Companies that excel in creativity outperform in terms of key financial results, so instead of using ROI or return on investment, the measure of business success should instead be ROC or return on creativity, argues Ogilvy Network ANZ’s Toby Talbot. Listen to more insights about investing in creativity in our SXSW Sydney coverage on the WARC podcast.

Creativity has never been more important to business than it is today. We see it applied everywhere and in increasingly interesting ways. And yet, paradoxically, its value is hard to nail down despite being the most important tool in the marketer’s toolbox. Not only that, it has a direct impact on sales and brand salience, and there’s plenty of data to back it up.

For instance, analysis by McKinsey & Company covering 16 years of data from Cannes Lions showed how companies that excel in creativity outperform in terms of key financial results (organic revenue growth, total return to shareholders and net enterprise value).  

Charles Young and Adam Page of research firm Ameritest used McDonald’s data to explore the relationship between advertising quality and sales growth. Based on a six-year dataset involving more than 180,000 consumer interviews, they found that nearly half of McDonald’s sales growth could be explained by variables related to advertising quality.

If that’s not enough, try reading “The Long & Short of It” by Peter Field and Les Binet or at the very least, listen to this podcast about why their view on creative effectiveness still holds.

But despite concrete proof that companies investing heavily in creativity (aka brand building) outperform their rivals, return on investment or ROI continues to be the most accepted measure of success, even though creativity is not part of its calculation. 

History – and simplicity – may explain its longevity. ROI was first coined by the assistant treasurer of DuPont in 1914 as a singular, distilled measure of business success, a definitive means of benchmarking the financial health of any company’s products and businesses that has since been widely adopted across the globe.

I guess that when you think of “one single measure”, that’s why ROI is still with us today. It’s brutally simple. It’s reductionism. ROI is a ratio. It’s what you get back, divided by what you put in.  

It’s hard to argue with the principle of ROI, though many have tried to rally against something as linear and one-eyed (and failed).  So instead, perhaps it’s time for ROI to evolve, just as the marketing process and all of those that work within it have also evolved.

It doesn’t need to be a quantum leap. Instead, I would like to change out just one letter from that clichéd acronym. Out comes the I, in goes the C. Return on creativity.

What is ROC

With marketing now being applied everywhere and in more and more interesting ways, return on creativity or ROC also has an opportunity to measure its success in more interesting ways, particularly given the obvious shift in how creativity is being applied.

As an example, what we learned at Cannes 2023 was that success lies not so much in finding creative solutions to business problems but in identifying real-world problems that could need creative and business solutions outside the traditional marketing brief. This is the case even where the brand’s proposition might not immediately or obviously fit. What this does is expand the universe of these brands.

Take limes in China. Corona’s Extra Lime campaign is a refreshing regenerative commerce idea, three years in the making, which saw the brand revitalise its beer business by partnering with local farmers, agricultural experts and local government to improve the quality of farming techniques and help farmers expand their yields through a Corona-branded lime.

The result was the creation of an unexpected new media channel for the brand, with sales of two million limes in the first year and the regeneration of farming economies in Anyue, China. Farmer income rose by 21% and lime yields are expected to double for 2024 and increase farmer per capita income by 30%.

Is that ROI or is that ROC? Well, no traditional business plan I suspect ever involved Corona getting into the lime business in China. So, I’m going with ROC.

Let’s support this shift to ROC

The rule of thumb in advertising is that 70% of advertising produces a commercial result.

But when it comes to creatively awarded ideas, James Hurman in “The Case for Creativity” found that the most consistently awarded brands are up to 11x more profitable.

Given the value of creative ideas to business is anywhere between 2x and 11x, clearly creative ideas deliver more profit. No question. But what about purpose?  

There is now clear evidence of corporates leaning into a new kind of “social capitalism” and making big profits along the way. It’s not just purpose. It is purpose, principles and profits. The biggest winners are seldom purely about shifting product. They were about changing government policy, tapping into new communities and doing meaty stuff like creating positive change in the world.

From a mass ROC point of view, think of the amazing Nike Dream Crazy campaign. By taking a stand, Nike delivered the greatest returns to the brand they had ever seen. Dream Crazy created US$6 billion in brand value, the most successful in the brand’s history.

So as we look at defining ROC, is it work that’s measured in terms of impact, with revenue, engagement and fame combined? Feels right to me.

Work that goes beyond the day-to-day

Whatever methodology we use to measure ROC, for me, it will always have to be about the work that goes beyond the day-to-day brief – work that redefines the possibilities. Every year, the Effies and Cannes Festival of Creativity show us that true creative collaborations that go way beyond campaign thinking to more impact-focused thinking succeed.

These are ideas where brave agencies and clients hold onto their shared convictions, even when the inevitable doubters question their decision to stray from the tried and true. 

Long may this trend continue because it will help creativity become more relevant than it’s ever been to all our lives. And with the application of ROC, proves that in business, creativity is always the answer.