Salary Survey

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Raises are projected to increase an average 6.6% in 2000 for the rank-and-file at advertising agencies in the U.S., compared with the 6.4% average in effect this year, according to Advertising Age's eighth annual Salary Survey.

Bonuses, mostly distributed this holiday period, will average 8.3% of base pay for the mainstream of agency employees, up from 7.9% recorded last year in a similar survey.

The boost in bonuses is linked to solid gains in gross income (revenue) at most agencies. Bonuses are tied to a predetermined formula -- profitability among 42% of agencies and achievement of operational goals among 38%.

Growth in gross income is reported by 86% of surveyed agencies, with just under half of them advancing at a 10%-plus clip, a third between 5% and 9.9% and the rest at 4.9% and below.

Last year's survey predicting raises of 6.4% for 1999 are in keeping with returns monitored by U.S. Bureau of Labor Statistics, which shows an average 5.6% uptick in hourly earnings during the first three quarters for the nation's advertising employment segment.

EAST TAKES PRIZE

Regionally, agencies in the East and South are more likely than agencies elsewhere to record increases in gross income of 10% or more this year. Agencies in the West continue to experience more limited growth. For 2000, nearly all Midwest agencies expect growth in gross income, and 48.4% of survey participants believe growth will hit 10% or more, just shy of the East's 50%, top among regions.

Agencies in the East carry the highest base salaries and highest total pay (salary plus bonus) for all positions except CEO where the West is highest in both categories. Agencies in the South are most conservative in their salary growth projections for 2000; agencies in the West are the most optimistic about growth.

The market continues to be a seller's market, with seven of 10 agencies forecasting an increase in total employment, the rosiest views coming from larger agencies. Only 1% of agencies predict a drop in total employment.

Overall, 68% of agencies expect higher account management staff counts in 2000, 65% expect the same for their creative departments, and 44% see a higher level of media staffing.

Employment rolls swollen by mergers are feeding some forecasts, although expansion of existing business remains the primary reason employment will rise in 2000.

Gender differences remain notable. Men dominate the CEO and creative director posts. Where women dominate the position -- media director, lead account planner and account executive -- males are consistently paid more than females for same-level posts.

Gender differences have narrowed since 1998 for a number of positions, primarily CEO, management supervisor and lead account planner. Female associate creative directors have lost ground against their male counterparts since 1998.

UPPER-LEVEL PAY

CEOs will get the highest raises -- an average 11% -- regardless of agency size. In about half the job positions, growth in raises is more optimistic, the larger the agency.

Base salaries in 1999 are above 1998 projections for all positions except chief financial officer, lead account planner and account exec. The mix of agencies in this annual survey differs each year.

The survey, tallied by Irwin Broh & Associates, a market research company, includes responses from 163 agencies, with the largest portion (65%) from agencies with less than $3.6 million in gross income.

The second-largest group, $3.7 million-$7.5 million gross income, comprises 19% of responses, followed by agencies $7.6 million-$15 million at 9%, and $15 million and over, 7%. This composition of agencies parallels the national mix of agencies by size.

This relatively small sample size challenges statistical reliability when analyzing subsets of data, such by agency size or gender. Because of the small sample, Ad Age only applies what's called a sample tolerance range (for a 95% confidence level) to overall salaries for men and women (see chart on Page S-1).

As an example, the tolerance range (to achieve 95% confidence level) for all media directors is $5,824. But by gender and agency size $3.7 million-$7.5 million gross income the tolerance range is $15,288 either side of the $72,800 average salary for women (based on 21 responses) and $18,900 either side of the $70,000 for men (12 responses).

Midwest respondents account for 33% of the total, most in the survey; the West has the fewest (13%). The East, at 24%, represents the largest share increase for a region. That region formed 19% of responses in the 1998 survey.

The 1999 survey in general follows past compensation trends that show pay increasing with agency size. The account exec is one exception; also several posts at agencies $7.6 million-$15 million in gross income register lower pay than those in the $3.7 million-$7.5 million level -- the former is an agency size not well represented in this survey.

A change in methodology this year produces slight increases in 1998 salaries reported last year. Agencies in previous surveys submitted salary averages by position within the agency. This year, salary for each person is tracked. Last year's results were recalculated to meet the new criteria.

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