Creativity versus Profit

Mark Adams is Partner at Pembridge Partners LLP, active investors in Creative Services Firms. The Pembridge portfolio includes the creative services firms Lexis, Ministry of Sound and Simply Red. In the past year, he has worked on Management Buyouts in the Creative Services Sector, most notably the £5m buyout of Lexis PR. He chairs one marketing services firm, and a PR company.

Some TV advertising campaigns are memorable works of art. They can stick in our affections. They can brighten up our days or evenings. They give a common currency to pub and office talk. Adverts form a small but fond part of almost everybody’s childhood memories.

They reached our eyes and ears in the first place because a marketing manager inside a large company put together a proposal that his company should spend from a few hundred thousand to millions of pounds to create and buy the broadcast time for the advertisement. That expenditure was approved by the company.

The companies which advertise most are public companies and have shareholders to account for their expenditure, so their rationale has to be pretty tough: creative advertisements must usually pay dividends by improving product sales or the “brand value” of products. (Actually, it is the Government which spends more than anyone else on advertising – so one assumes their rationale for spending the money must be even tighter).

Or is it? There are quite a few loopholes which allow creative advertisements to get through unchecked.

The “showcase” loophole is the worst. I can’t get over the shock I felt last year when I researched three marketing campaigns which had won awards for creativity. It was the sort of research which is difficult to do on a formal basis – but I knew the people I was researching and they shared some vital inside information with me. They told me how much they had been paid for their award winning campaigns. Without exception, compared to what I was expecting, the sums were derisory. It seems that the agencies had done the work as showcase work, not as “commercial” or “profitable” work.

Doing “showcase” work of course is a perfectly normal part of business practice – it’s great marketing. But the shock was that this appears to be the norm, not the exception, for high profile creative work.

Another loophole is the appalling “ego” advertisements which large companies do at merger or privatisation time. For the senior management of a company, a merger or privatisation, is a career highpoint – they often celebrate with advertisements in Business Week or the FT. (It’s the corporate equivalent of being photographed with Kylie Minogue).

But the ego moment rarely translates into a piece of communication which motivates a market – it’s usually an ineffective piece of communication which reaches those who wanted to see it in the first place. Wasted money.

The ego loophole provides another opportunity to avoid the justifying eye of the bean counter.

The loopholes exist because they have to. The business of justifying creativity and getting businesses to pay for it, is corrupt because it has to be. If it wasn’t – there would be no creativity.

Wouldn’t it be better to have a way of valuing creativity in bean counter terms so that both parties are happy?

If the creative people could see creativity as delivering a measurable effect on a business, then we would go a long way to bringing the bean-counter onside. (And once this is achieved, there’s no limits to how much creativity will be unleashed).

With advertisements, the measures are clear – sales, profits, margins, market share and so on. The advertising industry promotes a mid-way measurable which is not one of the hard measures above, but which “leads” to them (the jury keeps popping in and out on the issue): it is “awareness” or “talkability” or “standout”.

These measures make creative people happy because it means that their ads are talked about – they achieve their creative fix - while at the same time (depending on the state of the jury on that day) the company also gets its commercial fix.

Another thing to help bring the bean counters onside is for creative people to take creativity off a pedestal. Creativity can and must pay its way. If a creative department comes up with rubbish ideas for 364 days of the year and has an idea which pays their annual salaries ten times over on the 365th day, they’re great value. If not, fire them, downsize them, relocate or reengineer them.

If they come up with ideas which are “talked about” or “liked” but can’t be proven to make a difference, their boss should consider early retirement. For it is he and above which should ensure that the right performance measures are in place.

There’s also the risk that a creative idea can be a one-in-a-million idea. If it is, then it’s a very special thing. Most creative people aspire to this kind of achievement – it can be a career crowning glory.

But the judgement on whether a creative idea is one-in-a-million all too often is made by the creative person who came up with the idea. They nursed the idea and they see it as breakthrough. Too often, they have got too close to the idea to make an objective pronouncement.

If the creative person can accept the idea that judgement is not his or hers to make, but someone else’s, then that’s one big thing achieved.

That’s not easy to achieve. All too often, the creative person has achieved absolute status with an idea – the bean counter nixes it and crushes the creative person. Schism and division.

Only if the creative person trusts and respects the person who makes the judgement on the idea, will they remain motivated beings by this experience. (The experience of rejection and the ability to handle it with regularity is the second biggest attribute of a successful creative director.)

From the bean-counter’s view, how can he or she embrace creativity? Applying short-term, blunt instrument measures like creative-investment-versus-sales-this-quarter will not work – the timescale is too short. Measures must be applied, but over time and with enough test cases running together so that data from one can be compared to another.

But the biggest favour the bean-counters can do is to define the problem which they want creativity to address. This is “one thing” which will truly make the difference.

The brief to creative people should run from “increase sales by 20% this quarter” to “let us charge 20% more for the same product by creating a position in the market which allows us to”. Using financial metrics.

I feel that bringing a cold hard commercial brief directly to the creative people will get respect – there is a bluntness in this approach, and being blunt at least brings clarity.

It’s a process of cutting out the middlemen who talk about “awareness”, “recall” and “talkability” and letting creative people loose on real hardcore business problems.