The industry searches inward for answers, continuing a recession-prompted re-engineering of corporate structures. Job descriptions change from top to bottom and so does compensation.
Most advertisers and agencies are in various phases of this plot line. The drama is played out in current compensation trends.
The compensation microcosm shows average salaries for this year plumb with 1993 levels in the nation's corporate marketing departments. Among ad agencies, average salaries are either flat or slipping among key personnel, mid-management and up.
Overall compensation also continues to shift to forms of pay other than salary-bonuses and awards-that tie performance to corporate returns, according to a survey done for Advertising Age by Altschuler, Melvoin & Glasser.
While staffing levels indeed are rising, particularly among smaller agencies, following downsizing, issues of paternalism raise their ugly head (see related stories in this Special Report). Men are pulling from 5% to 20% more base pay than women in similar posts, says the study. The ascendancy of the East is documented in higher salary levels for agency and marketing personnel.
Most executives-male and female, regionalism aside-can expect base pay growth in 1995 from 4% to 9% in many agency/marketing positions.
A swing in survey responses this year to smaller companies no doubt had some impact on trends in overall salary movement for both agencies and marketers-about 10% more returns came from smaller companies this year than last.
That swing, probably amounting to a few percentage points, does not diminish the impact of the forces keeping a lid on pay.
Layoffs during the recession culled many middle-management executives from marketer and agency rolls. Their workload was either spread around to others or they were replaced by lower-salaried staffers. This eliminated some high salaries from the pool.
"There's no free ride anymore. All positions that could have been eliminated have been. Any replacement makes a lower salary," says a human resources executive from a leading U.S. ad agency.
If that's true, then the growth in employment-increasing in 53% of the agencies surveyed this year -brought in a bank of lower salaries.
Among seven agency positions in the survey-CEO, creative director, art director, chief copywriter, media director, senior account exec and account exec-only the account exec drew more base pay in 1994 than 1993, and that was up about $2,000.
The survey drew responses from 550 ad agencies.
The marketer data came from 250 survey responses reviewing salaries of the VP-marketing, VP-product manager, VP-brand manager and VP-advertising. The majority of companies had less than $49 million in sales, followed closely by companies with greater than $1 billion in sales.
Given the flat to declining average salaries at agencies, a gap is emerging between the top echelons at agencies and marketers.
The 1994 results show the four marketing positions range in salary from $96,000 for VP-brand manager to $120,000 for VP-marketing. The agency CEOs' $123,160 average is higher than all salaries surveyed, but the agency's second-highest salary-a $85,037 average for creative director-trails all marketing tiers.
Agency executives would best hitch a star with agencies of $3.7 million-$7.5 million in gross income (i.e., $25 million to $50 million in billings) if base salary increases for 1995 is the goal. Growth in four executive levels is projected to outstrip growth among all agencies.
Growth projections on the marketer's side were not favored by company size.
Growth isn't the province of all, though. Some 32% of agencies say the CEO won't get a base pay boost in 1995; 25% said so last year. The fact that industry increasingly is placing top executives on a 15-to-24-month schedule for salary increases could be stimulating these numbers.
A fifth of the agencies surveyed by AM&G say the creative director won't see a raise. The likelihood of the remaining posts not getting a pay boost rests with about 15% of the surveyed.
By contrast, salary hikes in 1995 for companies' VP-marketing and VP-advertising are not expected from 16% and 13%, respectively.
These two positions, however, are drawing increasing amounts of compensation from bonuses and performance-related incentives (see story on Page S-10). The bonus for VP-marketing as a percentage of base pay is 26%, nearly the same as last year; for the VP-advertising it's 22%, up from 17% a year earlier. In raw numbers, that's an average $31,000 bonus for VP-marketing and $23,700 for VP-advertising.
Bonus pay is rising dramatically on the agency side, where percentages range from the CEO's 31% to the art director's 13%, representing dollar values of $38,200 and $14,900. In 1993, all but the top two spots collected bonuses below 10% of base pay.
Awards as compensation are offered by about a third of all agencies. About 10% of all agencies provide one-time awards to VP and manager levels, with a third of these providing it for the first time in 1993-'94.
Stock ownership is made available to senior executives at 14 of the agencies, with about the same number offering "gain sharing" awards.
On the marketers' side, 15.5% of the companies make one-time awards available to VP and manager-level employees, with only a few of these awards instituted for the first time in '93-'94.
Stock ownership is offered by a quarter of the companies to this employee level, and 15.9% make awards available.
Salary averages bear the particularly dark theme illuminated in the cover story: Men earn more than the average; women, considerably less. For example, male creative directors average $86,900, and female CDs $78,800. Some 77% of the CD salaries reported among agencies were for men. Indeed, males hold the majority of executive positions except for account exec and media director, held 64% and 71% by women.
Continuing the scenario: Clients, media and agencies "flatten" their structures. Less people run the complicated business. High-paid CEOs scrutinize daily the brands under their purview and delegate a heavy workload to junior staffers whose pay is increasingly tied to profit-and-loss statements.
It's a brave new world.