Return on investment has always been a primary consideration for marketers deciding how to spend their budgets, and modern methods mean it can be calculated with high levels of precision.
But with widespread acknowledgement that the world is facing a climate catastrophe, there is growing pressure on businesses to demonstrate how they are limiting their environmental impact. The trouble is that, when all economic activity produces greenhouse gas emissions, it isn’t often clear how to do that without hitting revenue and profitability.
In an effort to solve this problem, the ad industry sustainability networking group Purpose Disruptors has created a new metric, “Ecoffectiveness”, which is measured in “return on CO2e” – the additional revenue generated for every tonne of CO2 equivalent emitted. If ROI is about putting a figure on “bang for your buck”, ROC can be seen as the measure of “bang for your burn”.
The methodology uses life cycle assessments (LCAs), which calculate the full “cradle to grave” carbon impact of a product, taking into account the harvesting and processing of raw materials, product manufacturing, distribution, use by the consumer, and eventual disposal. Where an LCA does not exist for a specific product, it is possible to use category-level data, which will give a less accurate result.
This is then combined with effectiveness data – which shows the incremental sales generated by advertising – to produce a measure of the business impact of a campaign relative to its environmental impact.
The initiative has been led by Ben Essen, chief strategy officer at Iris, and Caroline Davison, managing partner at Elvis. The methodology will be launched at tomorrow’s (15 October) IPA Effworks Global conference and demonstrated using data from IPA Effectiveness Awards winners, with a focus on the 2018 Grand Prix winning case study from Audi.
Speaking to Campaign, the pair said that while there is now a significant will among businesses to reduce carbon emissions, there has so far been a lack of work on how advertising relates to this.
“What is interesting is that a lot of industries are starting to work out what their industry response is going to be, which is why we thought that it was really about time that we as an industry started to get our heads around how we needed to become part of this conversation,” Davison said.
The methodology is about joining up existing information to create new knowledge and understanding, Essen explained. There is a growing engagement among consumers of the carbon impact of their behaviour, he argued – pointing to initiatives like a credit card from Swedish fintech brand Doconomy that tracks users’ carbon footprint, which won a Grand Prix at Cannes Lions last year.
“So that's kind of happening over here, the consumer side,” he said. “On the other side we've got the evidence [advertising effectiveness data] that says hey we've sold this, we've sold that. But the bit in the middle has, I think, been lacking.”
The framework was “only as good as the data that's going to go into it”, Davison added. “And that's why, essentially, we're calling for lots of people to look at what we've got, build on it, put their own numbers and their data in so that we can build up quite a comprehensive overview of all the figures out there.”
The Ecoffectiveness methodology consists of three elements. The first is transparent reporting on the incremental uplift in greenhouse gas emissions driven by advertising. The second is the creation of ROC as an industry standard, allowing sectors, competitors and campaigns to be easily compared. And the third is using this tool to identify what Essen and Davison call “levers of Ecoffectiveness”: areas where methods can be used to reduce environmental impact while maintaining profitability.
“Once we've kind of got the baseline there, then actually all the stories become good news stories,” Essen said. “What we’re saying is here's a currency that you can then use to have these conversations, and if you can say that return on carbon for a new campaign [for example for a car brand] was double what it was for the previous one, because we're now creating an electric vehicle, then, yeah, that's a great advertising story to be able to tell.”