Agency: CHI & Partners
campaignlive.co.uk, Friday, 15 January 2010 12:00AM
Sit down, I have some bad news. In the seven minutes or so you spend reading this article, you - yes, you personally - will have made society poorer to the tune of £20. By the time all 40,000 of Campaign's readers have finished this piece, you will have drained £800,000 in value from the world at large. Collectively, you will have encouraged high consumer spending, obesity and indebtedness. You will have created insatiable aspirations, fuelling feelings of dissatisfaction, inadequacy and stress among consumers. Worse still, you will have wrought untold environmental damage through the over-consumption of goods that people don't need, yet you have persuaded them to buy.
At least that's the rather depressing conclusion of a report released at the stub end of last year by the left-wing think tank The New Economics Foundation. The study, It's A Bit Rich, rated jobs on how much they help or hinder society through the social, economic and environmental effects of their work. It found that bankers, who you will recall recently helped bring the world financial system to its knees, destroy £7 in social value for every pound they earn. But far worse are advertising executives, with no global crisis to their name, who, nonetheless, destroy £11.50 in social value for every pound they earn. Only tax accountants are less socially useful, destroying £47.
By now, as a person of good conscience, you should be bristling with indignation. After all, who enters advertising in order to make the world a worse place? But the point of the NEF report wasn't simply to annoy, it was to encourage us to take a different view of the value generated by different types of work, its author says.
"Because social and environmental effects are not properly accounted for, the market tends to oversupply goods that may have a significantly negative environmental or social impact - such as cheap consumer goods and complex financial products. We should be looking beyond the narrow definition of economic productivity to calculate the broader social and environmental value of the work we do," the economist Eilis Lawlor concludes.
She argues that we have entered the era of "externalities" (defined as untraded economic effects) - that's what last year's Copenhagen conference was about. "Addressing externalities will be the driving force of much of human activity in coming decades.
But it's an issue advertising has completely failed to address. So far, I think advertising has got off really lightly," Lawlor opines. "Our model suggests the world would be substantially better off without advertising."
Hurtful words. The good news is that even the NEF admits its model isn't particularly robust (see box). Its significance lies, however, not in its precise conclusions, but in arguing that there is such a thing as over- consumption, that externalities are real and that they should be taken into account when valuing economic activity.
These are ideas that have traditionally been restricted to those on the left of the political spectrum. It seems that they are now going mainstream. But are they fair?
The advertising industry has long argued that advertising doesn't affect aggregate or total demand for goods and services in society. But that orthodoxy is now being eroded. Rory Sutherland, the president of the IPA and vice-chairman of Ogilvy Group, thinks that over-consumption can occur because "people often seriously overestimate the joy brought by a new car or bigger house. And conspicuous consumption is not always economically valuable because your new BMW can make other people feel worse about themselves."
To what extent advertising is responsible is still a moot point. There are those who don't accept that advertising does have significant negative unintended consequences. "The biggest externalities of advertising are funding of the media and its effect on innovation," Professor Paddy Barwise of the London Business School says. He argues that advertising can't have large externalities because it is just not that strong a force. "Only the most ardent supporters and critics of advertising believe it is the major driver of consumption," he says.
Then there are others who accept that externalities exist but warn that we should be wary about how we address them. "Externalities are increasingly being used to undermine free market economics. There is a real danger of using externalities as a back door for social engineering," Tim Knox from the right-wing think tank the Centre For Policy Studies says. "There needs to be a clear, identifiable link between the externality and the people responsible. But, in this case, that link doesn't exist."
Others find it easier to sidestep the question. "In a way, the environmental crisis has made life simpler," John Grant of the sustainability consultancy Abundancy Partners says. "This has become a matter of resources. We in the UK consume at a rate three times greater than the world can sustain. It is physically impossible for us to go on like this without seriously damaging the planet."
So, increasingly, it is accepted that business does have effects beyond its own balance sheet. Advertising is no exception and as the Copenhagen conference showed, these effects have to be addressed. Even senior ad industry figures buy the argument that advertising can have unintended consequences for society at large. "They're (NEF) not completely mad to make the point, although I don't believe that, as individuals, we are all sons of Satan," Sutherland concedes.
But, really, it doesn't much matter whether the ad industry has served the world well or badly in the past. The question is now: can it help the world in the future? Can it help contain global warming to just two degrees, in line with the Copenhagen treaty? And how should the hapless ad executive of good conscience who "destroys £11.50 of value for every pound he earns" remedy that situation?
Previously, advertising may have driven consumption. Many now see the industry as having a crucial role in promoting planet-saving sustainability. But the starting place for this has to be with the individual, the writer and marketing consultant Mark Earls argues. "The service culture in the ad industry has tended to make people servile," he says. "The industry is used to thinking about the social function of brands. It would do well to extend that thinking to itself because although we are not solely to blame, we are part of this. Our contribution will not be about making people give things up so much as offering desirable alternatives. But we do need to start taking personal responsibility for our own actions."
So what does "personal responsibility" really mean? Grant details some of the things an advertising person can do to avoid becoming, in his words, a "complete pariah". First, he suggests, be more picky about which accounts you work on: "For a long time, more liberal agencies have refused to work on tobacco business. Even within agencies, you can elect not to work on certain accounts. So be selective about who you work with."
Then he says you should take a critically questioning attitude to your clients' business: "Most greenwash arises from an inability to fully question the client. It is important to analyse and, where appropriate, challenge them. Try to become a strategic influencer with your clients. Work with them on creating new opportunities and markets with sustainable impacts."
Sutherland suggests some of these opportunities and strategies might include: transforming manufacturers into service providers, designing products that last, offering opportunities for consumers to share products where possible, adding value to lower carbon alternatives, replacing tangibles with intangibles and educating consumers into making more sustainable choices.
The debate about whether climate change is occurring and whether man is responsible is effectively over. The issue is now how best to change people's behaviour to mitigate the worst effects of our over-consumption. This means, in the words of Futerra, the sustainable communications agency, which opened in 2001, "climate change is no longer a scientist's problem, it's a salesman's problem".
The industry seems aware of this. Sir Martin Sorrell has spoken many times of it being "our job to make fashion unfashionable". Havas sees it as a huge business opportunity. "Clients across every sector are now either highly engaged or under mounting pressure to instigate significant changes in the name of sustainability. We believe sustainability represents the single largest opportunity for forward thinking businesses today," its chief executive, Fernando Rodes Vila, says.
Smaller players such as Futerra and Abundancy Partners aspire to put sustainability at the centre of corporate strategy. But, generally, the industry's response to this huge business opportunity has been slow and limited.
A few networks are, however, leading the way. Aegis has a sustainability practice called Clownfish. Ogilvy set up Ogilvy Earth, which aims to give its clients a more positive take on sustainability. "Traditionally, comms in this space tend to fall into the 'apocalypse is nigh' camp or the 'save the polar bears/tree frogs' camp. The first is disempowering while the latter fails to pass the relevance test," Freya Williams, the global planning director of Ogilvy Earth, says. "We need a more optimistic, hopeful vision of a sustainable future - what will it look, smell, feel and taste like, why will it be better and what's in it for me?"
Last year, Saatchi & Saatchi bought the environmental consultancy Act Now, rebranded it SaatchiS and built it into a global network with 20 offices. "We see the power of brands to drive social change. They certainly played a significant role in the bull market and they have a role to play in solving the problems caused by over-consumption. We see an opportunity to change the way firms communicate, for big businesses to associate themselves with big ideas," Niall Dunne, the managing director of SaatchiS, says.
It will mean a different way of thinking, moving away from small, short-term ideas in communications to big, long-lasting themes, he says. "We don't want to create campaigns, we want to create movements. We want to move away from short-term shareholder returns to long-term stakeholder value."
Ironically, it seems that the very people who, according to critics, destroy so much social value (and the planet), think they are the ones in the best position to save it. If the industry is looking for a new social purpose or mission statement, perhaps it should be "advertising can save the world".
MANIFESTO FOR ADVERTISING PERSONS OF CONSCIENCE
1. Understand your brand. Conduct a "brand perception audit". Include environmental and social elements in tracking studies. Consider the inherent qualities of your product and how it affects the environment or society.
2. Understand your consumers and how your company provides "social utility". Observe the values, beliefs and lifestyles of customers, preferably using "anthropological" techniques such as home visits and accompanied shopping.
3. Set your house in order. Audit and improve your internal processes including power consumption, water use and waste. Screen suppliers for sustainability. Use environmentally friendly products and office supplies.
4. Total corporate social responsibility should drive innovation. Even then, it should be seen in a short-term change management role doing itself out of a job as soon as possible by becoming part of the DNA of the brand and the company, defining sustainable business practices that should be used to set objectives and targets.
5. Innovate. Identify new ways in which your brand can help consumers. Retune corporate values and brand to resonate with attitudes you see emerging on sustainability issues. Constantly query sustainability at all levels. Think of new ways existing products might do useful jobs.
6. Motivate. Make part of employees' annual performance review dependent on how they perform their job in line with company/brand values.
7. Collaborate. Create multi-functional, multi-skilled teams from all relevant functions, including marketing communications, investor relations, product design/development, brand strategy, financial planning and analysis, and corporate responsibility.
8. Communicate. Once you have done all of the above, communicate externally. If you are open and honest, a bit of sniping from critics will be grist to your mill.
9. Sign up consumers to your sustainability journey. Ensure that they come away from every contact with your brand with as positive a self image as possible. If your brand makes them feel like better people as it does its main "job", then it will thrive.
10. Measure, monitor and report continuously. Develop ways of identifying, measuring, evaluating and reporting the various elements of brand value, including sustainability, so that they can be used as indicators of performance.
By Jules Peck, a founding partner of the sustainable strategy consultancy Abundancy Partners.
HOW YOU DESTROY POUNDS 11.50 OF VALUE FOR EVERY POUND YOU EARN
The NEF uses the Minimum Income Standard, developed by the Joseph Rowntree Foundation, to define over-consumption. It simply takes the income people generally think is needed to afford a socially acceptable standard of living in the UK - around £13,000 a year. Everything above that is "over-consumption" - amounting to £176 million.
The report only looks at creative advertising agencies. It assumes ads rather than other people and editorial content are the major influence in shaping consumer values.
It assumes that £6 billion a year is spent on creating advertising (excluding media space) and that every pound of advertising attracts £5 of spending. According to the NEF, this means that £30 billion of over-consumption - or 17 per cent - is due to advertising.
It identified four categories of costs: environmental (resource depletion and climate change), obesity, anxiety-related mental health and indebtedness. It estimated that advertising's share of non-renewable over-consumption is £85 billion.
For social costs, it took advertising's share of the social cost to the UK of obesity (£17.4 billion), anxiety-related mental health (£11 billion) and indebtedness (£67.4 billion). The total cost attributable to advertising is £16 billion.
It then added in social benefits in terms of employment and tax receipts from advertising. It concluded that all the social costs incurred by advertising professionals amount to £1.2 million per person, against a benefit of £370,156 per person. The result is that for every £1 of positive value, £11.50 of negative value is generated.
This article was first published on campaignlive.co.uk
Agency: CHI & Partners