AAF Survey on Recruiting and Multicultural Advertising Trends

1. AAF Survey on Recruiting and Multicultural Advertising Trends Prepared by Atlantic Media Company February 2006

2. Survey Highlights • Recruiting • Almost two-fifths of advertising industry executives reported increase in hiring needs over the past year– less than half of that reported a decrease. “General industry decline” overwhelmingly cited as the reason for decreasing need; increase attributed to more numerous factors including new acquisition of accounts, turnover/attrition and need for specialist talent. • Two most significant challenges in attracting and retaining talent both salary-related. • Word of mouth/networking deemed most effective recruitment tactic; internships and relationships with educational institutions a close second. Online and Web site recruiting ranked in the lower half of effective tactics. • Flexible working conditions called most effective recruitment tactic, while more direct financial incentives follow. • Only 26% of industry executives say that college advertising programs are successful or very successful at preparing future ad professionals, while 36% say programs are not very or not at all successful. • Multicultural Marketing • Benefits of multicultural marketing seen as substantial; precise targeting rated the most substantial benefit with branding products to wider audiences and showing company sensitivity to diverse consumer groups tied for a close second. • Effective targeting of sub-segments of larger market deemed greater challenge in multicultural marketing, but recruiting and retaining relevant talent to run campaigns a close runner-up. • 50% say that their organization has been not at all or not very successful in recruiting and retaining minority talent. Only 15% categorize their organization as successful or very successful. • Recruiting through internship programs is the principal way in which organizations recruit multicultural talent; a surprising 27% report not using any of these common methods. • 37% of industry executives rate their organization not at all or not very successful in obtaining the services of qualified minority vendors, while 24% say they have been successful or very successful. • Overall, leading executives are familiar with AAF’s programs relating to young talent and multicultural issues in the advertising industry.

3. Surveying Senior Advertising Industry Leaders One hundred and sixty executives from agencies, media organizations, advertisers/clients and other related firms responded to the survey; more than 80% have worked in the advertising industry 11 years or more; and nearly one-third for 25 years or more. Years in Advertising Industry (% of respondents) Advertising Industry Sector (% of respondents)

4. Hiring Needs Generally Steady or Increasing • Almost two-fifths reported increase in hiring needs – less than half that reported a decrease – over the past year. “General industry decline” overwhelmingly cited as the reason for decreasing need; increase attributed to numerous factors. How have the general hiring needs of your organization changed over the previous year? (% responding; 2003, 2004, 2005) Reasons for Decreased Hiring Needs (Multiple Responses Permitted) General industry decline 59% Loss of major account(s) 30% No new business 26% Increase in turnover/attrition 22% More use of freelance/contracted work 22% Agency consolidation or other restructuring 7% Reasons for Increased Hiring Needs (Multiple Responses Permitted) New acquisition of major account(s) 40% Turnover/attrition within the firm 39% Positions created for existing workgroups 39% Need for specialist talent 39% General industry growth 30% Expansion of total firm services 29% Positions created for new workgroups 19% Less use of freelance or contracted work 5%

5. Tried, True Recruitment Tactics • Word of mouth/networking deemed most effective recruitment tactic; internships and relationships with educational institutions a close second. Online and Web site recruiting ranked in the lower half of effective tactics. How effective are the following recruiting tactics? (score on 5-point scale: Not at All Effective to Very Effective) Word of mouth/networking Internships Relationships with colleges/universities On-campus recruiting Hiring contractors/freelancers Ads in industry publications Ad-industry online job listings Direct recruiting by own Web site Job fairs inside industry Recruitment Web sites Classifieds Third-party recruiting firms Job fairs outside industry 4.0 Very Effective Effective Somewhat Effective

6. Making the “Sell” to Chosen Few • Flexible working conditions called most effective recruitment tactic, while more direct financial incentives follow. How effective are the following tactics in getting applicants to accept job efforts? (score on 5-point scale: Not at All Effective to Very Effective) Very Effective Flexible working conditions More competitive benefits Signing bonuses Compensation alternatives Flexible start dates Non-traditional job tracks More competitive perks Opportunities for community service Job sharing 4.1 Effective Somewhat Effective

7. Significant Challenges in Attracting and Retaining Talent • Two most significant challenges in attracting and retaining talent both salary-related. How significant are the following challenges in attracting and retaining talent? (score on 5-point scale: Not at All Significant to Very Significant) How do you forecast the significance of these same challenges over the next five years? Less competitive starting salary opportunities relative to other employment sectors Less competitive salary ramps compared to other employment sectors Less appealing working conditions/environment Less competitive performance rewards such as incentives and bonuses Less appealing long-term career opportunities within the advertising industry 3.7 Increase Somewhat, 41% Significant Increase Significantly, 14% Stay the Same, 28% Decrease Significantly, 1% Decrease Somewhat, 16% Somewhat Significant

8. College Programs Deemed Lacking • Only 26% of industry executives say that college advertising programs are successful or very successful at preparing future ad professionals, while 36% say programs are not very or not at all successful. How successful are college and university advertising programs in preparing future ad professionals? (% responding) Describing the Ideal Candidate In an unaided exercise, the following were the most used terms to describe the “ideal candidate” for success in advertising: Flexible Intelligent Professional Motivated Passionate Driven Eager Creative Innovative • Hard-working • Educated • Adaptive • Diligent • Self-starter • Enthusiastic • Teachable • Ambitious • Responsible Not at all successful Not very successful Somewhat successful Very successful Successful

9. Multicultural Business Important to Industry Executives • Effective targeting of sub-segments of larger market deemed greater challenge in multicultural marketing, but recruiting and retaining relevant talent to run campaigns a close runner-up. How important are the following multicultural marketing challenges to your organization? (score on 5-point scale: Not at All Important to Very Important) Very Important Developing creative work that speaks to multicultural segments Effectively marketing multicultural campaigns to audience-specific segments Finding media outlets that effectively reach multicultural segments Recruiting top minority talent Retaining top minority talent Convincing management/clients to invest in multicultural marketing Identifying qualified minority vendors Important

10. Significant Benefits to Multicultural Marketing • Benefits of multicultural marketing seen as substantial; precise targeting rated the most substantial benefit. How substantial are the following benefits of multicultural marketing? (score on 5-point scale: Insubstantial to Very Substantial) Other significant benefits Permits more precise targeting of audiences Brands products to wider audiences Shows company sensitivity to diverse consumer groups Allows specialized creative executions to segments Profitable business strategy 3.7 “Diversity affords endless opportunities.” –Media Exec. “Increasing sales through effective market research.” –Agency Exec. Substantial How does your organization incorporate multiculturalism? “All of our media plans look at the benefit of multicultural marketing as an option, and we implement whenever we feel that significant portions of the population are being missed for our products.” -Agency Exec. “We have multicultural presence on almost every account, an in-house team of experts, and a pretty diverse workforce.” -Agency Exec.

11. Not as Diverse as They Want to Be • 50% say that their organization has been not at all or not very successful in recruiting and retaining minority talent. Only 15% categorize their organization as successful or very successful. Why has your organization succeeded (or not) in recruiting minority talent? How successful has your organization been in recruiting and retaining minority talent? (% responding) “The main problem is that the minority community here is so small, that when qualified minorities visit the city, they worry about being isolated without support of minority friends and family.” –Academic “We are a small ad agency and have not had multicultural talent even apply for a position.” –Agency Exec. “We were a founder in the Minority Advertising Training program on the West Coast and are making progress, but it is slow going – faster improvement with Asian and Latino, still far behind with African-American.” –Agency Exec. Not at all successful Not very successful Somewhat successful Very successful Successful

12. It Only Works if You Try It • Recruiting through internship programs is the principal way in which organizations recruit multicultural talent; a surprising 27% report not using any of these common methods. What methods are used by your organization to specifically recruit multicultural talent? (% responding, multiple responses permitted) • On-air solicitation • Active networking • Contacts with media • vendors • Not appropriate for my • situation Award programs Minority job fairs On-campus recruiting None of the above Internships Other

13. Struggling to Find Minority Vendors • 37% of industry executives rate their organization not at all or not very successful in obtaining the services of qualified minority vendors, while 24% say they have been successful or very successful. How successful is your organization in obtaining the services of qualified minority vendors? (% responding) Not at all successful Not very successful Somewhat successful Very successful Successful

14. General Familiarity with AAF Programs • Overall, industry executives are familiar with AAF’s programs relating to young talent and multicultural issues in the advertising industry. How familiar are you with the following AAF programs? (score on 5-point scale, Not at All Familiar to Very Familiar) AAF College Chapter Networks AAF National Student Advertising Competition AAF Most Promising Minority Students Program AAF Mosaic Career Fairs AAF Mosaic Awards AAF Student Conference AAF Public Service Advertising Competition Very Familiar Topics in multicultural marketing which could be further enlightened through AAF research: “Identifying sub-groups within ethnicities and culture groups, i.e., Hispanics in N.Y., Calif. and Texas are not the same, and should not be marketed to as if they are. We need data as to these differences.” -Agency Exec. “Media consumption and psychographics.” -Agency Exec. “Looking to predict future trends of local markets due to current tendencies of the home countries where these ethnicities have come from.” –Agency Exec. Familiar