EDITORIAL: Adland is working hard for its money

Britain's ad industry has always found it hard to justify its high level of senior salaries to the outside world. Maybe it's down to the perceived peripheral nature of the business and memories of the time when it was deemed to be vastly overpaying itself for minimal amounts of work.

Little matter that salaries were disproportionately high compared with other areas of activity because job security was rare. Advertising was seen neither as art nor commerce and certainly not a profession.

Old attitudes die hard and it seems doubtful that industry onlookers will offer much sympathy for the board account directors who have seen their average salary fall from £114,000 to £110,000, according to a new survey by the headhunters Kendall Tarrant. Not much compassion either for the junior board planner who has to get by with an average annual salary cheque of £69,000.

However, the industry is slimmer than it was and long hours have become the norm rather than the exception. Salaries may seem generous but are less so when compared with consultancy and merchant banking, advertising's perpetual rivals for the brightest talent. Moreover, the pay of many agency staffers has remained static while they have been forced to take on the workloads of newly redundant colleagues. Hardly a recipe for high morale.

The current situation leaves agencies stuck between a rock and a hard place. Surviving the lingering economic gloom means not allowing salaries to spiral out of control. But, as the report warns, promises of "jam tomorrow" are beginning to wear thin. At present, agencies benefit from a "buyers' market" in which some senior staff have had their salaries reduced. But this can't go on indefinitely. A Middle East war may delay the economic recovery but won't prevent it. And, when it comes, staff will expect a payback for wage freezes and cost-cutting.

Thankfully, Kendall Tarrant detects signs that agencies have learned some lessons from the last recession by ensuring that they lock in their best people by proactively giving substantial pay rises and retaining their graduate trainee programmes. But agencies must also recognise that an improving economy means a buoyant jobs market and renewed pressure on their ability to retain those able to help them profit from the upswing.

Meanwhile, they'd do well to remember that while it's OK to pay hefty salaries to their high flyers, they can only do so by extracting higher levels of profits from clients. That means finding new ways of adding value. And that can only be done by investing in talent.