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Friday, Jun 24, 2022

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There are all kinds of economic barometers the Dow averages, consumer spending, gross domestic product among them but one of the most under-utilized is ad spending.

When companies are doing well, their marketing budgets get bigger, and when they’re hurting, advertising is one of the first things to go. Which is why the current jittery state of the financial markets is making some people on Madison Avenue (and Wilshire Boulevard) a little edgy.

“A lot of clients think they could stop advertising for a while (in the face of tough economic times), and there wouldn’t be any immediate effect,” said Jerry Gibbons, executive vice president with the American Advertising Agencies Association and head of its Western office in San Francisco. “When people get nervous, they stop advertising.”

In hard times, corporations look for efficiencies. Advertisers might change their contracts with agencies. They also can opt to base agency compensation on a campaign’s performance.

Nobody in advertising is ready to panic over the falling Dow. After all, consumer confidence remains fairly strong, and the stock market has shown remarkable resilience. Further, it’s been a very good year for advertising so far.

“Until there’s really an impact, where companies’ earnings are really affected, we’re not likely to see anything,” said Saatchi & Saatchi Los Angeles Chief Executive Scott Gilbert. “We don’t see, typically, a knee-jerk reaction to the stock market in terms of advertising budgets.”

Tim Spengler, recently appointed senior vice president and general manager of national TV buying at Western International Media, said spending on cable and broadcast TV ads rose 4 percent this year during the “upfront” market (most advertisers allocate their TV spending for the coming fall season during the upfront market in May and June).

Spengler says there are still a handful of big advertisers that haven’t committed their television spending for the year, and those are being watched with some nervousness. But for the most part it’s shaping up to be a pretty strong year for TV advertising.

“It’s a little bit wait-and-see still,” Spengler said. “I’m not worried. You’ve got ups and downs in the stock market, that’s to be expected.”

Enjoying it while they can

With all the anxiety about the future of the economy, people in the P.R. and advertising industries can at least take solace in the fact that most of them are making a good deal more than last year.

On average, in fact, they’re making 6 percent to 7 percent more than they did in 1997, according to a recent compensation review by executive search firm Marshall Consultants Inc. And if they work in a hot field like health care or high technology marketing, their pay raises were probably in the 10 percent to 15 percent range.

Marshall Consultants, which has offices in Los Angeles and New York, took salary information from its database of over 16,000 professionals in the P.R. and advertising industries. The data contain some pretty interesting tidbits, such as:

? If it seems like marketers in New York make substantially more money than those in Los Angeles, that’s because they do. The difference depends on the level of the executive and the industry segment in which he or she specializes. The president/CEO of a P.R. agency specializing in health care makes on average $247,500 a year in New York, $225,000 in Los Angeles; an executive vice president/creative director specializing in high technology at an ad agency in New York makes on average $207,200, or $196,000 in Los Angeles.

On the plus side, though, Los Angeles and San Francisco are considered the second highest-paying markets after New York. Regional differences in salaries are usually tied to higher costs of living in certain cities.

? In public relations at least, salaries of women have reached parity with men. In fact, according to Marshall Consultants Chief Executive Larry Marshall, some P.R. agencies and corporate communications departments have been accused of reverse discrimination in recent years for giving preferential treatment, or higher salaries, to women than men.

“Often, we’ve found companies willing to pay more to bring in an accomplished and seasoned female executive,” Marshall said.

? The difference in average salary between different industry specialties can be very dramatic. A senior vice president of corporate communications at a large high-tech company the most demanded industry sector pulls down on average $302,500 a year. In the least-demanded industry sector, industrial/manufacturing, the average at that level drops all the way to $176,600.

“There’s a dearth of talent that truly understands the health care and technology sectors,” Marshall said. “As we bring technology or health care people into organizations, what companies are looking for is an understanding not only of the current technology, but what’s at the cutting edge and what’s the outlook for the future. And that’s very rare.”

Although marketers might be riding the gravy train now, many are understandably nervous about the future.

Amid the Wall Street roller coaster, there’s a definite perception that the crisis in world financial markets is about to hit home. Nonetheless, Marshall is among those who don’t expect that to have a big impact on marketers. Even if the economy does suffer, he believes most companies won’t take it out on their marketing budgets because they have come to realize that they need a strong brand identity to survive in bad times even more than good.

Advertising and P.R. types who want to compare their salaries with the industry or regional average can find the full survey results at Marshall’s Web site, www.marshallconsultants.com.

News Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.

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