'Half my advertising budget is wasted - the question is which half?' Just how far have we come since Lord Leverhulme uttered his famous dictum? Gary Duckworth examines the arguments.

I'm going to be provocative, since I'm allowed to be in this article, and suggest that the esteemed Lord Leverhulme's words may well have led us on a wild goose chase, because I reckon he framed a question which is at best misleading, and at worst unanswerable.

Firstly, it assumes that advertising is inherently wasteful - a bit like saying "Have you stopped beating your wife yet? or "How long since you downed a bottle of gin? So it's a question that contains a hidden assumption.

I have to admit the question also has a kind of gnomic quality - it looks like it's holding out the promise of advertising activity whose effects we can predict numerically and precisely - and then, of course, simply eliminate the wasteful 50 per cent. Makes it sound like we could create advertising paradise on earth.

The philosopher Ludwig Wittgenstein focused on the way we use language - that it not only sets limits to what we say, but also what we can understand.

He argued that some questions which appear meaningful are in reality meaningless - and hence unanswerable. A meaningless question can easily be capable of provoking endless debate but is not capable of a definitive answer.

The problem we have in real life is that meaningless questions closely resemble meaningful ones: "Half your advertising budget is wasted ..." looks like it might be meaningful. But suppose I said to you "Half your holiday budget is wasted - the question is which half? or "Half your engine oil is wasted - the question is which half? You'd probably look pretty puzzled and wonder what I was talking about. It wouldn't be immediately obvious that I was making sense at all.

If you were bold enough to have a go at an answer, how would you be precise?

Could you give me measurements? Could you simply eliminate the "wasted" half of your holiday? The oddness of Lord L's dictum starts to become more apparent when you transpose it like this into another context. At the very least you begin to realise that this artfully posed question has a greater capacity to perplex than to illuminate.

Lord L's reservations don't seem to have inhibited businesses' adoption of advertising as a tool of competition and success. He was talking in the early FMCG soap-and-toothpaste era of advertising. Today even sober-as-a-judge entities such as banks and management consultants use it. Not to mention telecoms, retailers, the transport industries, IT manufacturers, drugs companies, cars, jeans, trainers. It's easy to overlook how widespread the adoption of advertising has become as the modern competitive economy has evolved.

They're all doing it. They must think it's rewarding even if they can't precisely quantify how much. We can all think of activities which are immensely rewarding where we remain unable to precisely quantify that reward.

Nonetheless, much work on the quantification of advertising effect has now been completed. There is now a very substantial body of case studies demonstrating precisely how rewarding advertising is - IPA Effectiveness papers and more from all over the world. These carefully document, with convincing evidence, the major brands and business successes it has helped to create.

But I have to face up to the fact that Lord L's statement has an enduring resonance and I think it's because he accurately hit an emotional nerve: that advertising is an activity that involves uncertainty about outcomes, and businesses find it difficult to deal with uncertainty when they make investments.

What has happened in the past couple of decades is that as media costs have risen, so the cost of undertaking advertising has mounted. And we now live in an era of capitalism where the pursuit of "accountability" drives scrutiny of all kinds of activity: the education sector is beset by performance indicators; surgeons have their success rates in operations measured. At the heart of this is an attempt to reduce all kinds of behaviour and practices to numbers, so in theory we can make better informed decisions and feel more secure.

I don't have a real problem with any of this - it may well show some results. The problem that I have is that advertising resists predictive quantification or mathematical precision. There are some "forces such as gravity or electricity which at one point in history were mysterious to us but have now been reduced by science to mathematical formulae. Advertising is not and will never will be like that. Not because we're not committed to effectiveness or haven't yet invented the perfect "measurometer to "predict the effect an ad will have - but because when we try to create effective advertising, we deal with a human currency of emotions, aspirations, perceptions and so forth.

And human feelings and perceptions are not easily or reliably reducible to a set of mathematical formula. That's why if you said to your partner "How much do you love me? and the reply was "6.45", you'd be worried.

Not so much because 6.45 doesn't sound high enough, but because it would feel like your partner wasn't replying in the right language.

To speak intelligently about how and why advertising works uses a completely different conceptual language from the language of business investment.

The difficulty the advertising industry still faces is that advertising creative decisions form the battleground where the concepts and language games of capitalism - "return on investment", "payback", "balance sheet" - meet the language game of human communication, motivation and emotional influence.

This creates massive image problems for advertising and for marketing directors who have to justify creative work at senior level. Announcing to the board that the car ad you're about to run will work because it will get the average 40-year-old male driver to emotionally identify with the search for the hero inside doesn't do your career prospects much good, even though it is the human truth that explains why the ad will work. Saying the ad scores 67 on a persuasion index is more likely to get sage heads nodding round the table.

People are uncomfortable with things they can't easily explain or discuss, so they seek solace in numbers and processes for "predicting persuasiveness".

Numbers offer emotional comfort dressed in rational clothing - the illusion of precision. Yet the forces that really motivate human beings (including, of course, boards of directors) are things such as love, desire for prosperity, looking good, ambition, fear, parenthood, aspiration, commitment and so forth. None of these can be easily or precisely quantified.

Most of the things in human life that are really powerful and shape our behaviour can't be precisely measured, but that doesn't mean they're not powerful. Yet it has to be these kinds of human factors that advertising tries to harness. And it is precisely these kinds of human factors that many companies find it difficult to talk about.

There are increasing signs of progress: a lot of companies are having to learn this human language of "non-rationality now that they have to compete and prosper in markets where most products and services are of good quality, prices are static or declining and USPs and rational propositions are rare, ephemeral or completely absent.

Standards of living have become higher over the decades: we now live in an age where in Western capitalist societies our basic needs are for the most part satisfied. And because of the long-run growth of income and wealth it's not surprising that some sectors of the population should be moving up Maslow's hierarchy towards the needs for self-esteem, self- actualisation etc. How else can we explain makeovers, gym membership and the popularity of designer brands?

We now also seem to have reached a stage where most major companies do use the word "brand in their discussions of their business success, even if they're not quite clear on how brand thinking can impact on the choices their intended customers make. I do think this is a major step forward, since advertising is designed primarily to shape and direct the way people perceive brands.

Another change is that in the years since Lord L's pronouncement, business, marketing and communications possibilities have all massively expanded.

And since we're now in a people business economy and we have moved towards more integrated thinking about communications, it is also becoming clear that advertising, because of its ability to inject brands with power and direction, can catalyse the way that, for example, direct marketing, staff morale and website usage can all work together. Buddha said: "Truth is one and although he's not as quoted as Leverhulme in business circles, maybe he had a point for us too.

In short, we are becoming more aware in marketing of the connectedness of things, though paradoxically this makes it even more difficult to be numerically precise about the effects of advertising, since full evaluation becomes more expensive, time-consuming and complex. You only have to look at the complexity of some winning IPA papers in recent years to see the superhuman efforts that have to be made to disentangle this interrelatedness.

At this year's ITV conference, Mark Cranmer of Starcom observed that advertising is "overmeasured and undervalued". It's a phrase that has stayed with me: relatively speaking, advertising is one of the most scrutinised forms of investment businesses make.

Look at IT as a contrast. As with most other forms of business investment, IT is aided by the fact that you can more easily see what you get for your money - you get lumpy plastic material things such as servers, PCs, screens, wires etc. But what is the business effectiveness of all this stuff, and how do we calculate it? It's not guaranteed either. A recent government report identified one public sector IT project that wrote off £700 million.

Probably all of us managing companies have been hard put to quantify the payback of major IT investments, let alone predict the effects such investment will produce before it is undertaken. I suspect the vast majority of us have never even tried. I haven't yet been invited to the IT investment effectiveness awards, and I don't think it's because I move in the wrong circles.

So it's strange that advertising has this image of being something uniquely uncertain in terms of predictable quantified delivery. Permit me now as plain Mr Duckworth to throw down the gauntlet: half your IT budget is wasted, the question is, which half?

The fact is business life is bedevilled by uncertainty. The theory of a healthy capitalism tells us that risk is inherent in what we do, in all kinds of ways. Aren't we supposed to believe in risk and reward?

Businesses need the confidence to use the human language that enables us to discuss brand and advertising concepts intelligently. This entails a certain kind of emotional risk-taking. But until we learn to link the language of human motivation and perception to the language of risk and financial reward, we run the continuing danger of seeking certainty in a place where it cannot be found.


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