Moneymen Demand Greater Transparency in UK Adspend

24 May 2005

Financial analysts are demanding more information from marketers about their advertising and promotional expenditure, reports Britain's Institute of Practitioners in Advertising.

Monday saw the publication of a new report from the IPA, a trade body representing UK advertising and marketing agencies. The survey, conducted for the IPA by researcher Populus, probes the attitudes of fifty City of London financial analysts toward the reporting of advertising and marketing expenditure.

Between them, the polled haruspices rake the fiscal entrails of five key business sectors: automotive, FMCG, telecoms, alcohol, and financial services.

Among the survey's key findings are …

  • One third of the analysts regard the relative importance of intangible assets (such as brands and goodwill) as 'highly' or 'enormously' important. Asked to attach a percentage estimate to the importance of intangibles, the consensus was 42%.

  • On the significance of non-financial measures of performance, 40% of the sample said that they rarely or occasionally refer to non-financial measures, but cited the lack of information as a key barrier to their inclusion.

  • The survey also highlighted an apparent call for greater transparency about marketing expenditure, with four of the five analysts surveyed stating they thought marketing expenditure was at least in some part a 'black hole'.
The publication of the survey coincides with a call from new IPA president David Pattison for agencies to put 'the business' back into the advertising business.

Urging agencies to be more financially open and to learn to speak the language of business, Pattison continued: "It would appear that the financial community is struggling to identify what advertising is; it just seems to be budget item to them.

"Financial transparency is on the way for all of us in marketing. Sarbannes-Oxley, the American financial corporate governance code is already affecting about half of our members. We believe by embracing transparency and using business based language the marketing community would help itself within the financial community. The views of the analysts in our research seem to tie in with this."

Data sourced from Institute of Practitioners in Advertising; additional content by WARC staff