Agencies are preparing for a bloodbath as the best of their talent is targeted to jump ship. We speak to the headhunters doing the poaching and the agency bosses keen to keep their greatest assets.
Media agency churn could jump as high as 40% this year, according to agency bosses who believe the recent high-profile pitches spell staffing “turmoil” for the market.
Within the past six months alone the media accounts of high profile and big-spending brands MasterCard, Woolworths, Coke, Lion and Microsoft, as well as the Federal Government have all been in play.
“When account moves are announced in the press there is usually one to two months of transition before they start to move. I feel like quarter three could be a massive headache for the market,” Maxus chief executive Jonathan Chadwick said.
Combined, these businesses spent a whopping $446m on main media during the 2013 calendar year according to Nielsen.
At least 5% of the workforce will need to change in the space of six months.
The moves are set to put extra stress on the industry’s already high churn rate which – according to reports – hit 33.5% in 2013 up from 2012’s 30.4%.
“At least 5% of the workforce will need to change in the space of six months,” Chadwick told B&T.
“Given the market has a turnover of almost 35% already that means you might have the potential for it to go up to 40%.”
Chadwick’s 5% figure is based on the fact that there are approximately 3,043 people working in media agencies in Australia – about 700 of those are at non-Media Federation of Australia (MFA) member agencies including Dentsu Aegis – and that approximately 150 people will be needed to staff the accounts.
However, agency bosses believe the sizeable Woolworths and Federal Government accounts would need roughly 40 staff each so the 5% figure has the potential to be much higher.
OMD’s people and development director Martin Cowie agreed that churn is “clearly going to be more significant” this year.
The impact is going to spill beyond agency walls with marketers likely to feel the shift.
“I think most marketers have been affected by regularly changing media agency staff at some point throughout their career,” Anthony Xydis, national marketing director for Australian Radio Network (ARN) said.
“A great agency partnership requires strong alignment and stability. There needs to be a degree of trust that you’re dealing with experts and due to time and internal pressures, you can’t constantly focus on this specific issue.
“However, it does become more heightened when you’re working on specific campaign deliverables and/or are in the planning and/or implementation stages.”
Mitchells’ managing director Adrian Roeling agrees but can see a silver lining amongst the impending changes.
“All of these pitches in market do theoretically provide a threat with increased churn, but I think you have to view all of this as an opportunity for your agency to learn and grow. I see pitches as positive, new energy, staff challenging themselves and agencies evolving,” Roeling said.
If agencies haven’t thought about how they are making their people sticky to their operations…well in advance of this they are probably likely to be running a company that is going to be a feeding ground
Views on which level of media agencies will be impacted the most by churn are divided.
Some believe it is those with anywhere between three and seven years experience and others feel the impact will be felt at more senior levels.
“People with five-to-seven years experience and those who are solid and sought after account managers, the ones who can bring strategy to life, they are going to be the people who agencies are really looking for. They are the hardest people to hold onto as well,” one agency boss said.
However, Cowie believes movement at the pointy end is going to be more visible.
“With these account moves there are clearly going to be more senior people moving then there would be normally because these accounts need to have senior people staffing them and running them.”
How can agencies protect their staff from agencies on the prowl?
“If agencies haven’t thought about how they are making their people sticky to their operations…well in advance of this they are probably likely to be running a company that is going to be a feeding ground for where these accounts have gone,” Cowie said.
Frequently updated career plans, training entitlements and the chance to work overseas are some of the tactics agencies are using to keep their businesses ‘sticky’ for their more junior staff.
“We need to counteract this feeling that this generation has that it is counterproductive not to move,” Cowie said.
“It is up to us to create environments that empower them to turn down the increased salary that is thrown at them by other agencies,” Cowie added.
Salary is one major factor that keeps the lower-ranks shaky with “people jumping in some instances to have another $1000 thrown at them”.
When juniors are starting out in the industry they are paid peanuts compared to the hours they are expected to put in, according to Zrinka Lovrencic, the managing director of consulting and training firm Great Place To Work.
The average wage for first years in local media agencies was$47,408 last year, according to research by the firm (for more click on the infographic below).
Combine this with the fact that many newbies are seduced by the glamorous aura that surrounds the statement ‘I work in media’ and you end up with a rank full of disgruntled juniors.
“There are a lot of people who want to go into media not really understanding what it is about because it sounds very lucrative and attractive. It’s like when Sex and the City came out and everyone wanted to join the PR industry because of Samantha Jones,” Lovrencic said.
Salaries have not shifted to meet the level of work now demanded because clients are not compensating agencies enough, according to Carolyn Maloney, founder of talent and people consultancy MAD People.
“The fee structure is just putting so much pressure on agencies now and clients want more. Procurement people are now becoming much more involved in most pitches and they are really putting the microscope on fees that agencies are charging,” she said.
“It is a big bow to compare, but law firms can charge whatever they want to charge, consultancy can charge whatever they want. But media firms have never been able to because you know how much a spot costs.
“A quest for the whole industry should be to get further aligned with the CEOs and put value to what they add to the business.”
Beefing up total salary packages with training and travel entitlements along with industry exposure is one way to make your business more attractive.
“All of that adds up and I think we have to get better as an industry of packaging up the total offer and not just thinking about the money,” Chadwick said.
The ebb and flow of business in the media industry also keeps churn high. “We are victims of account moves and contract durations,” Chadwick argued.
But Maloney disagreed. “No I don’t think that has anything to do with it,” she said, adding that advertising is also a pitch-driven business.
“There is much more turn over in the media industry because it is younger. Creative agencies have a much more mature age bracket.” At OMD the average age is 28 and Great Places To Work found that the bulk of media shop staff were between 26 and 34 years in 2013.
“Perhaps we work certain levels a bit too hard in the early stages of their career and after the five to seven year mark they revive their career and we have a bit of a drop out of people leaving the industry,” Chadwick mused.
Headhunter Chantal Manning-Knight from Cloak & Dagger says the stress of continually pitching for business means staff are putting in longer hours.
“Staff need to be acknowledged, if not rewarded, for that kind of contribution and made to feel like their contribution counts and is incredibly valued.”
Make your culture work for you
Dangling sexy perks such as work-sponsored weekly drinks, office breakfasts and subsidised ski-trips in front of over-worked mid-20 something’s just isn’t enough of a reward these days.
“This generation particularly wants to know what you are going to do for them in terms of their career, everyone will give them free drinks,” Cowie said.
Mitchells’ Roeling added: “If you are trying to drive culture through extrinsic motivators then you are pushing uphill. It is about intrinsic motivation – intrinsic motivation builds great culture.”
Over the past five years there has been a shift in focus towards more investment in personal development and it has paid off for the industry.
“There has been quite a positive shift in peoples’ perception of working in the industry and that is because of all the work agencies and the MFA have been doing around making sure this industry is a good place to work,” Sophie Madden, chief executive of the MFA, said.
In fact media-land isn’t far behind the likes of Google when it comes to its focus on workplace culture.
“The only industry that does a better job than media in culture is IT and that is because they have such a large requirement for intake and a very, very shallow pool of valuable employees. They really have to focus on attraction and retention more than any other industry,” Lovrencic said.
“In terms of the work that our industry does in culture and people management, having seen it in other parts of the world, Australia does it very very well and we don’t really recognise that,” Chadwick added.
But the industry still has some work to do.
An inter-agency churn rate of over 30% is just not acceptable, Maloney argued.
“It would be amazing if the industry could say 25% was the maximum acceptable figure, a quarter of the agency a year moving – that is acceptable. Not a third of the agency.”
