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The world has dramatically changed - Paul Boateng, Serena and Venus Williams and Halle Berry are names that symbolise this change - but advertising seems oblivious. So is this institutionalised racism?

In the nation as a whole the next census will reveal that one in ten are ethnic. In London it'll be more than three in ten. The guesstimate figure for numbers in advertising is 2 per cent or two in 100. This can't simply be a matter of chance.

Before I go on I can claim to be a statistic myself. I grew up not knowing my real father. We only met a few years ago and it turns out he's American Caribbean and I have a healthy slug of Harlem/Kingston, Jamaica in my veins. But I grew up white and cannot access any personal experiences to shed light on this issue.

My research shows that black people perceive that the predominance of white Anglo Saxons in the business means ergo it's racist. Black people think it's a relatively racist industry, Dominic Carter, the display advertising director at the Mirror Group, says. Patricia Macauley, the cultural diversity advisor at COI Communications, elaborates. "Black people can be wary if an organisation doesn't employ lots of blacks and Asians.

After four years at university with a year's placement at Royal Mail I thought I'd have an easy ride. But no way. I had interviews on the agency side but it's an uphill struggle."

The perception is that the industry is so white-only that it'll be more alien on the inside than in fact, according to the experience of many, it actually is. And, to exacerbate this hostile perception, recruiters on the inside-looking-out can be more into cloning than diversity.

Ray Barrett, of Barrett Cernis, says: "We are just not choosing people from a diverse pool. We are choosing the Oxbridge set because we're so keen to be seen as a respectable business. Macauley fears "a white person may not be as good but may get the job because (recruiters) imagine they'll fit in better". This brings up a recurring theme for people from ethnic backgrounds - that they want to be treated as ordinary citizens.

It's funny that the business recruits conservatively in a desperate attempt to be pukka because that's precisely how Asian parents don't see it. "My parents think that advertising isn't a proper job, Farah Ramzan, the deputy managing director at Abbott Mead Vickers BBDO , laughs. "Indian people often desire integration and external esteem and encourage kids to be doctors or lawyers. My parents wanted me to be a banker."

But there are many examples of thriving ethnic people in adland. Many I spoke with actually fitted the conservative, cloning hiring policy in all but race - public school-educated and if not Oxbridge then certainly good red brick grads. Carter smiles: "I'm public school-educated, have a white father, went to the English school in Nigeria and boarding school here. I'm hardly your average black man. I have been privileged."

The IPA is on this race case right now. There is a working party co-chaired by Stephen Woodford of WCRS and Barrett. Bruce Haines, the IPA president, says: "We have to be reflective of all cultural groups. We must demonstrate good citizenship. He points out that the BBC found that the more black faces they had on screen the more ethnic job applicants they had for all jobs. The working party has physically counted ethnic faces in a month's advertising output and found that only 3.5 per cent portrayed any ethnic faces. More positively they had a group of independent anthropologists study the portrayals which found there was a lack of stereotyping.

Once in an ad, we get it right then. And once in the business, there is little racism. Jonathon Mildenhall, a managing partner at TBWA, is typical of those I spoke to "I could not imagine a conversation in the workplace about anything other than someone's talent. Bobby Hui, the group planning director at Saatchi & Saatchi (also on the IPA working party and speaking with the authority of three focus groups), says: "People who are here are here on merit and don't have a great sense of discrimination.

In the main they're middle class graduates. Is there racism? Yes. As there is in society, but do I feel I've been held back? No. There's no institutionalised racism in advertising."

I agree. Even though most people have their tales of racism to tell.

One account man tells of a client's racial prejudice in rejecting black casting. He asked to be taken off the account but "the client wasn't challenged. It (racism) should be more of a fundamental value - like nicking things. And Carter remembers News International's display advertising team. "I was the only black guy in a suit. All the others worked in the canteen."

No-one I spoke to favoured positive discrimination. But one way or another how can advertising claim to sell to the Great British public if big slugs of that same public are excluded from its midst?

JONATHON MILDENHALL - Managing partner, TBWA

Race is definitely an industry issue because the statistics just don't add up.

I've been incredibly lucky. I've never encountered any prejudice at all. I've been in the business for 12 years and worked in some great agencies. My career has been good to date and it'll be interesting to see how it progresses.

I was at Manchester University and applied to four agencies, getting interviews at two. I was always the only ethnic face. I don't think enough black people try to get in. I've worked at McCann, BBH, HHCL and now here.

They've all been very different but all judge an individual on nothing but talent. I've been responsible for graduate recruitment, but have pushed the talent not the ethnic agenda.

I have an English-sounding name which works on a CV. Had I had my father's name, Npiapia, it could have limited things. Sometimes I've built a telephone relationship with clients and then I tip up and they are shocked to see a 6' 4 black guy.

My mother gave me great confidence. I'm one of five boys and none of us respond to a negative social situation by thinking of our colour. Racism exists unmercifully at school. I'd run home crying and mum would teach me to deal with conflict with a determination to succeed.

When I was 13 I was at a friend David's house to stay over. I was intimidated by their wealth. Anyway, his father came home, took one look at me and was obviously shocked. He told David he didn't want me in the house. I walked home and thought that the one person I was going to get to welcome me was David's father. It took me six months and they took me on a family holiday. It was my mum's training. I didn't walk away. I faced it.

There's not enough confrontation of prejudice in the work place. But confronting constructively is a bit of a delicate art.

FARAH RAMZAN - Deputy MD, AMV BBDO

Both my parents were born in India. I was born in Africa but have been here since I was five.

I've been at AMV for 12 years and before that was at Burkitt Weinreich. I graduated from Cambridge.

I've never ever felt any prejudice directed at me. But I have been in environments where there have been comments. I'm Anglicised and people just assume I'm one of them; I'm white. I am not white. I do represent an ethnic minority. People will make a racist comment in my presence and think it's a compliment that they see me as one of them. It's this inverse racism that has bothered me; people assuming we're all homogeneously white.

In my early days I was more militant. Now at AMV it's just about your ability. I've never suffered any set-backs.

I've been in a TV production meeting where token blacks have been mentioned and no-one's noticed. It misses the point. The point is about celebrating diversity.

Old recruitment policies in advertising are changing. We don't just go for the red brick/ Oxbridge skew any more. At AMV we recruit widely. Also a career in marketing has gained legitimacy.

When I first came to AMV I felt I was the only non-white person. Maybe there was another girl on reception. Today there are loads - I think about 4 to 5 per cent but I'm not sure. In our current intake,three out of ten are not white.

There is a move to consciously include ethnic minorities in commercials but the best way for it to happen is unconsciously. People first recognise diversity and then move through it. 20 years ago there was a debate about women - now look who runs AMV.

My parents did want me to go into banking like my brother. It's not just a racial issue. All parents think advertising might not be a proper job. But it's more pronounced among Indian parents. Mine are not traditional at all; they're successful avant-garde. My mother represents special needs children around the world. She broke her mould.

ARJUN CHATTERJI - New-business manager, St Luke's

I've only been in advertising for six months. Here you're judged on merit. The whole co-ownership thing makes equality important.

I was at Edinburgh University and had thought of becoming a lawyer or an investment banker. But I write poetry and plays and thought advertising would tap into my creative side. I had no trepidation about my racial background.

My parents encouraged me. They've been in the UK since they were 16. I can imagine lots of Asian families put pressure on kids to go into accountancy, medicine or law. I've a cousin at Partners BDDH, so my family is aware of advertising as a decent career. I have a few contacts in advertising.

My aunt is at JWT in India and some other relatives have started their own agencies there.

It's been great so far. You can speak out here and get your voice heard.

There's no huge hierachy. It's as I expected but it is a hard grind. It's not glamorous. There are late nights, stress and lots of organisational work.

I've never really experienced racial prejudice. I was at school at Westminster, which was racially mixed. I've not noticed a lack of diversity in advertising but here the chairman and the creative director are not white. Seeing people in high positions like that is very positive.

I recently went on the IPA Two training. Ethnics were in the minority. Only five or six out of 100. I think it's less of an industry issue than a cultural one. I really believe that advertising is amazingly meritocratic. If you show your capabilities, you'll get a result.