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November 14, 2007
Striking it Rich, or At Least Striking it Profitable

Being a creative, I’m curiously following the news about current Hollywood writers’ strike. I’m simply amazed that this particular group of creative people has the actual power to shut down production on nearly every major television program.

A lot of the dispute, naturally, is related to issues of money. The rise of new media outlets is conflicting with old pay methods. The advertising industry is facing many of the same issues. Every ad agency has a different method of dealing with finance, but it all comes down to one basic question:

Are agencies, and in turn their people, getting paid what they’re worth?

The stock answer would be “no,” or rather, “no, you dipshit, of course not,” but the reality is more complex than that.

When it comes right down to it, every ad agency is a factory with an assembly line that produces a different product every time. We don’t truly how much each assignment will cost to make and how much we should ideally charge for it.

Agency accounting and revenue is one of those areas that management doesn’t want rank-and-file employees to go poking around in.

I remember working at an agency when they discovered a former employee was cooking the books, making it look like the agency was taking in more money than it did. So to remedy the shortfall, a 10% pay cut was instituted for all employees. At the meeting to announce this, when one person brought up why the revenue was short, the CEO said, “Well, we don’t charge enough for our services.” His was the name on the door. So whose fucking fault was that?

Or perhaps you’re at an agency that has an efficient job tracking and billing system. Does your agency live and die by accurate timesheets? Great. You’re screwed, no matter what you do. I’ve seen it myself.

In the past, I’ve been told to put more hours towards a job I didn’t work on so the agency could make money. And I’ve been told to decrease the number of hours on I put towards a job on my timesheet so the agency wouldn’t lose money. Which in reality makes absolutely no sense. Because either way, whether the agency makes or loses money on a certain job on paper, I’m a fixed cost. My salary stays the same.

If you spend extra hours working to make an ad great because you’re not satisfied with it, in most agencies that’ll be looked at negatively. Because the more hours you work on a job that’s over what was estimated, the more it looks like the agency is losing money on the job. Creative quality? No one generally gives a fuck about that, because that usually costs more money. Try telling the agency CFO about the merits of overcharging a client for an ad that you rewrote 5 times because you or your Creative Director weren’t happy with it.

Since there’s no legitimate quantifiable method to determine the financial impact of a brand’s ad campaign, performance-based models don’t work so well. Because we simply don’t know how well our work works. So there’s no real incentive to do effective work in advertising. The creatives who work for ad agencies don’t get paid based on a campaign’s effectiveness or longevity. To most hiring managers evaluating creative talent, an award for an ad that never ran is of a higher value than an effective ad campaign that ran for years. I’ve created ads, taglines, and websites were used for years—long after I was gone from the agencies I did them for. But that is of little comfort to me. Advertising creatives don’t get residuals or royalties; hell, most of the time we’re never even thanked.

It’s no surprise that the entire industry is in a downward revenue spiral. Clients are squeezing their budgets in an increasing WalMartian fashion, and squeezing their vendors in the process. There’s not much profit to be made slapping a viral video together and posting it on YouTube or seeding it on blogs. We once made money on media and production markups—and those are dwindling.

We can, at least fleetingly, look to the Writers’ Guild for some signal of what’s to come in advertising. If they can’t improve their fortune in the new media age, there’s little hope for ad agencies to make more money doing more work in the interactive space. And big, brand-building ideas that have lots of legs or touchpoints or integrated media components or whatever won’t be worth much.

If we don’t fix the compensation issues our industry is facing, the picket line won’t be our fate. The unemployment line will.

A few years ago, with a looming baseball strike, I wondered What if advertising people had a union?. Take a look, it's quite timely again.

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Since 2002, Dan Goldgeier has been writing the most provocative advertising columns about advertising and marketing -- over 170 of them, covering every related topic you can think of. Now based in Seattle, Dan is a copywriter and ad school graduate who's worked at shops big and small. 

Visit his copywriting websitesee his LinkedIn profile or follow him on Twitter.

And please, buy his book for 99 cents.


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