trend noted during 2002 has since abated.

Flexible working practices are increasingly prevalent among employers, with 56 per cent now offering flexibility, and one in four companies permitting employees to take career breaks. The mobility of today’s marketing workforce is also highlighted by the fact 45 per cent of marketers rate the opportunity to work from home as an important job criterion.

Employers are still failing to provide a clear vision of how a marketing career is mapped out, with only a third of respondents satisfied with the job companies are doing in this respect.

A typical group product manager received a pay rise of 7.9 per cent last year, a figure nearly three per cent down compared to two years ago. Again, this is indicative of employers having to be thriftier, largely due to a lack of profitability.

Nine out of ten marketers receive additional benefits over and above base salary, but only 30 per cent of these have a company car, ten per cent fewer than two years ago, revealing the shift away from company cars being offered as part of the package.

Marketers’ desire to have a company pension fell dramatically last year. Only 54 per cent considered a non-contributory pension of importance, down a massive 35 per cent on 2002, while 71 per cent considered a contributory pension scheme to be worthwhile, down 18 per cent. This is reflective of changes in the pensions market and points to increasing unease among marketers regarding the value of a pension, especially if it’s non-contributory.

Average salary (&£) by gender and job title

Overall Male Female Marketing director 69 852 71 257 67 647 Marketing manager 37 147 39 797 35 284 Group product manager 50 055 59 000 38 875 Senior prod/brand manager 39 788 42 909 36 964 Product/brand manager 29 882 31 263 28 723 Assistant product manager 24 050 20 500 24 444 Marketing services director 58 571 59 285 58 333 Marketing services manager 34 062 36 265 32 772 Marketing services exec 23 549 23 256 23 541 Marketing assistant 18 569 19 142 18 431