It’s clear the industry continues to attract brilliant young talent.
But finding and retaining talent while keeping staff costs in check remains one of the toughest challenges for agencies. According to Kingston Smith W1’s analysis of filed accounts, a failure to negotiate appropriate client fees and manage staff costs means agency margins are still well behind the recommended target of 15 per cent.
Over the past seven years, agency salary bills have just gone up and up as companies battle for a too-small pool of decent talent; the result has been a rise in costs that has outrun revenue growth. The good news – unless you are a hungry wage-monster – is that the latest figures suggest creative agencies are starting to get a (limp) grip on staff costs: the number of staff employed across the top 50 agencies increased by 6 per cent but staff costs rose only 3 per cent.
A glance at the tally of advertising’s highest salaries suggests cost control isn’t coming from cuts at the top. We can only guess whose salaries these are as the individuals aren’t named, but the highest earner at The &Partnership saw their salary rise 26 per cent to £1.04 million, at Abbott Mead Vickers BBDO the biggest buck earner took home a 40 per cent rise to bring their salary to £797,000, while over at Grey London the top dog got a 47 per cent uplift to £649,000. Well done, all.
Better control of salary costs at a time when staff numbers are rising (and the bosses are getting more generous handouts) suggests that the make-up of the agency staff base is changing, with an increase in the number of junior executives who, it seems, are being asked to shoulder responsibility much earlier in their careers. Anecdotal evidence suggests an agency grad can expect to be thrown in at the deep end these days – and spend their career there.
What’s clear is that agencies will have to find better ways to incentivise their hard-working young talent – ways that aren’t (always) about handsome pay rises and bonus schemes. The agencies that crack this will be the ones that thrive over the next few years.
You will have noticed that this week’s issue comes with our annual A List of industry leaders. If there’s a common thread knitting together the individuals in our book, it’s that they passionately care about what they do – love it, even – and they enjoy doing it with the people they are doing it with. Create a culture like that, combining passion with a (higher) purpose and lots of fun, and you won’t need sky-high salaries to keep the right people.