The Hallway's Simon Lee on The New Value of Advertising

Early this February, Australian Treasurer Jim Chalmers published an essay in The Monthly entitled “Capitalism after the Crisis.” It is a portrait of a system on the verge of major change.

Chalmers describes his history of working on and responding to budgets in government and opposition, totalling 16 economic plans. That’s 16 times he’s looked at the state of Australian capitalism, taken stock, and asked where we go from here. And now, he concludes, the answers have to be different.

Namely, Chalmers outlines his ambition to “build a better capitalism”; specifically, one he describes as “values based”. In essence, this is a kind of capitalism that broadens what the concept of “value” in our economy means. Rather than just an economic term related to productivity and profits, value should, Chalmers argues, encompass societal wellbeing as well.

As he puts it, “Last year’s October budget sketched our approach to measuring what matters and fleshed out Australia’s first national wellbeing agenda, by tracking a range of outcomes broader than, but not instead of, traditional measures of economic strength… To measure what matters is also to recognise a growing consensus from economists and investors that our economies need to embed and express more than one notion of value.”

Perhaps unsurprisingly, this has been a controversial article, drawing criticism in particular from the political right and economic neoliberals. It has been dismissed in some sectors as pure blue sky thinking, ignoring the real value that competition provides, or being unfair to small businesses. 

These critiques, no doubt, have their place. But one could make the case that they’re missing the forest for the trees. Regardless of whether or not Chalmers is able to make his wish for a values-based capitalism into a real set of policy, there’s no denying that he has tapped into something of a zeitgeist when it comes to what people want a strong economy to deliver.

The past decade and a half has been tumultuous to say the least. From the GFC to Covid, from climate change (and its accompanying natural disasters) to a war in Europe (and its accompanying inflationary pressures), people everywhere have been under the pump. And there is a real human sentiment that growth is not enough. Wellbeing - real, overall wellbeing - must come first.

We are already seeing this sentiment play out on the business stage. In the eyes of the public and many business leaders, a business’ accountability increasingly extends beyond the financial bottom line to the broader impact it has on its people, society, and the environment. These outworkings, once dismissed as “externalities”, are now central to a business’ brand value: 

80% of consumers agree that a business must play a role in addressing societal issues. They want a company to take actions which increase profits, improve social conditions, and make the world a better place. (Edelman)

60% of Americans said they would choose, switch, avoid or boycott a brand based on its stand on societal issues. (Wall Street Journal)

2 in 3 consumers will pay more for products and services from brands that are committed to making a positive social impact. (Nielsen)

So. What does this mean for advertising? 

Crudely speaking, our value has traditionally been measured in plain terms: our ability to shift units of product off shelves into the homes of “consumers”. But if (as is now the case) “consumers” are looking for more than just products from brands, brands, in turn, need more from their agencies.

Now, although there are creative agencies of all shapes and sizes, each with their own style and approach, across the board our job boils down to one basic thing: employing creativity to affect the way that people feel, think, and behave. In the old world of Capitalism 1.0, we did this with the main aim of growing our clients’ businesses, and, thus, improving their bottom line. But in the world of Capitalism 2.0, affecting our client’s bottom line, while still key, comes part and parcel with driving positive impact for broader society and the planet that sustains us all. 

Let’s be clear: just as Jim Chalmers isn’t advocating abandoning GDP as an important measure of economic success, we’re not talking here about an advertising industry that focuses only on worthy for-purpose campaigns. Rather, one that embraces the opportunity afforded by values based capitalism and enables our clients to capitalise on the commercial and societal win-win that Chalmers describes as “the intersection of prosperity and wellbeing”. Simply put - creating work that drives commercial success for our clients by having a positive impact on broader society and the planet that sustains us.

The value of advertising, particularly in terms of the impact we have on society has often been 

questioned or negatively perceived. The pursuit of this new path affords us an opportunity to redefine our value. 

A 2009 report by The New Economics Foundation think tank compared the social value of six different occupations: parents and childcare workers, hospital cleaners, waste recycling workers, bankers, tax accountants and advertising executives. Waste recycling workers ranked first in social value creation - ahead of hospital cleaners and childcare workers - generating £12 in social value for every £1GBP in salary. At the other end of the spectrum, advertising executives were reported to destroy £11 of social value for every £1GBP in value they generate. In fact, only tax accountants fared worse than us, destroying £47 in value for every £1GBP in value that they generate.

The copy which accompanied our damning statistical state read as follows: “Although the role of an advertising executive has high status, the impact of the industry has always been a point of controversy. It encourages high consumer spending and indebtedness. It can create insatiable aspirations, fuelling feelings of dissatisfaction, inadequacy and stress.”

This report may be over a decade old, but how much - if we’re honest - have we evolved since then? We are now - however - facing a genuine inflection point in the way capitalism is expected to function by the public, and with this comes our opportunity to be, and be celebrated for being, a positive creative force for both societal and commercial wellbeing. This is our time to become creators - not simply of ads that drive great results - but creators of social value.

Simon Lee, Chief Creative Officer and Partner The Hallway