Advertising accountability in the crossfire: an overview of the discussions in the agenciesBy Wolfgang Koschnick Can anyone at all still hear the saying, repeated ad nauseam, that half of all advertising money is thrown out the window, but we just don't know which half it is?
And yet accountability is the keyword for advertising in the 21st century. In English, the term is full of cunning ambiguity. It means "predictability" as well as "accountability" in the accounting sense, and therefore immediately provokes the verbal opposition of all creatives.
Creative performance cannot be understood from the froggy perspective of accountants. Advertising is a complex instrument whose complexity defies the primitive rationality of debits and credits. Yes, if one could calculate exactly which effects advertising achieves in detail and down to the last detail, then one could also handle it without all creativity and calculate the results mechanically. And so on and so forth...
Advertising does more than just increase sales in the short term
On the other hand, no other branch of industry can afford to be as incompetent. Or can you even imagine that the car industry would boast that fifty percent of all the cars it manufactures are unroadworthy, and that you just can't know in advance which ones they are?
Proponents and opponents of accountability in advertising misunderstand each other thoroughly and probably also intentionally. Each of them simplifies the arguments of the opposing side in such a sustainable way that it becomes easy to pick them apart in the air in a cheap way. That's why it's worth taking a look at what accountability actually means - and what it definitely does not mean.
The strongest argument against all accountability is that anyone who looks at advertising through the eyes of a controller does not understand its nature. Advertising does much more than just increase sales in the short term. On the contrary, that is only one tiny aspect. And only that is easily measurable. All other services provided by advertising, such as the long-term development of brand value, the development and maintenance of the image of a brand or a manufacturer, and the like, are beyond accounting calculation - and beyond short-term calculation anyway.
That's true. But the demands of advertising accountability are not that high. Its proponents simply argue that the costs associated with a company's marketing and communications objectives should be calculable. No more, but also no less. So it's all about a clear hierarchy of goals.
The marketing objectives are derived from the corporate objectives. Advertising objectives are a special case of the communication objectives derived from these. And the advertising company calculates - as best it can - in advance the amount required to achieve these goals. This is the core of Accountability in Advertising.
Agencies do not consider whether even half is enough
Accountability is therefore a special approach to budgeting. It is a variant of the objective-and-task method of advertising budgeting, which also makes use of mathematical-theoretical optimization techniques. Advocates of accountable advertising take exception to the way in which advertising companies make decisions about communications budgets.
Usually, a budget is set based on one or more criteria. In varying degrees of primitiveness, this can be the amount of money left over after deducting all other expenses, the expenses of the past year, the sales expectations for the next year, the market share or some other criterion.
In the rarest of cases, companies set themselves marketing goals and the budget for their market communication that is required to achieve these goals. Once the budget has been set, it is then passed on to an advertising agency, which considers how it could spend the money. As a rule, it does not consider whether the advertising objectives could be achieved with half the money. After all, they would be pretty stupid. But it would be in the interests of the advertiser if they did.
Advertising is also one of the investment risks
Accountability amounts to putting corporate decisions about the use of advertising on the same level as other investment decisions. However, this does not mean that the standards to be applied to advertising must be more rigid than those applied to other investments. Every business decision involves risk. Advertising decisions are, of course, too.
There is no doubt, however, that the mentality from which the theory of Accountability in Advertising was born comes from the Anglo-Saxon world, where a more short-winded corporate philosophy prevails than in other parts of the world.
In the U.S. and the U.K., there is a single perspective for a business enterprise that is of central importance: short-term profit maximization. Therefore, the objection that this perspective neglects long-term advertising goals counts for very little there. In other regions of the world, such as Asia and to some extent Europe, the focus is on market criteria such as the continuous improvement of product quality or the defense and growth of market shares.
How to measure advertising impact in saturated markets?
This is why the criticism that the Accountability in Advertising approach measures all advertising by the yardstick of sales promotion cannot be completely dismissed. And that is, of course, fundamentally wrong. After all, accountability measures advertising impact in terms of increased turnover and sales - even if its proponents argue eloquently against it.
And the Anglo-Saxons don't understand the meaning of the objection: If advertising doesn't even trigger short-term sales and revenue growth, how can it achieve long-term effects? They do not accept the accusation of short-sightedness. If something doesn't work in the short term, how can it be successful in the longer term?
The crucial problem of Accountability in Advertising lies in the state of the markets in advanced industrial societies. The markets are saturated. Increases in sales or revenue are not necessarily indicative of successful advertising. All too often, both markets and brands are static. But how is it possible to assess the value of advertising if an increase in sales and turnover cannot reasonably be expected at all?
Brands live in a
"dynamic tension"
Among British sutlers, there is widespread agreement on four basic characteristics, according to advertising theorist Colin McDonald:
- Stabilized markets: In developed economies, most markets have reached their maturity stage. In other words, growth has been exhausted.
- Similar patterns: According to the empirical studies of Andrew S. C. Ehrenberg, consumer buying behavior in stabilized markets follows very similar patterns. Brands differ from each other predominantly in that they are purchased in larger or smaller proportions. In this way, brands of different sizes tend to be in a state of equilibrium with each other. This equilibrium has the character of a "dynamic tension", since each market participant always tries to gain a competitive advantage over its rivals. Sometimes there are even shifts and disruptions in the pattern, but the tendency to fall back into equilibrium remains.
- Short-term shifts: For established brands, an increase in the advertising budget often does not lead to any short-term increases in sales. However, this by no means suggests that the additional advertising expenditure should necessarily be regarded as a shot in the arm.
- Too small: Even if increases in sales can be seen, they often seem far too small to justify the high additional advertising expenditure. However, it would be completely misguided - according to Colin McDonald - to suggest that advertising spending is useless: "There is no shortage of evidence that numerous branded products have stopped growing and indeed cannot continue to grow. And this may be as much a sign of successful past advertising activities as it is of unsuccessful present ones. Continued success in the future, then, may be that nothing changes at all. But how can we determine that our advertising is working well to bring about that success? And how can we determine whether we should continue, change or abandon the current strategy?"
Answers to these questions are being sought in Great Britain using the tools of Accountability in Advertising. To explain the principle of advertising impact, marketing consultant Simon Broadbent, who has written a book on the subject, likes to use the metaphor of an airplane. Advertising is the engine that keeps the plane flying at the same altitude. If you turn it off, the plane stays at the same altitude for a moment, but then it inevitably starts to descend. Advertising is therefore a means of keeping a brand alive in a saturated market.
Accountability in practice The next installment of this series of articles deals with the topic of accountability in practice and describes the conditions under which advertisers and agencies can make their advertising accountable. To this end, it examines in detail the ideas of the British marketing consultant Simon Broadbent and reviews their practical applicability to larger, medium-sized and also smaller companies.
