Close-Up: Live Issue - Will remuneration guidelines work?

Evaluating an ad's effect on sales is widely regarded as the best way
around these problems and most clients - 90 per cent of the companies
surveyed by the IPA in a recent report - use this method. However, only
20 per cent of the clients surveyed actually evaluate the ad's effect on
profits.

In a bid to remedy this, the IPA, ISBA, the Marketing Communications
Consultants Association and the Public Relations Consultants Association
have joined forces to produce the Best Practice Guide to Evaluating the
Effects of Your Campaigns.

"There is already a groundswell of clients desperate to get their act
together on this," Sven Olsen, the chairman of the IPA Value of
Advertising Committee, says. "Ninety per cent of clients said they
wanted these guidelines and the remaining 10 per cent are already
measuring effectiveness on profits, so we're very confident the guide
will be extremely successful."

The crux of the document is to show the shortcomings of common
evaluation techniques and put forward new ideas on how advertising
effectiveness can be measured on profit, rather than sales.

Both methods of evaluating advertising's effect on profits are based on
core sales assumptions. The common technique was to assume sales would
stay constant without an advertising push, and would surge following a
campaign. The idea was to measure the surge.

However, the guide says that because brands are under constant pressure
from competitive activity, if you halt your communications activity
while competitors carry on theirs, the likely result will be a drop in
sales. This means clients need to measure effectiveness based on assumed
decline rather than on a constant level.

"When budget decisions are being made, some clients think that if they
cut ad budgets, sales will remain constant. This isn't the case, and the
guide explains this. The onus is now on the client to make sure they
measure correctly what's happening with their ads," Tina Fegent, the
procurement director at Lowe, says.

All the interviewees agreed that with a better way of evaluating the
success of a campaign, the thorns on the remuneration issue could,
eventually, be pruned away.

"If you can better evaluate the effect of ads, of course it will have an
impact. The more hard key performance indicators you can put out, the
better for the industry," Debbie Morrison, ISBA's director of membership
services, says.

There was also a view that the guide will bring up a lot of other
questions when it comes to agencies being paid.

"Agencies need to be accountable, that's why there's not many of me
around," Fegent says. "What's the point in making a crap ad? This will
become especially relevant if this guide moves more clients to offer
bonuses for good work."

The overall feeling is that if enough people adopt the tips laid out in
the guide, it can't fail to improve evaluation techniques, and therefore
agency remuneration.

"The best practice guide is obviously not going to hit everybody - some
companies already have good systems in place. But we're confident it
will make a difference," Morrison says. "If we hit 20 per cent of the
market, we'll know we've had a major success."

- Got a view? E-mail us at campaign@haynet.com

CONSULTANT - Andrew Melsom, senior partner, Agency Insight

"It's a very good guide with good contributors on both sides and it's
good for people to see different approaches to evaluation. But I don't
think it's simply a case of good guide/bad guide. It's about raising
questions.

"It is going to raise informed discussions on agency remuneration.
Clients I work with at the moment are constantly asking whether agencies
should be given bonuses for brilliant results. Its major strength is in
highlighting the ways in which clients can evaluate agencies."

TRADE BODY - Sven Olsen, chairman, IPA Value of Advertising
Committee

"Clients have always monitored the effect of advertising, but they have
never monitored the effectiveness of spend on the bottom line. They
haven't been taking this as seriously as they should. If you look at the
research, only one in five companies do this.

"Clients now have to consider whether they want to be taken more
seriously by their boards. If they do, then this set of best practice
guidelines will work and everyone will want to use them.

"Board members speak a different language from marketers. They speak in
profit and loss, they don't look behind the brand as marketers do. These
guidelines will help everyone work in the same language."

AGENCY - Tina Fegent, procurement director, Lowe

"It's an absolutely great idea. It's wonderful for purchasing
departments to be able to lead the way. This is tremendously important
because the industry has gone down such a cost-focused route in the
past.

"Every switched-on purchasing person will be looking to get their hands
on this guide. It's also great to see the IPA and ISBA working together.
Two years ago, the IPA didn't even accept purchasing, so it's a great
step forward.

"It will also be invaluable for planners because once there is a degree
of measurement for the quality of ads, they will be able to measure the
success of a campaign before, during and after it has run."

TRADE BODY - Debbie Morrison, director of membership services, ISBA

"It will work because it is filled with great advice, but it is easy to
read and in no way daunting. This means anyone, no matter how long they
have been in the industry, will be able to use it.

"It isn't a catch-all, but it's a good introduction. We are really
trying to influence the junior people coming up through the ranks of the
industry. If we can get the young marketers using it, it will eventually
become an industry standard.

"You can't go to college and learn to be a good client, but hopefully
this guide will help provide one of the pivotal building blocks."