Ad salaries are coming down from peak Great Resignation levels

Ad salaries are coming down from the height of the Great Resignation of 2021—when agencies had to significantly raise their offers to compete with tech companies that could afford to pay their talent twice what they could. A former account director for a holding company agency, who was laid off in early March due to financial trimming, said she was making $150,000 a year and is currently being offered salaries ranging between $120,000 and $140,000 a year at comparable agencies. She said she would be more open to taking a small pay cut if the jobs she was applying for were remote, but that’s not the case. She spoke on condition of anonymity to not jeopardize her job prospects. “A lot of these positions are lower pay and coming into the office,” the person said. “And I love going into the office on a hybrid basis but, at least it would be like, ‘OK I can take a pay cut and be remote.’ But it’s everything rolled into one. And it’s consistently happening. It’s not just small agencies, it’s big agencies, it’s holding company agencies, it’s independent agencies.” Also read: Ad business cut 1,000 jobs in February The former account director said she loves agency life and doesn’t want to consider moving to another industry, but the offers are concerning. “It just reinforces what you’re hearing and reading in the news; things are shaky in the economy and in the business world,” she said. The Great Resignation saw burnt-out employees from the 2020 pandemic leaving the industry for a better work-life balance. Tech companies including Meta, Snap and Google were heavily poaching talent from ad agencies, offering to pay them twice the amount agencies could. Agencies had to significantly up their offers to try to retain their talent. Ad Age spoke to nine industry executives, including recruiters and agency CEOs, who said with Big Tech undergoing mass layoffs recently, ad professionals who fled to that industry are now returning to agencies. But opportunities are scarce. Check out the latest Ad Age events and award programs As Ad Age reported earlier, agencies remain woefully understaffed and are running on leaner teams and cutting costs everywhere they can. They’re largely blaming declining client budgets for their inability to properly staff up. On the other hand, some industry executives have also argued that agencies have made their own bed by underbidding to win business and are then unable to staff accounts due to the low fees they’ve promised but can't deliver on. Either way, agencies are not facing the talent shortage they were a year ago. “Agencies have been very public about the inflationary pressure on their salaries,” said Brian Dolan, CEO and founder of industry staffing firm WorkReduce. “We’ve heard recently that they are flush with job applicants after years of having trouble sourcing. Basic economics dictate that they’re going to try to save money.” One independent ad industry recruiter, who also spoke on condition of anonymity to protect his agency relationships, said the majority of creative director roles he handles in New York are offering salaries between $225,000 and $250,000 a year, “with the actual target being $225,000.” A year ago a New York creative director could be hired for $275,000 or more, the recruiter said. Read more: Understaffed media agencies spark 'terrible mess' Layoff cycle continuing Most of the executives interviewed for this story agreed that Great Resignation salary rates were never really sustainable for agencies. “We’re not in the same place as we were last year,” independent industry recruiter Lauren Lotka, founder of talent firm Lotka&Co, said. “Last year, salaries were on the rise. It was great for talent to be able to advocate for themselves and, in a lot of cases, level up to where they should be. There were definitely some people being underpaid. But there was no way that was sustainable.” And with inflationary pressures continuing to cause economic woes, Lotka anticipates more layoffs to come. Walt Disney Co. has begun the first of what is expected to be 7,000 job cuts this week, while Accenture said last week it will cut 19,000 jobs over the next 18 months; these are just two examples of many companies undergoing layoffs recently. “The layoffs cycle is continuing,” Lotka said. “I’m hoping things pick back up in Q2. But we’ll probably see more layoffs before then. It’s a very anxious time.” These economic factors are starting to place the power back into the hands of the employer—a year ago talent held the negotiating power. “I have seen a noticeable back-to-reality level for salaries since they and titles were inflated in the months post-COVID,” said Tony Stanol, president of industry talent firm Global Recruiters of Sarasota. One CEO of an independent ad agency that has offices in New York and San Francisco said the shop has historically had to pay people on the high end of salary rates because of its shop’s locations, but recently has been able to lower offers, though the CEO didn’t specify by how much. “I don’t think there’s a big issue with finding talent right now,” the agency CEO said. “We’ve had that pressure of being at the top end of pay for people and we’re having to slow it down just because it’s harder and harder to run a viable profitable business; clients aren’t raising their rates significantly.” On the part of job candidates, he added: “We’re seeing there’s way more openness, way more gratitude for having a job. Less of ‘I have to get that raise, that bonus, that new title.” Also read: How R/GA shakeups are impacting the agency The agency CEO said he’s hired a lot of boomerang employees—workers who left during the Great Resignation and returned—in the last few months. “A big part of it is there is uncertainty out there and less opportunities for people,” he said, explaining he’s seen the trend of people wanting to leave the business for a better work-life balance settling down. “It’s the classic case of the grass seemed to be greener,” the agency CEO said. Tracking layoffs and budget cuts How brands and agencies are bracing for a recession Click here Cost cutting everywhere Some agencies seem to be trying to get away with hiring one person at a lower rate to cover multiple roles. The former account director said she’s seen such job postings—some blatantly include multiple titles. But even in cases where they don’t explicitly do that, she said they will include an endless list of responsibilities and experience requirements. “That’s the biggest red flag I’m seeing,” she said. “I can read between the lines and see what’s going on. They want a lot of experience, leading this and that. I’ve seen jobs that are asking for three different roles, and you’re underpaying.” Freelance budgets are also taking a hit. Many ad professionals during the Great Resignation opted to go freelance, finding they could, again, make twice as much working for themselves than in full-time agency positions. The independent agency CEO said a lot of friends in the industry who have been freelancing for the past decade are struggling right now. “Everyone is trying to figure out how to make that side of the business work, because freelance is just not something agencies are tapping into as much right now,” he said. One recruiter for a holding company-owned agency said everything is tied to client budgets and, with those still down due to the shaky economy, opportunities everywhere, including freelance budgets, are impacted. “It’s always tied to the client spending,” the recruiter said. “The clients are feeling a fiscal crunch and trying to be more conservative. We’re watching Silicon Valley fall apart." ‘Something’s got to give’ One search consultant who spoke on condition of anonymity said he’s witnessing a power struggle over salaries between agencies and talent that fled the industry. “Tech offered to double agency salaries pretty much, so those people now looking for agency jobs again need to halve their expectations,” the consultant said, noting how many ad professionals who fled to Big Tech have now been laid off. “A lot of the stellar agency talent that left agencies over the last five to six years to work in big tech— Google, Facebook, Twitter, etcetera—are now back job hunting on two-times their previous agency salaries, which agencies cannot pay, so something’s got to give.” The former account director said she’s been wondering if she will eventually have to concede and take a pay cut. “I’m debating if the market value is changing and I’m going to have to say, ‘OK, this is what I’m willing to accept,” she said. Some people are already having to give in. The holding company-owned agency recruiter said she’s had a lot of former tech employees reach out and essentially beg for jobs, which she added is upsetting because it’s people she respects and has worked with for years. “People reach out to me on the daily saying, ‘I’m desperate, I’ll take anything.’ It’s hard,” she said.

Ad salaries are coming down from peak Great Resignation levels

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