Salary Benchmarks: Not a good agency start

November 11, 2013  |  Harry Teitelbaum  |  Comments

Starting salaries in agencies are so low, it’s no wonder bright young business people avoid agency life

Young people working in agencies tend to move around a lot in the early years of their careers. They do so for many reasons, but the most common trigger is the search for a financial bump.

Something firms need to remember is that a higher starting salary can be a great retention tool. It would save on the costs of recruitment and training and agencies wouldn’t see the revolving door of talent they see now. Winning a piece of business is the hard part, but harder still is keeping the people who are assigned to it.

I once asked a class of college students in marketing what their salary expectations would be upon graduating. Slowly, a few hands went up: 15, 18, 20 were the answers.

I was puzzled before I figured out they were referring to their salaries on an hourly basis. So I asked them, “What are your annual salary expectations?” Blank looks all around; they had never thought in those terms.

Many also don’t know what it costs to live. When a graduate gets offered a starting salary of $32,000 to be a junior media planner, it sounds absolutely fantastic until they move out of their homes and start paying rent, car payments and insurance.

If you were then to take that starting salary and work out what they would earn hourly if accounting for all the overtime they are expected to do in their first few years, the salary would more resemble a retail minimum wage. Compare that to banking. If a top business student from Western or Queen’s is offered a starting salary of $75,000 from one of Canada’s big banks and a signing bonus of $10,000, why would he or she even consider being a junior account executive at an average starting salary of $36,000?

Sure, once you get through the first few years and you are making a contribution to your company your salary will rise at a pace faster than most other occupations, but that’s only if those employees stick it out without jumping ship for a lower-stress and better-paid sales or client-side role.

I’m not sure why this happens in advertising.

Harry Teitelbaum

Maybe we could blame Darren Stevens or Don Draper for glorifying it. Maybe it’s the procurement guys who have whittled down agency compensation to an hourly rate for services. Agencies don’t always win business because they’ve racked up the most awards. Often the winners are the ones who just do it cheaper. Maybe agencies think of it as a training period and an extension of their education, thus an intern’s wage. Maybe it’s because it’s always been that way. My first agency job paid $15,000 and when you adjust for inflation it’s the same as it is today.

The gap between client and agency salaries continues to grow, so there could be a future that would make agencies irrelevant. Clients will just have better resources in-house.

Harry Teitelbaum is president of InterCom Search Inc. in Toronto.

This story originally appeared as “Not A Good Start” in Salary Benchmarks, Marketing‘s annual remuneration study in its Nov. 11 issue. It’s available now on your iPad and on newsstands. The issue also includes an investigation into automated digital ad buying and a look at how PR agencies are evolving in 2013.

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