Is your ad agency paying junior staff enough for them to stay?
Staff turnover is a puncture in the hull of many agencies. Three London indie shops hope that raising entry-level salaries to £30,000 can reverse churn figures.
Three indie shops have each raised their entry-level salaries to £30,000, around $38,000. / Unsplash
Creative, media and digital agencies are struggling to keep staff in their businesses. According to the Institute for Practitioners in Advertising’s most recent census, staff retention fell to 67% last year. That’s down from 73.6% in 2022 and far lower than the UK business average of 94% (according to a 2022 report from the Chartered Institute of Personnel and Development).
A significant reason for this retention problem is that advertising doesn’t pay young staff well enough to stick around. A handful of independent agencies in London are moving to change that, however – at least within their own organizations.
Pablo London, for example, shifted the annual salaries of its junior employees up to £30,000 ($38,000). Joint managing director Hannah Penn tells us: “We’ve got an industry that is hemorrhaging talent and isn’t bringing in diverse new talent. This is a decision to – being crude about it – put our money where our mouth is on something that, we believe, will become a bigger problem if we don’t take action now and will impact our business in a much scarier way.”
Creative shops St Luke’s and Neverland followed Pablo’s lead in January. Josh Harris, managing director of the latter, which employs around 50 staff, says commonly used benchmarks such as the London Living Wage (currently £13.15 an hour, or roughly £26,800 a year) are the “absolute bare minimum” agencies should offer, but adds: “Wouldn’t it be better if they could not just keep their heads above water but also have a little bit of extra income to do things they want to do? To immerse themselves in culture and experience things?”
The decision to shift salaries upwards was relatively easy, he says. Four of his staff were eligible for the raise, while seven employees saw their pay packets increase at Pablo. Arguably, the heavier commitment is the promise to hire entry-level staffers at that salary going forward.
“It’s a long-term commitment to future talent, to bring the best talent into the business and not let salary be a deciding factor in where they go,” says Harris.
Joanne Lucy, managing director of recruitment agency Major Players, tells us: “We’re seeing a lot of younger talent now moving out of the industry quicker – especially candidates from different backgrounds, who are neurodivergent, who are LGBTQ+ – because there’s less support.”
The cost of living crisis in the UK has been especially hard on younger people. A recent Princes’ Trust survey found that one in 10 job seekers aged 16-25 had turned down a job because of the cost of transport.
Harriet Knight, who is the managing director of Pablo alongside Penn, says higher salaries can help staff with backgrounds outside the typical middle-class profile to stick with a career in advertising. “You’re removing stress, poor mental health and frustration from your culture,” she adds.
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For those who do attempt to stay within advertising, low pay is a key motivation to head to another agency. It’s the quickest route to a higher salary, says Lucy. “To get the pay rise people want, they tend to move.”
It’s not enough for agencies to put together an increase after a staffer has begun considering other offers, though. Lucy says her firm’s data suggests employers need to be proactive with pay reviews. “The data shows that people still leave within 12 months of accepting a counter-offer because the money is a short-term sell.”
Penn and Knight claim their churn rate is already lower than the rest of the industry, at 12%, but despite that stat suggesting it wasn’t a major concern, the agency considered it a priority.
“We were coming off the back of a strong financial performance… and were in a position where we were able to make the choice from an investment perspective,” says Knight.
With plenty of agencies struggling to find commercial growth, many will wonder how they can justify a pay rise for junior staff in the face of budget cuts. Knight and Penn advise calculating the cost of losing staff and having to hire replacements.
“Quantify what inaction is costing you,” says Penn. “There are costs happening elsewhere that this, ultimately, will safeguard you against.”