To the relief of many within the media, companies are once again splashing out on advertising. Spending on advertising in the UK topped £9 billion in 1993 - over 1.5% of GNP - and is now increasing at an annual 8.6%. But is this money being spent to good purpose? The effectiveness of advertising is still being debated. As one respondent to a recent survey of major UK advertisers commented: 'The pressure is on to prove value for money.' For the past 10 years, the Institute of Practitioners in Advertising has been trying to do just this - by making annual awards to agencies that have isolated and quantified the beneficial impact of their campaigns. (A new set of winners will be announced this month.) A lot of industry veterans have implicit faith in the objectivity and accuracy of the measuring processes employed. Nowadays, declares Peter Mitchell, strategic affairs director at Guinness and one of the Advertising Effectiveness Awards judges, any marketer who repeats the old saw about half his ad budget being wasted (but not knowing which half) 'ought to be fired'. Disentangling the effect of a campaign from other product, pricing and promotional activities - and from the actions of competitors - may present problems, but, Mitchell insists: 'Any marketer worth his salt can isolate the advertising variable and assess its impact.' Others remain sceptical - not just about the measurement but about the effectiveness. Referring specifically to TV advertising, the anonymous survey respondent quoted above observed that 'traditionalist board members just do not believe in it'. In that case it's not surprising that advertising's own market share has been falling - from 45% of total UK marketing budgets in 1988 down to 40% last year. In the US, advertising's relative decline has been steeper, as companies turned to activities such as direct mail and sales promotions - the effects of which are transparently easier to measure.
Andrew Ehrenberg, professor of marketing at South Bank Business School, thinks that the advertising industry is its own worst enemy.
He argues that, in today's crowded markets, attempts to justify advertising budgets in terms of extra sales and/or margins are mistaken. 'Advertising needs to be accountable, not in terms of everybody always doing better, but in terms of the more realistic perspective of brand maintenance: protecting market shares, countering the erosion of customer loyalty, sustaining price differences, containing private label.' The trouble is that there is no single parameter to measure. For a product relaunch, a short-term sales gain might be the whole objective. In other cases the aim may be to slow or halt a decline in sales or market share, or to build up a brand over the longer term, or counter a negative corporate image, or persuade retailers to stock the product, or send a message to staff or distributors - the options are endless.
'Advertising is a business tool applied to many and various problems,' agrees Chris Baker, convenor of the Effectiveness Awards judges. Baker also believes that the factors which make advertising effective are in a constant state of flux. 'You can get an understanding of how to do effective advertising in a certain market for a certain time. But just when you arrive at that point it ceases to be relevant, because everyone gets to the same level of understanding. Then somebody does something different, and what worked perfectly for years stops working.' Those who strive to discover what makes advertising effective are searching for the Holy Grail. It will only be fully understood when the innermost workings of human desire and motivation are finally laid bare. Which probably means never. But that's not to imply that the quest should be abandoned. It has already shown advertising to be a more complex and subtle process than most people ever assumed.