The salary rollercoaster

The latest Marketing Communication Consultants Association (MCCA) salary and benefits survey reveals major disparities in the fortunes of marketing agency staff. The survey reflects the pressure imposed by clients and procurement departments on agencies to justify and control costs.

The results come almost four years after the MCCA’s last salary and benefits survey in 2003. At that time, the marketing communications industry was still struggling to emerge from the fallout of the dotcom boom and the subsequent slump accentuated by September 11. Since then, conditions have notably improved; WPP Group’s recent results (a 10% increase in revenue) reflect the strong advertising conditions across the globe, with even the weakest geographical region, Western Europe, picking up in the second half of last year.

Despite the overall economic improvement since 2003, the increase in procurement and the rise of project accounts has put agencies under enormous pressure – reflected in agency salaries for mid-ranking account management staff (account executives, account managers and account directors) seeing a rise of only 6% over the period. This, at a time when mid-ranking account management staff are in such short supply that more than one agency head has described the situation as “acute”.

In response to the erosion of margins by procurement, agencies have controlled the increase in account-handling costs despite the lack of available staff, however, costs cannot continue to be eroded if agencies are to compete for the best calibre of staff in what is a very competitive job market.

It is time for clients to focus on asking agencies what percentage of their income they re-invest in skills and training as part of their procurement “request for information” questionnaires – rather than continuing to pare down costs – which is actually to clients’ own long-term detriment.

Other findings from the MCCA salary and benefits survey show that senior agency personnel, including group account directors, board directors and managing directors/managing partners and chief executives saw an above average rise of 10%, 9% and 15% respectively. This both reflects the better performance of agencies through 2003 to 2006 and the shortage of senior personnel which is keeping senior salaries high.

Another key finding from the survey has been the decline since 2003 of 23% and 33% for salaries of planning directors and data planning directors. Junior planners’ salaries also saw a decline by 5% over the same period. This comes at a time when online planning specialists such as digital strategists have seen spectacular salary increases of 50%, highlighting the shortage of experienced digital specialists and the ever-growing importance of digital marketing.

Regarding employee benefits, in 2003 company cars were becoming increasingly outdated as an employee incentive. Surprisingly, 28% of agencies indicate they still provide company cars to certain employees. However, cash equivalents are increasingly on offer as companies and staff become more aware of environmental issues.

Correspondingly, the use of business class travel shows a marked decrease with 24% of agencies using business class compared to 42% in 2003. Larger agencies are more likely to use business class with 87% of smaller agencies using economy travel only.

Other findings of the MCCA’s salary and benefits survey include 96% of agencies operating bonus schemes (based on a combination of individual and agency performance); 36% of agencies providing share incentive schemes (primarily for director status and above); 80% providing private medical cover for all employees; 56% providing nursery vouchers for employees (although not one agency provided crèche facilities for staff); and only 48% per agencies operating an occupational pension scheme.

Agencies have played their part in keeping costs under control, and states, but clients and their procurement teams must stop cutting budgets if fair remuneration is to be achieved. At present, attracting new people and training them is difficult enough and it is only by justly rewarding agencies and their staff that the industry will remain healthy.”

 

 

These findings come on the back of last year’s MCCA fees and remuneration report which also demonstrated the financial pressures that agencies face. The rise in short-term projects, the increased influence of procurement departments and restrictive client budgets all point to an agency sector under tremendous pressure.

There has to be a point where enough is enough. Indeed, any further cost-cutting will be to the detriment of clients themselves. Of particular concern to the MCCA is the knock-on effect on recruitment and training. Graduate salaries in our industry start at £17,000 whereas the median starting salary for investment banking is £35,000 – more than double! Clients must understand that unless the agency sector is able to compete for the best staff, their own businesses will suffer.

The only way forward is for both clients and agencies to collectively rally round best practice and best standards. This can only happen if clients reward agencies properly and the MCCA would like to see greater commitment by clients to this end. After all, it’s to everyone’s advantage.

Scott Knox, managing director MCCA