Opinion: Perspective - Hard-working agency heads deserve big salaries

There were gasps of indignation heard on Tuesday as the Daily Mirror revealed that Terry Wogan is earning a whopping £800,000 for his Radio 2 show. Just wait for the complaints about licence-fee money being frittered away on millionaire-style salaries.

But Wogan's Irish brogue has made him the most-listened-to DJ in the UK and makes a healthy contribution to Radio 2's proud 16 per cent share of national radio. His salary is big, but so is his audience.

There's nothing like a salary scandal to get people gossiping. Garry Lace's rumoured £800,000 at Grey was most likely a work of fiction, but it rapidly turned into fact - laid down in stone over lunches at The Ivy.

This week's revelation from Willott Kingston Smith's Marketing Monitor will also raise hackles.

In ad agencies, employment costs-per-head rose while profit margins fell.

Agency chiefs regularly earn more than £250,000, which equals a significant percentage of any agency's overall profit - agencies are not large enterprises, after all. Willott Kingston Smith's findings show that employment costs over the past six months have risen from 56.2 per cent to 57.3 per cent of gross income. Media agencies, meanwhile, have been more frugal; staff costs remain at a steady 55 per cent of gross income.

Executives from both disciplines like to show off their wealth; they drive Aston Martins, wear expensive suits and buy watches that warrant individual insurance assessments.

The danger with this is that it winds up marketers and their procurement experts. For as long as agency executives bear the trappings of a lavish lifestyle, procurement agents will detect that there's surplus cash sloshing around their advertising and media agencies and swing their axes accordingly.

But it's too easy to forget how hard these agency heads work. For many agency chiefs, striking any kind of work/life balance would be a luxury.

Campaign's 24 Hours With column (page 19) reveals just how little time executives have to spend with their families. It is a life consisting of early-morning starts following late nights entertaining clients; it's working through the weekend on pitches and it's late-night BlackBerry tapping as US bosses demand instant responses. Yes, they're paid well, but boy does this involve personal sacrifices. In most cases, this is money well earned.

Strip away the big salaries at director level and you risk alienating further the ever-declining number of top graduates applying for jobs in the industry. The IPA is constantly fighting to keep graduate applications up. This week it unveiled a joint initiative with Leo Burnett, which targeted school teachers as conduits to future agency executives. However, no matter how canny the targeting of future recruits, it is big salaries that will draw them in.

One of the questions I am most frequently asked is how do I think The Red Brick Road will do. It's not one that can be answered simply. The agency has tremendous strengths in terms of people: Paul Hammersley, Paul Weinberger and David Hackworthy. Not only that, but it launched with the £50 million Tesco account in its back pocket and looks strongly placed for business from Heineken and perhaps The Guardian. Wow.

The Hackworthy/Hammersley double-act is a compelling performance. It comes across as future-focused, energetic, and definitely not bogged down in traditional advertising - something clients love. Yet, with Sir Frank Lowe as one of the founders, it also has one of the most traditional advertising practitioners imaginable at its helm.

Scotland Yard's arrest of Des Smith after cash-for-honours allegations is dragging Sir Frank's name into the national newspapers for all the wrong reasons. Such reports would be unwelcome for any fledgling agency, even one with the mighty Tesco as its founding client.

- Claire Beale is on maternity leave.