IPA Report: Ads that Win Awards Are 11 Times More Effective
LONDON (AdAge.com) -- Marketers are doing everything they can to keep costs down, including tactics such as charging agencies to pitch for their business, or -- as in the case of U.K. vacation company Thomas Cook -- demanding a signing-on fee from the winning agency.
But by putting all the emphasis on cost and procurement, are marketers reducing their chances of creating -- and supporting with media spending -- campaigns that really work and will drive business growth in the long term? A study carried out by the U.K.'s Institute of Practitioners in Advertising claims to prove a direct link between creativity and effectiveness that it's touting as a good argument for quality over cost.
The report from IPA, a trade organization representing agencies, examined 213 case studies of advertising over the last eight years, including campaigns by marketers such as Cadbury, Volkswagen, Budweiser, Honda, Audi and Orange. It claims to demonstrate objectively that creatively awarded campaigns are 11 times more effective than campaigns that do not win creative awards.
Hamish Pringle, director general of the IPA (whose website is labeled "promoting the value of agencies") thinks that driving down costs will also drive down effectiveness. "Sooner or later procurement will hit a brick wall," he said. "It's not possible to save 15-20% each year and still work with good quality agencies. Agencies will go bust or refuse to do business with them, and they will be dragged down to the alluvial silt of less good agencies."
Mr. Pringle pointed to the procurement people who are paid a significant bonus linked for reducing costs. He believes that they should be remunerated not just on the price reductions they achieve, but also on the value they have added, in terms of input, output and results.
"Creatively awarded campaigns are a more reliable investment -- they achieve greater effectiveness levels," said Peter Field, the marketing consultant who authored the report, which looked at a number of business metrics in the study to determine effectiveness, including market-share growth, sales, profits, return on investment, likability and emotional appeal.
The report concludes that the link between creativity and effectiveness is driven by two important factors: the emotional communication model favored by the most creative campaigns, and the much greater "buzz" effect that creativity engenders.
"Creativity and effectiveness are inseparable. This is a good first step, but there's still a lot of work to do to show the exponential value of great creative ideas," said Bert Moore, chief strategy officer of Lowe Worldwide. "It's bizarre to believe that there's a creative answer and a business answer. In other creative industries, like architecture, film and music, the creative solution is always the answer to the problem."
Does a creative solution need to cost money? Mr. Moore said no. "A provocative idea is the magic. It's not linked to media spend. A marketer's only exposure to risk is to not develop a powerful creative idea."
Procurement negotiations should, Mr. Moore believes, focus on the value that an agency brings to a business, but he concedes that a basic level of funding is essential. "You need a certain number of people and a certain amount of time given the culture and geography of the brief," he said.
Laurence Green, chairman of Fallon London, whose "Gorilla" spot for Cadbury is a classic mix of creativity and effectiveness, noted that "the best ads tend to come from the highest-margin agencies, like BBH and Goodby, for example," adding, "whether that's because they can command the margins because they do the best ads or it's more indirect, I don't know."
Mr. Green added, "In a world where 80% of ad spending typically goes on media with 10% each on production and agency fees, it's a puzzle why so much energy is devoted to examining the 10% agency fees. We should be looking at how to procure better and more effective ideas, not cheaper agency services. It seems extraordinary to me -- it's petty penny-pinching masquerading as procurement."
Mr. Pringle said he hopes that the report will convince those people to take seriously the value that good creative work brings to the relationship.