For decades, many of the brightest graduates in economics sought their fortune in finance. In coming years, they will seek it in marketing, as the Internet gives all companies the information-rich environment once available only in financial markets.
There is much more here; Varian of course is now working full-time for Google. Thanks to Chris F. Masse for the pointer.
I very much doubt that marketing will ever take the top graduates since the money involved is nowhere near that available in corporate finance. By money, I am of course referring to both money at risk and wages. Whilst well paid by marketing standards, economists in marketing are not paid anywhere near their counterparts in corporate finance.
Maybe in the future, but as of now, our numerous marketing
grads at JMU get the lowest starting salaries except for the
hospitality management folks. Of course, it may be that econ
grads going into marketing will do better than the marketing
grads themselves.
Dirk – because teenagers don’t listen. And from their perspective not without reason. Like cicadas, financiers disappear into cubicles after undergrad, where they languish as pasty little creatures until their mid-thirties. At which point they generally turn out to be either responsible upper middle class parents or the slightly skeevy types that act like 22-year-olds-with-15-years-practice. All of which tends not to look too attractive
from the perspective of a teenager.
Which is why lines like “I’ve wanted to be an investment banker since I was a child” tend to be a sure way not to get the job.
Barkley Rosser writes “our numerous marketing grads at JMU get the lowest starting salaries except for the hospitality management folks.”
Statisticians, economists, and programmers who do data mining for online transaction security (e.g., for credit cards, or for similar issues at places like Paypal and Ebay) seem to be cagey and closedmouthed about everything including their salaries.:-| My general impression, though, is that they are on a rather different payscale than people who get degrees in law enforcement.
Regarding the majors issue, actually finance this past year
replaced marketing as the top major for our graduating seniors
in the JMU College of Business. However, I know that their
starting salaries are not all that impressive (econ majors
beat them), not that much better than the marketing ones.
There have been lots of layoffs in the investment banking
industry, although things seem to be picking up again.
What does do well is our very small quantitative finance
program. They have the top starting salaries of our majors.
They take lots of math and econ, and skip the “business core.”
So, yes, it is the quants, with many having backgrounds in
physics (including the very high powered “econophysicists”),
engineering, computer science, and math, generally at the
top of the compensation pile in the actual finance field.
The subsegments of the marketing data industry have a strong tendency toward winner-take-all monopoly — e.g., the Nielsen TV ratings.
I worked for the first company to use supermarket scanner data in marketing research, and for its one competitor. But in the scanner data business, the DOJ prevented the two leaders from merging in 1987 and the pugnacity of the two competitors caused a subsequent price war that went on for over a decade, with disastrous effects on the stock price.
Varian claims, “I think marketing is the new finance. In the 1960s and 1970s [we] got interesting data, and a lot of analytic fire power focused on that data; Bob Merton and Fischer Black, the whole team of people that developed modern finance. So we saw huge gains in understanding performance in the finance industry. I think marketing is in the same place: now we’re getting a lot of really good data, we have tools, we have methods, we have smart people working on it. So my view is the quants are going to move from Wall Street to Madison Avenue.”
I would strongly advise young people to take Prof. Varian’s advice with a truckload of salt. Two decades ago, my firm had nearly real-time scanner data on every single product sold in a highly representative national sample of 3,000 supermarkets. We had outstanding quantitative analysts. And, what happened? We and our competitor both bled red ink for years because the industry was only big enough for a monopolist.
If you can get in with the next monopolist in marketing data, fine, but, otherwise, there is simply so vastly more money sloshing around on Wall St. than in marketing that you would be a fool not to go to Wall St.
Anecdotal evidence beats no evidence!
And where is your evidence that quants make comparable amounts of money in marketing as they would on Wall St.
The reason why Wall Street makes so much money:
Economists are good at aritmetic, not marketing.
Please note: I didn’t say “For decades, many of the brightest graduates in economics sought their fortune in finance…” That quote is from the WSJ reporter, Greg Ip.
When he asked:
WSJ: Will economists earn the money in marketing that they do in finance?
I replied:
Varian: There’s this old line about Wall Street, this magic moment in a transaction when the money leaves one person’s hands, and goes to another, if you are there to catch a little as it drops off, you can do very well. I’m not sure if marketing has that same characteristic.
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That being said, I do think that finance is getting overcrowded and there are very attractive opportunities for quants in marketing.
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