New services, clients boost agency hiring

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Expansion of existing business remains the primary reason agencies plan to staff up in 2000, claiming more than two-thirds of respondents, about equal to last year.

Agency mergers are the primary means of head count growth among 8% of agencies, more than double last year's percentage. The larger the agency the tighter the relationship between employment growth and mergers: some 20% of agencies $15.1 million-plus in gross income credit mergers for their employment growth.

New clients and expansion of new services are primary vehicles for growth among 8% and 27%, respectively, of agencies. The survey question urges agencies to mark only one "primary" source of new employment; there is little doubt several of these apply to many.

Among new services, interactive agencies are staffing up and creating a seller's market for middle layers of account management.

"We're finding a dearth of agency middle-management people, and so are headhunters we've talked with," says Sara Jones, chief financial officer, Sawyer Riley Compton, Atlanta, who contends this segment of agency employment is moving en masse into interactive areas.

INTERACTIVE VOID

Interactive agencies began by hiring techies and soon found they needed people with marketing backgrounds. Account managers and supervisors are being lured to those posts, Ms. Jones says. "There's now a void at this level among agencies in Atlanta," she says.

Regardless where the growth comes from, only 1.2% of agencies predict a drop in agency employment; 72.2%, an increase, and 26.5%, no change.

The survey says 31.3% of participating agencies presently comprise the smallest employment rung (1 to 10). But only 23.3% of the entire agency base expects to be at that level in 2000, meaning a lot of those agencies anticipate reaching the next employment level (11-30). This level captures 34.4% of agencies in 1999, while 38.7% of all survey agencies predict employment at this level in 2000. The larger the agency, the less likely it will advance in head count to the next category.

Apart from the survey, agency employment definitely is on the upswing. Data reported by the Bureau of Labor Statistics indicates ad employment is growing at a 4.7% pace over last year.

Among agency departments, account management employment is rising at 68% of agencies responding to the survey question, creative departments are growing at 65% of agencies, and media departments, 44%.

Strongest growth in the creative department is expected among agencies with annual gross income of more than $15 million. Increased staffing in media and account services is more pronounced among agencies with gross income of $7.6 million to $15 million.

GREATEST CHALLENGE

"Staffing creative and account planning is our biggest challenge," says Mark Benner, director of communications at Campbell-Ewald, Warren, Mich., "and we're making extensive use of headhunters to fill those positions."

Campbell-Ewald's hiring is challenged by the number of available and qualified people in those areas as well as the sheer volume needed. The agency has 300 more employees this year than last year. Driving those numbers are eight new account wins, including the $200 million-plus regional business for General Motor Corp.'s Chevrolet division that has led to five new regional offices.

C-E's digital group, tdah!, also is stretched to find the entry and mid-level people it needs.

"Two years ago we had a couple of Web sites in our portfolio, today we have 40," Mr. Benner says.

Respondents in the Midwest and South are more optimistic than other regions about growth for 2000. In the Midwest, some 78% of agencies predict an increase in employment in 2000 and none expect a decrease.

HIGH SALARIES AS BAIT

The anticipated growth in the Midwest could mean slightly higher salaries for the region, lowest among the four regions in the survey.

"To attract talent from higher-paying regions such as the East Coast, we may need to raise the [salary] bar slightly," says Steve Renier, human resources manager at Martin/Williams, Minneapolis.

He also says the location of Minneapolis and its lifestyle are estimable intangibles in hiring. These quality-of-life issues can bridge pay gaps between the regions.

Location is cited as a Campbell-Ewald draw. "A lot of people from the coasts come back to Michigan because of roots, lifestyle considerations, or to work with a large client like Chevrolet," says Mr. Benner.

ECONOMY'S STIMULUS

Tangibles and intangibles aside, the economy is stimulating agency salary levels.

"In today's market, most people who start looking to change jobs think they're 5% to 10% underpaid. When they really get into the process they discover they're 20% to 30% underpaid," says Ms. Jones.

The higher salaries are a function of a strong economy, says an executive at Dublin, Ohio-based agency Fahlgren, noting the job seekers he sees are being choosy and have more pay leverage.

"The market is full of people looking to improve themselves, gain experience and get to the next level," he says.

"They're usually asking for 20% more than they're currently making. They're also looking more closely at the benefits package, particularly healthcare," he says.

Agencies in the East are most optimistic about increases at the client service level (71.4%), and least bullish among the regions about increases in account management (61.1%). The East has the widest spread of client service to administrative personnel of nearly 3.7 to 1, probably the result of larger agencies.

EAST HEADS B-TO-B COUNT

That ratio actually could be higher for traditional agencies, because the East has a disproportionately large number of business-to-business agencies in the agency survey mix. Business-to-business generally takes lower ratios than traditional agencies. Some 32% of the agency mix in the East is b-to-b, second to traditional agencies at 54%. The only other region with a sizable b-to-b count is the Midwest, at 21%.

Overall ratio of client service employees to administrative support personnel remains 3-to-1 in 1999.

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