Ad Agencies were once the darling of B-schools graduates. But the scenario is changed today. Now, FMCG companies, financial services and MNCs are offering stratospheric salaries, which the agencies are finding difficult to match. Agencies have to look at second-rung and lower B-schools; for instance, Chetana, MET and Somaiya in Mumbai.
And quite a few advertising professionals admit that scraping the bottom of the barrel won't get them the right people. Agencies offer anything between Rs 3.5-4.5 lakh per annum to management trainees, which pales in comparison to salaries offered by financial services companies.
Other communication institutes like Northpoint, set up by Lintas, and AICAR, do have takers in the industry, but have to go a long way to establish themselves. It's no secret that the advertising industry just can't attract top-notch B-school graduates anymore, and they certainly need them.
Says Kalpana Rao, talent director, Ogilvy & Mather, “Agencies do need MBAs, as they're the kind of people who can work with and understand clients.” According to Anand Halve, co-founder, Chlorophyll, “There are a few high-paying sectors that have emerged, but it was the decline of margins in the old commission-driven model which led to a widening in the salary difference.”
While advertising has emerged out of the trough in the early 2000s, the business model still remains essentially unchanged, relying more on commission than on retainerships. Margins today are well below 15%, a figure that held for most of the 90s, and while they've been steadily climbing in the last couple of years, margins are unlikely to reach those heights anytime soon.
Says Mr Kamath, “Unless their business and remuneration models change, agencies can't afford to match salaries offered to the top B-school graduates.” Mr Kamath suggests that clients should move towards remuneration for creating brands and preferences rather than just for services.
Even as margins got squeezed in the late 90s, agencies cut back costs on training rather than re-look at the business altogether. This led to another problem that agencies didn't reckon with - discontent at the mid-level. Agencies began losing people in services and planning to their clients, a trend that shows no signs of stopping even now.
The Anil Dhirubhai Ambani Group alone has hired four top-level professionals from the advertising industry, including Ajay Kakar who quit as CEO, Ogilvy PR and Sandip Tarkas, then-CEO, media direction, RK Swamy-BBDO's media unit. Most agencies are now trying to turn this threat into opportunity, by giving greater responsibility to the young people joining the industry in client servicing and planning.
There is also some movement at the agency-level. Mudra, for instance, has drawn up a program to identify the top 25% of its employees and chart specific career plans for these individuals, and also working in tandem with MICA for fresh graduates.
Says Preet Bedi, President, Rediffusion DY&R, “We've put in place a flat structure, and our planners can work on a wide rage of clients or have the option to specialise.” Adds Colvyn Harris, CEO, JWT, “We ensure that everyone in the agency gets at least four days of training in a year, and our best performers get mentorships abroad.”
However, at an industry-level, there's very little collaborative effort to get the best people into an industry which once ruled the roost at B-schools.