Tuesday, 3 February 2009

Ad agencies simply can't afford to train anymore

Comment re: Jan. 30, 09 Ad Age article: Epsilon Survey Finds That Nearly 40% Are Dissatisfied With Applicants for Marketing Jobs

Ad agencies, for better or worse, in the last half of the past century were incubators for a great many of the type of business leaders who were naturally 'hybrid' thinkers, good at both business strategy and at thinking creatively about how to implement strategies. These thought leaders went on to work in the top marketing firms. Since the 90's, however, agencies can no longer afford to train their people the way they did just a decade ago. Back when I was coming up through the agency ranks I was regularly sent to off-site seminars at considerable expense to my employers -- the severe margin reductions that came about following the splitting-off of media departments and the institution of "Purchasing Departments" at client companies has meant that even in-house training (something I've tried to sell into agencies of late) has been largely eliminated.

But there's a related issue at play. An article in the Harvard Business Review back in the winter of '05 pointed out that there is no factor that can be statistically accurately used as a predictor of executive performance other than IQ. People with high IQ 'think outside of the box' by nature, yet high intelligence is distributed in the human population in a bell-curve, so we just don't see as many truly bright bulbs as we'd like walking into job interviews.  (Yes, more recent research indicates that "emotional intelligence" (empathy, etc.) is necessary in addition to high IQ, but if the exec isn't smart to start with...)

With plunging ad agency margins came lower salary averages and a shift in the type of industries that the bulk of the most creative strategic-thinking candidates targeted for their careers (a lot of them went into the financial sector -- something to ponder given the risks that these young turks plunged us all into...). A parallel can be seen in the fact that the majority of doctors were women in Eastern Europe back in the 90's, which surprised me when I went to work in the region, given that there's a male majority of physicians in North America.  Under communism medical professionals were paid on par with all service workers, the more aggressive males went into the only areas where more freedom could be had and more money made: the KGB and politics. There are now more women than men entering the ad business.

The old ad agency model is broken and has yet to be fixed/replaced. Until it is and industry salaries rise, I suspect CMOs will continue to be disappointed with candidates, at least until they start using different screening tools or source from other industries.

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