Stringing the Purse

Posted on July 1, 2006

The hefty revenue increases many marketing agencies have posted in the past three years have begun to filter through the ranks, finding their way into the compensation packages of more agency staffers and executives at all levels.

While the general recovery of the U.S. economy has spurred marketing spend since 2002, corporate marketing departments in most industries have tended to staff up only conservatively. Instead of hiring, they have opted to outsource large chunks of work. As a result, some 56% of U.S. agencies reported revenue growth in the last year and 66% say they expect revenues to continue their ascent through 2006, per PROMO’s 2006 Industry Trends Report.

Although it has taken a few years for the wealth to spread through the majority of shops, wallets are definitely fatter for more respondents to PROMO’s biennial Agency Salary Survey than they were two years ago. Among the survey’s respondents, presidents and CEOs report a 41.3% jump in salary from $99,371 in 2004 to $140,431 in 2006. Salaries for executive VPs and VPs inched up 2.3% from $124,073 in 2004 to $126,951; directors’ salary rose 9% from $78,472 in 2004 to $85,538.

Managers faired less well, with salaries declining 2.9% from $52,927 to $51,396 during the period. Even though bonuses have become more generous for this group, reflecting a shift further down the food chain of such “contingent compensation,” managers still saw a 1% decline in their total package (see Chart 1, page left).

The real growth has been in the top tiers. Some agency experts believe the numbers (when considering large public agencies or shops that have longevity) could be even higher, touching the $200,000 zone for senior level personnel.

“The industry is doing very well and the really good people are requiring compensation to that extent,” says Clint Pierce, CEO Pierce Promotions and Event Manangement, a firm based in Portland, ME.

Another salary driver: good people are hard to find and cash is one way to keep them, Pierce says. Beefy compensation packages may also attract qualified professionals from the corporate brand side to work for agencies, he adds.

The 2006 Agency Salary Survey results jive with Pierce’s assessment. Some 38.9% of respondents spent an average 7.6 years working on the client side of the business before they made a jump to an agency position. Once there, those who stick around are apt to get rewarded for it. According to the survey, 58.9% of respondents say their salary was increased in the past year via a raise while in their current position. Another 13.4% cite a promotion triggering the pay hike; 9.6% cite a new job in a new company; and the remaining 16.7% increased their take-home pay based on “other” factors.

Per the survey, the average raise remained basically unchanged at 12.2%, compared to 12.1% in 2003. The majority of respondents (17.2%) received a raise of 20% or higher, while 9.1% received a 3% boost (about the national average according to the U.S. Department of Labor).

The number of respondents who received bonuses held steady at 50.2%. Lower-level executives edged out their higher-level colleagues in receiving the reward — some 64.5% of directors and 63.9% of managers received bonuses, compared to 58% of executives VPs and VPs, and 30.9% of presidents and CEOs, per the 2006 Salary Survey.

Profit and performance are the most-often cited factors for bonus distribution (see Chart 2), however there is the concern executives feel entitled to bonuses they may not have earned, says one professional. As a result, some companies are rethinking the bonus structure for top-level management. Some shops have resorted to collapsing their bonuses into their salary offerings, Pierce says.

But for those who did receive the perk, the majority (97.6%) received it in monetary form with the most (18.5%) pocketing between $10,000 and $20,000. Presidents and CEOs raked in an average $42,384 in bonuses, followed by executive VPs and VPs at $32,567; directors at $11,404; and managers averaging $3,866.

The survey shows that agencies kept a sharp eye on their bottom line when determining bonuses. The number of respondents who cited “profits” as the bonus determinant fell from 63.7% in 2003 to 54.3%. Instead, 58.6% of respondents indicated that they received bonuses based on their performance, up from 50% in 2003.

Total compensation for president and CEOs averaged $157,244, up 40.6% from $111,806 in 2003; $150,282 for executive VPs and VPs; and $93,189 for directors. Total compensation for managers slid from $54,729 in the last survey to $53,905, a 1.5% decline.

There was still a recognizable gap between how much men took home for pay versus women. Females report receiving an average $90,318 compensation package, compared to $131,716 for their male counterparts, a difference of $41,398. In essence, female respondents from marketing agencies made 68.6% of men’s earnings.

The number falls short of figures from a U.S. Department of Labor report, which indicates that women’s average weekly earnings were 81% of men’s in 2005.

“While this proportion has risen over the last several decades, women still are underrepresented among the highest earners and overrepresented among the lowest,” the Department’s report states.

The PROMO Agency Salary Survey echoed this disconnect. Men continued to dominate top-tier positions. Of president and CEOs, 66.2% were men, compared to 31.6% of women. The same is true for executive VPs and VPs where 60.2% are men and 37.5% of women. The numbers even out at the director level, 49.5% are men and 48.4% are women. At the lower end of the scale, 34.4% of men held managerial positions compared to 65.6% of women.

“I think this is a real issue for the industry,” says Fred Bidwell, president and CEO of Malone Advertising, Akron, OH. Over half of Malone’s staff of 210 employees are women; women make up its top management team, too, Bidwell says.

Because many consumer promotions target women, clients should question staff that is entirely led by men, Bidwell says. “Women deserve more than a fair share here and it’s a shame they’re not getting it,” he says.

What keeps ‘em up at night?

Advancement, or the lack of it, was cited as the most pressing career issue facing agency staff. One respondent bemoaned “advancement at a rate that allows my salary and career to keep pace with the national average” as a major concern. On average, it took respondents 3.5 years to be promoted.

Despite the slow rise to the top for some, others believe opportunity is nigh due to the broad array of services the industry has taken on.

Apart from the experiential space that is booming, “There is fulfillment, event marketing, multicultural marketing…and local marketing,” Pierce says. “There are just a number of areas to expand into, and clients needing these capabilities.”

VOICES FROM THE SURVEY

Asked what career issues they find most pressing, survey participants cited:

WORK LOAD

“Advancing to the next level, without working more and more hours…At some point, 100-hour work weeks are not ideal for a work-life balance.”
“Working long hours for little reward.”
“I wonder where I’ll get the energy needed to accomplish all that I have taken on for my company.”

AGEISM
(at both ends of the spectrum)

“It is difficult to age well in a business that thrives on a youth-oriented culture and new ideas.”
“It is hard to be taken seriously as a young marketing professional.”
“Cutthroat young professionals feel it is their due, with newly issued college diplomas, to walk around the rules. This leads to lower standards and hurts the industry as a whole.”

CHANGE

“We’re always looking ahead, trying to see what’s next.”
“The business environment is changing; advertising agencies are encroaching on our territory.”
“We’re challenged by the changing face of advertising in a down market.”
“We’re trying to understand how to use the convergence of technology as a highly effective marketing tool.”

COMPETITION

“Competitive marketing in the Internet area makes it hard to be singled out in a mass of competition.”
“We’re going after the same dollars as every other agency.”

CLIENTS

“There is continuous pressure to acquire and retain new clients.”
“Client budgets are evaporating.”
“Developing client loyalty is a top concern.”
“Experience doesn’t count any more; clients want results immediately!”
“We’re challenged to find clients who want to do great work, and are willing to pay normal-accepted rates for it.”

KEY STATS

The average age of agency professionals is 40. President and CEOs average 45, executive VPs average 44, while directors average 37, and managers 33.
Most (57.9%) have earned a bachelors degree, 24.9% hold master degrees and 10.8% have “some college” education.
Jobs in the promotion industry hailed mainly from Middle Atlantic and East North Central states with 19.4% and 19.1% respectively. New England (10%), Pacific (9.8%), South Atlantic and West North Central tied at 7.4%, West South Central, 5.3%, East South Central (2.9%) and Mountain (1.9%).
On average, respondents have worked in the marketing field for 15.1 years. Some 8.9% have worked in the industry for more than 30 years while 9.3% have worked less than 5 years.
Respondents have been with their present company for an average 5.9 years, up from 4.6 years in 2004 showing longevity and less turnover rates. Also, the number of respondents that have been with their present company between 1 to 2 years has fallen to 32.3% from 45.5% in 2004.
25.4% of respondents received promotions in 2 years.
Respondents (70.1%) indicate that base salary followed by health/medical benefits (46.9%) were top priority when choosing their current job. Vacation/leave time (43.3%), 401K/pension/retirement plan (39.7%), bonus plan (39.5%), telecommuting options (13.9%), and job sharing (2.9%) rounded out decisions for jobs.
Agency personnel supervised on average six employees, down from eight in 2004.
A reversing trend from long work weeks may be in the mix as respondents estimated they spent 48.5 hours on the job, down slightly from 50.1 in 2004.
Some 62% reported that their agency invests in staff training and spends an average 6.9% of operating budgets on such training. Most training (73.7%) was in the form of seminars/conferences.