The planner told her supervisor she was offered $40,000 at another agency. The boss asked for two days to match the offer. During the wait, the employee received two more offers, each at $45,000. Still wanting to hold on to the employee, the boss upped the ante -- only to be turned down. The media planner had been offered $65,000 and just couldn't refuse.
"It's tough to get great people in the Bay Area," says Nick Bishop, president-CEO at McCann-Erickson/A&L, San Francisco.
On the opposite coast, a human resources executive at a New York agency says junior account people came in at the $30,000-a-year salary level last year, and just 12 months later they're getting salaries in the $45,000 and $50,000 range.
Steve Gundersen, president-CEO of Gundersen Partners, a global executive search company, says erosion of employee loyalty to a single company is driving up compensation, and agency turnover. "The churn is happening faster than it use to -- hence, salaries have to go up," he says. "Ad agencies are responding to the demand and need (to offer better packages)."
LOFTY TITLES, TOO
And it's not just wages that executives are trading up on. Earlier this year, a young assistant account coordinator -- less than two years out of college -- negotiated her way into an account exec position at a Los Angeles agency. In the past, such titles were reserved for candidates who have years of experience and know the inner workings of an agency.
Gundersen Partners, specializing in placing executives at marketing and communications companies, has experienced a "dramatic" increase in its business over the last year. Mr. Gundersen credits the Internet with fueling growth for much of his company and the industry. Dot-com clients are stoking growth at agencies by awarding them lucrative accounts, and by providing them with new methods to reach consumers, he says.
"All of a sudden you have this whole new area that's ramping up," Mr. Gundersen says. He expects the industry's strong growth to continue. "Compensation is going up. The economy is booming. I don't see it slowing down in the next two or three years."
However, the flush economy is making it harder than usual to recruit. "Agencies are doing well. So many have openings and are hiring," says Mr. Bishop, who is staffing up for the $300 million Microsoft Corp. account consolidated at the agency earlier this year.
DOT-COMS LURE AD TALENT
But as agencies are gaining business from dot-com clients they're losing staffers to them. "That has put added pressure on the marketplace," he says. Human resources directors note employees often go to "sexier" dot-com clients that offer staffers not only a creative environment, but stock options.
To combat the problem, Mr. Bishop pitches McCann's benefits: The ability to learn technology working on the Microsoft account, McCann's training program dubbed "McEd," and the ability to transfer to jobs around the globe.
Staff levels at Santa Monica, Calif.-based Rubin Postaer & Associates didn't budge for the year, but turnover was dramatic, says Lark Baskerville, human resources director. Ms. Baskerville believes turnover is at an all-time high in the industry, noting the current seller's market has encouraged talent to seek the highest bidder, and often as not, the bidder is the client. The ad industry is not paying enough to keep people on, she laments.
New media departments have blossomed at the leading agencies, whether as startups or through acquisition. Interactive discipline and new business wins have provided a 7.3% uptick in agency employment at Milwaukee-based Cramer-Krasselt. The key is finding strategic thinkers who can drive Web surfers to a particular site -- not just techies who can throw up a Web site, says Peter Krivkovich, president-CEO at the agency.
"There is one person for every 10 jobs -- one good person," he says. "You'd be surprised at how many resumes [we get from people] that say they know how to get on the Internet, and that's their qualification for wanting to work in the Internet."
He notes even experienced people have worked no more than seven years in this industry segment, and the knowledge they gleaned in the first three is outdated. Workers with just two or three years' experience can command more than $50,000 a year. They're getting it because agencies and clients realize how important the Web will be to expand their business.
"It will never be the dominant form of business but will be a very integral part," says Mr. Krivkovich, likening interactive's role to that of direct marketing.
NEW CLIENTS INFLUENCE SERVICES
New York-based Deutsch has lured 12 new clients so far in 1999 and boosted staff 28%, one of the highest growth tallies on the chart. New wins have stimulated growth in integrated services. The last several years, Deutsch has expanded its direct marketing and interactive capabilities, creating iDeutsch and directDeutsch.
This year, Deutsch founded a client promotion and PR group. "We really have expanded from just traditional advertising to become more of a communications company," says Kristin Greaves, exec VP-director of human resources and development.
Marketers are increasingly looking for more than just general ad support, and Deutsch is bulking up its integrated capabilities to fill those clients' needs, says Ms. Greaves. "We're looking for people with expertise in all those different areas."
At J. Walter Thompson USA, New York, consolidated staff rose 3.8% due largely to growth at JWT Specialized Communications.
Growth is an overpowering need among marketers and agencies alike. Clients need new and improved brands, while agencies seek new clients and global services offerings. The voracious appetite among agencies for acquisitions continued throughout last year.
Euro RSCG Worldwide, New York, bulked up on the consolidated side in part because of its acquisition of the growing direct marketing agency, Devon Direct Marketing & Advertising. Euro RSCG also expanded with its January acquisition of Jordan McGrath Case & Partners.
Acquisition has been fundamental to growth at EPB Communications, New York, acquirer of 16 agencies within the last year. New services and clients have flushed agency employment 85% at the consolidated level from year-ago levels. However, redundancies and early departures have created a lower headcount when viewing these acquisitions pro forma.
In an agency's post-acquisition phase, redundancies and account losses due to conflicts often mean fewer employees than the pre-acquisition employee count.
True North Communications' merger of Bozell Group's Detroit and Costa Mesa, Calif., shops into FCB Worldwide transferred 244 to FCB. Under Ad Age methodology, Bozell still gained 2.7% at the core from new business gains. Its headcount was treated pro forma as if the move took place two years ago.
Sometimes the agency cultures clash in integrating acquisitions. Such was the case at Publicis and EvansGroup, which produced a sizable turnover at Salt Lake City-based EvansGroup. Publicis' employment as a result dropped 6% on a pro forma basis.
Employment rolls at Ammirati Puris Lintas got snipped at both core and consolidated levels largely due to loss of the Compaq Computer Corp. account worth an estimated $200 million. In addition, Ammirati has experienced a slew of management shifts and staff restructurings over the last year. To revive Ammirati, New York-based parent Interpublic Group of Cos. early last month merged the agency with sister IPG agency Lowe & Partners Worldwide to form Lowe Lintas & Partners Worldwide.
NEW/EXISTING ACCOUNT GAINS
New business gains as an employment growth stimulant were cause for the higher headcounts among most agencies on the chart. Fallon McElligott, Minneapolis, grew 12.9% from such expanded business. Goodby Silverstein & Partners, San Francisco, went on a new-win tear, gaining seven clients in eight pitches in the first quarter alone. Goodby is up 31.8% in employment in 1999. It ranked No. 32 in agency employment (Wieden & Kennedy was No. 31).
Growth in existing accounts at Warren, Mich.-based Campbell-Ewald, paced by its winning Chevrolet's $200 million regional business (C-E already had the national Chevy account), is boosting revenue nearly 30% in 1999. Campbell-Ewald's overall core level employment has grown 31.3%. In the first six months, the agency hired an average two people a day.
Contributing were Hillary Chura and Susen Taras.