An advertising industry temperature check
by Stephen Woodford, CEO, Advertising Association

Stephen discusses how the ad industry is responding to the climate crisis, recessionary pressures, and D&I shortfalls.

17th August 2022 Read time: 5 minutes Watch time: 53 minutes

What do climate change, the cost of living, inflationary pressures, talent shortages and lingering trends leftover from the pandemic all have in common? They are all issues that are affecting the advertising industry. An organisation at the forefront of protecting the role, rights and responsibilities of advertising and its impact on individuals, the economy and society is the Advertising Association. They are a voice for the industry in the UK and work to improve the state of the advertising industry globally as well. 

We welcomed Stephen Woodford, the CEO of the Advertising Association (AA), into the What’s Possible Community to discuss how advertisers are responding to challenges they face in the industry. The Advertising Association is putting their weight behind finding solutions for crucial issues in the industry like the climate crisis, D&I, and the talent shortage in marketing and advertising.

Getting to Ad Net Zero

In November 2020, the AA announced the launch of an industry-wide initiative named Ad Net Zero. The initiative’s mission is for immediate, collective industry action to help achieve real net zero carbon emissions from the development, production and media placement of advertising by the end of 2030.

Stephen says the industry in the UK has responded well to the initiative. At Cannes Lions in 2022, the AA announced they would roll out the initiative to major international markets. Stephen says there is a need for international markets to sign up for the initiative. He points out that the UK only accounts for 5% of the global advertising market, whereas a market like the United States accounts for 40% of global ad spend.

The AA is taking the initiative to 20 markets globally. This will culminate in the influencing of organisations that account for 90% of global ad spend. They will encourage them to reduce their carbon emissions across their entire supply chain. The whole industry will need to prioritise sustainability in everything they do – the AA believe it is an unavoidable reality that will affect every advertising stakeholder everywhere.

First of all, it’s about getting our house in order—advertising operations, from the businesses themselves, to the production, content creation, the media distribution. And the events and awards that happen in our industry. In effect, building sustainability into all those programmes,” Stephen explained.

For advertising producers interested in tracking the emissions of their production activities, the Advertising Association, along with agency partners, has built a carbon calculator named Ad Green. Stephen believes the more producers measure their carbon emissions, the more management and reduction can begin.

The most significant impact the ad industry can have, Stephen asserts, is in the messaging it presents to consumers. He says the biggest change will be in the products and services customers will consume.

Should brands cut advertising in a recession?

Inflation has hit a forty-year high, and consumers are being hit where it hurts most; in their pockets. The cost-of-living crisis does not seem to be an easy fix. Back in June, there were rumours of an upcoming government campaign that would encourage brands to cut advertising spend in favour of reducing product prices. The campaign never flighted, but the threat of it caused considerable reaction online.

It was a fundamental misread of what advertising does. Advertising is a key part of competition and innovation. Competition and innovation drive down price. And to think that cutting advertising will somehow allow price to be cut further is a naïve read on how advertising works in a competitive market,” Stephen commented.

Stephen warns that brands can lose market share in their post-pandemic recovery if they cut advertising more than their competitors. Agency marketers are also fielding questions from their clients about whether they should reduce investment in brand and instead prioritise performance advertising.

Stephen cautions businesses not to fall into the false dichotomy of performance vs brand. He says it’s not either/or; it’s both.

Maintaining spend around your brand may not be around the levels that they would be when times were good, but don’t cut it completely,” he said. “One of the best ways to gain market share is to sustain spend through difficult times”.

The ad industry must be ‘All In’

The Advertising Association is passionate about developing the next generation of talent and ensuring the advertising industry is diverse and inclusive. Not only have they helped launch a task force to address the talent shortage the industry is currently seeing, but they are also readying the next phase of their All In Census.

The census was the UK advertising industry’s first and biggest industry-wide survey. It provided insights into the representation and experience of the workforce, gathering data from over 16,500 professionals.

The first census found that non-white representation in the industry requires more concrete action, particularly in the C-suite of advertising organisations. The report also found that a third of Black talent said they would leave the ad industry over a lack of inclusion.

Consequently, the groups involved in the census drew up employment frameworks like BRiM (Black Representation in Marketing). The framework was sent to organisations, encouraging them to download the framework and implement it so they could remedy the retention of Black talent in the industry.

The AA recently, in June 2022, celebrated 70 businesses that had fully grasped what the All In census data was saying and provided evidence of adopting the AA’s first six actions from its Action Plan. These businesses are committed to improving the experience and representation of Black talent, Disabled talent, Working-class talent, Women, Asian talent and Older talent.

In March 2023, they will conduct another round of the All In census and compare the data with their previous findings. Stephen is confident that the ad industry is taking the subject of diversity and inclusion seriously.

I’ve not met a CEO who does not think this is important and does not want to see their business do better. I think the pandemic has accelerated that desire for change. You can’t pay lip service to this stuff. You can’t just put a badge on your website. You’ve gotta live this. Your employees, and all your various stakeholders, will know whether it’s authentic or not. They’ll know whether this is just virtue signalling,” Stephen said.