Steady Growth Begets Optimism for 2006
By David Drury
Editor
While cautious optimism has been the modus operandi for much of the Pacific Northwest economy over the last several years, it seems, heading into 2006, that the emphasis is shifting from the side of caution more clearly to that of optimism.
"Talent is in demand and salaries are rising," said Jessica Gasperini, division director at The Creative Group in Seattle. "Nationally, for example, marketing salaries were on the rise heading into 2005, looking at a two to three percent increase. Now, headed into 2006 we’re looking at a three-and-a-half percent increase."
Media Inc. spoke with leaders in advertising, graphic design, broadcast and the range of media arts industries to establish a regional perspective on the economy, and its effect on hiring and salaries.
Media Inc. also consulted The Creative Group and its findings in the 2006 Salary Guide for this report. The Creative Group specializes in professional staffing across the marketing, advertising, creative, Web and public relations industries, compiling an annual salary guide to complement its services. Visit www.creativegroup.com/salaryguide to view their guide. You can pick up the salary report at your nearest Creative Group office, or call (888) 846-1668 to find the location nearest you.
The Outlook
Are things really better than last year? Respondents from a cross-section of industries were by-and-large more positive than even the numbers dictated.
"We had our best year ever last year and it will be hard to match," said Steve Karakas, partner at Portland ad agency Nonbox. "All the indicators are good as we look forward."
"Our business is up 35 percent over the same period last year," echoed Wally Lloyd, president of graphic design firm GA Creative, Inc. in Bellevue, Washington.
"2005 has turned out to be the best year we’ve seen in the past four in terms of top line revenue and profit," said Ron Elgin, CEO of Seattle ad agency DDB. "At this time, we’re forecasting similar results for 2006."
Even radio, which showed among the most dismal returns a few years ago and feared that ad dollars might be slipping away forever into new media territories, has had something to cheer about in recent months.
"While ’04 was fairly flat, business is much better through ’05," said Monica Cory, executive director of the Portland Area Radio Council. "We have seen radio advertising spending continue to grow, and as a result, most stations have had to hire sales representatives to handle the demand."
New Trends A Welcome Relief
"Yes, overall confidence regarding the economy seems up and hopefully will continue to grow into other categories besides healthcare and tourism, the two busiest for us," said Gary Nolton, owner of Limbo Films in Portland.
In fact, Nolton’s comments reflected a growing trend. In our survey of Northwest media professionals, we found that healthcare ranked at the top of the categories that the agencies, production houses and designers have seen walk through their doors. Gasperini from The Creative Group confirmed that trend.
"Healthcare and biotech industries are a hotbed for advertising agencies and multimedia companies, resulting in some of the region’s biggest gains," she said.
Clients change, but the services they seek change as well.
"Although we’ve seen increases across our complete line of product offerings, the biggest gains have been in the non-traditional areas such as direct, on-line and corporate social responsibility," said DDB’s Ron Elgin.
Client Demands Drive Innovation
Times have been lean for the last few years, and it has apparently forced people to think more efficiently about their publicity and campaign dollars.
"Branding is resurging but in pragmatic, results-oriented ways," said Don Low, a partner at design firm Horton Lantz & Low in Seattle. "We also find that clients are increasingly less resistant to doing business long distance."
But clients are not merely less resistant to doing business in new ways. By all accounts they are actively seeking out fresh angles on reaching their customers, and are, in fact, forcing the media professionals they hire to lead the way.
"From an agency perspective, we are seeing clients become aggressive and they want to seek innovative ways to reach out to their target markets," said Karakas. In markets that are over-saturated with information, Karakas and others seemed to agree that the push is on to find the right combination of outlets, mediums, and positioning to reach customers—and to be the first to do it.
"We see clients’ budgets shifting from traditional collateral to interactive," said Low, "and in many cases it’s broader marketing thinking that clients are looking for. Design skills alone become the entry point for doing business—not the end all. Much like a shower is expected before one goes on a date. This new client need is requiring traditional designers to broaden their skills and traditional design firms to reinvent their capabilities."
More Options for More Clients
The media power is no longer wielded by a select number of big corporations who can afford it. The technology has become more affordable and widespread. Regional and even "mom and pop" operations now have access to a broad array of advertising, marketing, and interactive media options.
"We’re seeing both more new business and more new initiatives from our existing clients," said Eric Anderson, director of agency services at White Horse in Portland. "It’s been especially interesting for us to see how much things have picked up locally. We’re used to drawing on a national client base with comparatively few local ones, but we’ve been approached by more Oregon companies in the last year than ever before."
But there are always drawbacks. At least one Northwest production industry executive was concerned about the fact that with new media technology becoming cheaper and more widely available, the services of professionals are not being used where companies have chosen to bring them in-house or outsource them to less experienced local freelancers.
Hiring vs. Freelancers
"Brick and mortar establishments seem to be utilizing freelancers more and more," said Gasperini. "That often means that they have the projects and, thus, the financial resources to support it. We know that the older, more established companies tend to keep projects indoors when times are tight. As the market gets stronger, they are looking to hire."
It may not be merely that companies have the funds to hire freelancers, but that it is just another aspect of applying efficiencies to the process, even when funds are available. Karakas suggested that the recession may well have tempered aggressive hiring strategies.
"We have a flat headcount from last year," Karakas noted, "but our business model allows for expansion and contraction through our other office and a pool of trusted freelancers. We have the ability to be flexible in headcount as well as in the communications solutions for our clients." The upshot is that companies seem to be making hiring choices based on more factors than just the basic need and funds they have to pay for it. The question, "new-hire or freelance?" is still being asked, but the answer is often more flexible than in the past, and companies seem willing to take on both at once if it fills the need in just the right way. Either way, companies are on the lookout for good talent. The Creative Group identified copywriters, brand managers, and project managers as among the most sought after talent heading into 2006. Web developers with Flash know-how were in great demand a year ago, and still are.
The Search for Seasoned Talent
"The improving economy means it’s somewhat less of a buyer’s market for talent than it was even a year ago," said Eric Anderson, director of agency services at Portland ad agency and creative house White Horse.
"But at the same time, each year that goes by means the interactive industry is maturing, and we’re finding more seasoned talent available, especially in project management."
"Our biggest challenge right now is identifying and hiring the right people," said DDB’s Ron Elgin. "A few years ago our industry lost much of its intellectual capital to the dot-commers. Even with the subsequent downturn, we’ve yet to get back to where we began. Although the talent pool now appears to be growing, we continue to be very demanding and seek only the top-tier creative people for every department across all our disciplines."
Spokane ad agency WhiteRunkle employs 45 people, and CEO Ed. Runkle thinks that number is going to remain there for a while, in spite of the fact that the agency has grown for 16 years running. "We’re making adjustments as the market requires it," Runkle said, which means the company is interested in making smarter, more efficient hiring decisions based on more than just the numbers.
Don Low reflected a seemingly very different policy, while leaning on the same standard of market demand.
"We are hiring all of the time, even if we don’t have the position open," he said. "It’s not reckless or a build-it-and-they-will-come mentality, but we have to have people in place to respond to opportunity. If a client asks us if we have the ‘band-width’ to handle a new project, chances are we’re understaffed."
Pay, Perks, and Packages
Some say that when it comes to salaries and perks, working in the Pacific Northwest is the greatest perk of all. It remains, as always, an attractive destination for a media professional looking to relocate. And it doesn’t hurt to know that The Creative Group found that Seattle charts 15 percent above the national salary average heading into 2006, up from 13 percent a year ago. Portland still stands right at or slightly below the national average.
"The Northwest continues to show steady growth," Gasperini said. "We’re not seeing the peaks and valleys here."
But what are Northwest companies doing in regard to offering employees other reasons to stay?
Most referred to their competitive salaries, benefits and perks. Annual pay raises are the norm. Some utilize profit sharing.
Monica Cory, of the Portland Area Radio Council, spoke to the perks of working in radio.
"At most stations, starting salary packages have become more competitive with other industries in the past few years in an effort to attract better qualified sellers. One of our station groups runs an eight-month paid training program for sales associates, teaching associates every aspect of the station before they ever begin meeting alone with clients. It’s a great launching pad for sales success." Cory also pointed to the entertainment perks in radio as being among the best.
But consistently, company leaders spoke to the importance of creating an enjoyable work environment. "Money is always important, but countless surveys show it is only one of the determinates in job satisfaction," said Ron Elgin of DDB. "We always try to pay fairly, but equally important is that we strive to provide the very best work place experience possible. In fact, DDB requires us to encourage creative adventure and freedom of thought."
Now, more than ever before, money/salary/profit sharing/bonus is not as important to employees as a good place to work," added Don Low. This is probably a larger commentary on the state of the market as shifting in the balance toward the employee.
"You have to bring balance and constant improvement through localized ‘tweaks’ and realignments," said Glenn Scott, a VP at Portland design company Opus:creative. "The other critical element in this recipe is that the answers are all around you... You just have to stop and listen ... listen to your teammates, your interviewees, industry trends, etc. They will tell you everything you need to know."
Challenges
While growth is expected, it is not guaranteed. With new technologies and new business strategies come new hurdles. For each company, the hurdles are unique.
Scott pointed out that while talented freelancers are joining the salaried workforce, it is creating a new difficulty. "Most of them think that their high hourly rates should translate directly into a salary that most bottom lines can’t support," he said. "A similar compensation trend seems to be emerging from the ‘staffers’ we are talking with as well. The trend seems to be supporting a higher salary range for associate level positions. The days of lower salaries in this bracket, in trade for training and experience, are quickly fading away."
Talking money with clients is another issue.
"Our industry has to get increasingly more comfortable talking about money issues – presenting budgets, scope changes, budget updates," said Low. "I fear we, as an industry, are still leaving too much money on the table due to client fear and lack of attention to detail."
"We have seen increased sales and board flow, and general budget levels have inched upward a bit. All positive trends, but there are still many concepts put in front of my producers that are under-funded and we’d hope that improves," said Gary Nolton of Limbo.
Anderson spoke to the vulnerability of companies leaning on new technologies.
"In the interactive space, a certain amount of instability and competitive noise will be the norm for the foreseeable future," he said. "If you can roll with that, though, there’s plenty of cause for optimism as overall share of marketing budget continues to shift toward online."
Optimism remained the key ingredient for most.
"If you don’t maintain an optimistic view, you should not get out of bed in the morning," said Scott. " The ship follows where the bow points. The road is always long. You just have to take the journey one step at a time and know that as long as you keep pointing in the right direction, you are making progress."
