A qualified hurrah

No other awards do what the IPA Effectiveness Awards do – honour the actual, transformational effect that good advertising can have. For this reason above all they remain the gold standard in awards.  And for that reason Thinkbox is extremely proud to sponsor them.

At Monday night’s awards do, all winners were deserving of praise. The campaigns had worked brilliantly and the brains behind them had gone the extra mile to show how they worked. They proved the influence of advertising on the bottom line and they deserve our thanks for that effort.  

And there was also great jubilation to see history being made when Mediaedge:CIA won both the Grand Prix for Morrisons Let’s Grow and Effectiveness Agency of the Year.  I hope many other media agencies will follow them by taking more responsibility for effectiveness in the coming years.

However, there was one thing that puzzles me – why were entries restricted to campaigns that had cost less than a total of £2.5 million?

£2.5 million is still a hefty amount of money – especially at the moment – but isn’t effectiveness still effectiveness whatever the budget? A campaign spending £2.5m  should have absolutely no problem demonstrating its effectiveness against a campaign spending £25m.  Indeed, the way most entries seemed to define ROI (return divided by investment), the smaller the budget the easier the task I reckon.  Let me explain.

Generally speaking, as you start to invest in advertising the efficiency of your spend will be very high, but as your brand matures, increases its market share and you spend more, the efficiency of your spend is likely to reduce leading to the phenomenon of ‘diminishing returns’.   However, effectiveness is not the same thing as efficiency and respected gurus such as Tim Ambler, Les Binet and Peter Field have shown how, if we persist in defining ROI as Return divided by Investment it can lead to falling brand shares, declining profit and a disappearing marketing budget.  Return minus investment should be our goal; by pursuing this definition brands will focus on what really matters which is increasing market share and profit growth.

There is absolutely nothing wrong with diminishing returns, as long as there is still a return, the brands that understand this become market leaders.  However if you set your goal as ‘how can I get the most impressive ratio between what I spend and the incremental profit it generates?’ you are likely to spend less and remain a small brand (a bit like Arsenal).

Restricting the budget restricts those eligible to enter and, in an inadvertent way, sort of paints advertising as a cost rather than an investment. In a perfect world advertisers would invest more and more because they would make more and more profit. We don’t live in a perfect world, of course.

I’m also mystified by a few of the Special Awards.  Why have an award for best integration, or best use of media?  Either they were effective campaigns or not.  100% use of PR or outdoor or anything else would be unlikely to win either of those awards, but if it delivered the best business results then why reward other less successful campaigns.

There is obviously a bit of vested interest in all my concerns; the restricted budget meant that broadcast TV featured in fewer of the winners than in other years, though, despite this, the Grand Prix and two of the three golds went to campaigns with TV at their heart.  For next year’s awards, it’s business as usual: all-comers and all shapes and sizes of campaigns will be eligible, so start gathering the evidence now.

  • http://community.brandrepublic.com/blogs/jamessmythe/default.aspx JAMES SMYTHE

    Good points David. Some very clever advertising academics have worked out that optimal ad spend is linked to advertising elasticity: the more efficient your campaigns are at growing sales, the more you should spend. Great creative can be let down by scrimping on budget.

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