Ad Agencies' Biggest Neglect: Their People

By

Ron Owens

An oft-quoted remark goes, “The assets of an advertising agency goes down in the elevator every night.” There’s no doubt our business depends on its people. Agencies hold no exclusive patents, nor do they have any technological advantages over competitors. The best way to outperform the agency “down the street” is to have better people than it does and take good care of them.

It should follow then that we are excellent motivators of employees who, in turn, are satisfied, dedicated and loyal. Unfortunately, this is not always the case. We are negligent and deficient in attracting, motivating and keeping good people.

First, turnover, our industry does not condemn it, but simply considers it “part of the game”. And why not? An American Association of Advertising Agencies (4A’s) study of member agencies showed an estimated 22% annual turnover. One executive search firm estimates the current annual turnover rate at 30%. High turnover is bad for morale and stability and often breeds fear and uncertainty. In fact, it’s an enigma to clients, expensive and is often perceived as counterproductive.

How good are the people in today’s agencies? The 4A’s claim that the number of agency employees per million dollars in billings has dropped virtually every year from 12 employees in the 1990’s versus less than one employee per million today. Obviously, inflation must be considered when evaluating these figures. But defenders of this dramatic reduction also claim that while there are fewer people, they are of a higher caliber, i.e., smart, computer savvy, and technologically proficient.

This is a convenient defense, but I don’t think it holds up. In a study conducted by the Association of National Advertisers (ANA) on client-agency relationships, several respondents said: “We are disappointed in people at the account management and account supervision levels. All they do is take you to lunch.” Another stated: “Agencies are having trouble getting account managers of sufficient caliber to work opposite, ‘hand-in-glove’, with the brand managers who are paid more.”

Account changes in the 1990’s resulted in a $1.4 billion in advertising billings changing hands, doubling that of five years ago. We blame the switches on client management changes, or a client who feels that a fresh agency may be able to “pull a rabbit out of a hat.” Rarely is it suggested that perhaps the right agency people weren’t on the account or that the agency just didn’t deliver.

There would be fewer account changes if agencies regularly ask themselves these questions: 1. Do we have the most talented people on the account? 2. Are we providing continuity of personnel? 3. Do our people know and understand the client’s business? 4. Do they initiate or just respond? 5. Are our people motivated? 6. Do we produce the best possible service? 7. Are our people respected by the client, particularly client management?

If you are a small or medium-size agency with relatively low turnover, why should you be concerned? If you are going to grow, remain competitive and increasingly profitable, you’ll need talented, highly skilled, dedicated people. If you’re a large agency, the bigger you get, the more difficult it may be to educate, motivate and energize your people. And all those growing agencies may be offering your good people a bigger piece of the action and compensate them accordingly.

How can you make them want to resist these suitors? The best way to attract - and - retain good people is to be known as “an absolutely great place to work, thrive and realize your potential”. As my long-time friend and business associate, Doug Laughlin, still says, “hire good people, give them the tools / resources to do their jobs, pay them well, and get the hell out of the way and let them do their jobs”.

Ron Owens is a Past President of the Ad Club of Metropolitan Washington, former Governor of the 4A’s; Lt Governor of the American Advertising Federation (AAF); member of the Association of National Advertisers (ANA); VP, Bozell Worldwide; former Director, Advertising, Pitney Bowes, Inc.; former VP, Diversity & Inclusion, TMP Worldwide; co-founder & principal of LMO Advertising and President, Ron Owens & Associates, Inc., a consultancy specializing in market development, advertising and diversity & inclusion.