IPA ADAPT: Why adspend is an investment not an expense
A view from Tom Lewis

IPA ADAPT: Why adspend is an investment not an expense

"We live in a 90-day world" is a familiar mantra for anyone who works in a large, quoted corporate. Yet, as the IPA's report, The Long and Short of It, has shown, brand-building is a multi-year activity.

So, there is an inevitable and unhelpful tension between the two.

Add into this mix Procurement departments incentivised to reduce cost rather maximise value, marketers who lack a common currency for the measurement of brand value and it is not difficult to see how marketing has come to be seen as a discretionary expenditure to be turned off or on according to the needs of the corporate reporting calendar.

Measured in decades

David Ogilvy once said that clients get the advertising that they deserve – by this, he meant that the best clients work in partnership with their agency to develop great creative work whose lifespan can be measured in decades; that agencies and clients produce their best work when their interests are aligned; that great advertising is created in an environment of a trusting relationship.

There is now an emerging mentality amongst marketers that views advertising spend as more of an investment than an operating expense - that sees brands more as assets to be managed than as costs to be controlled. At present, however, accounting standards only allow acquired brands to be recognised as balance sheet items - a somewhat lop-sided position.

In the absence of a change in regulations, we need to start thinking of brands more in terms of long-term assets to be managed and consider ring-fencing marketing spend for core brand-building.

Alliance, diversity, agility

The IPA's series of Adaptathons, as part of Ian Priest’s Presidential agenda, have addressed this issue from the perspective of Alliances, Diversification and Agility.

The next piece of the jigsaw puzzle is how to bring agency remuneration into line with these changes; how to align the interests of everyone involved in the process of brand-building.  This issue will be addressed by agency FDs, Commercial Directors and General Management along with clients at the IPA's Performance Adaptathon on July 8th.

Previously the IPA’s Commercial Conference, the Performance Adaptathon recognises that there has never been a more important time to discuss in a cohesive group these structural issues around value as an industry; for this reason, the IPA has opened up the conference to a much wider audience including CMOs, Procurement, clients and agency management.

The structure of Performance Adaptathon will be threefold; the output of the day will be to identify specific steps to align client and agency interests on:

  • inputs / time-based remuneration
  • outputs / value-based remuneration
  • outcomes / risk-based remuneration.

Following on from the day, there will be joint projects and pilot schemes; looking further ahead, 2015’s conference will see us reviewing the progress, lessons learned and considering the way forward.

There’s still time to book a place at the Performance Adaptathon on 8 July